The Serious Fraud Investigation Office (SFIO) had flagged a case of conflict of interest against Bajpai when he was an independent director on the now-defunct Kingfisher Airlines’ board
The government’s decision to appoint GN Bajpai on the new seven-member board of debt-laden Infrastructure Leasing & Financial Services (IL&FS) is being questioned by proxy advisory firms, reports Mint.
This is because the Serious Fraud Investigation Office (SFIO) had flagged a case of conflict of interest against Bajpai when he was an independent director on the now-defunct Kingfisher Airlines’ board.
The firm run by Bajpai had received payments for services to the Vijay Mallya-promoted airline when he was on its board. He resigned from his post in January 2012, just before trouble started brewing at the airline.
JN Gupta, co-founder of Stakeholder Empowerment Services, blamed the government for having a short memory since Bajpai has been associated with companies with questionable corporate practices.
On October 1, the government superseded the board of IL&FS and appointed a board led by Uday Kotak, Managing Director and CEO of Kotak Mahindra Bank. The decision to appoint an active banker on the board also raised speculation, but it died down as specific information about KMB’s lending to IL&FS is not known, the report said.
In the case of KMB, it is 'too fine too far', since the bank’s exposure to IL&FS’s Rs 91,000 crore debt is negligible, Gupta told the paper.
63 Moons Technologies is another company Bajpai has worked with, which was under the radar of regulatory authorities. “The government knows what happened in Kingfisher Airlines and about Bajpai. But it seems those developments happened years back and so nobody wants to look back at your past when forming committees,” Gupta added.
The head of another proxy advisory firm questioned if Kotak and Bajpai were the most suitable to fill the posts on IL&FS board. “It looks like the government wants to get someone who can roll up his sleeves and get the work done. So, no one better than a banker like Kotak. Sure the government could have looked at other retired banking executives.”Currently, the board includes GC Chaturvedi, Chairman of ICICI Bank, former bureaucrats Vineet Nayyar, Malini Shankar, Nand Kishore and CS Rajan, who was appointed on October 3.