Rajat Gupta

Hyderabad, March 21: Rajat Gupta has resigned as the chairperson of the Indian School of Business (ISB), the premier B-school he co-founded here five years ago, after being charged in the US with insider trading.

“Rajat Gupta has requested the ISB executive board to relieve him of his board responsibilities till his pending matter with the US Securities and Exchange Commission is resolved,” said a release issued by the institute.

The ISB, of which Gupta was the founder-chairperson, said it was on the lookout for a new chairperson and would hold a meeting on April 2 to take a decision. “This (Gupta’s resignation) and the appointment of the new chairperson will be tabled at the upcoming board meeting on April 2,” an ISB spokesperson said.

The 62-year-old has also resigned from the institute’s executive board and may not attend the meeting. Anil Ambani, Adi Godrej and ICICI Bank CEO Chanda Kochar are being mentioned as Gupta’s possible successors.

The Calcutta-born Gupta had allegedly revealed to Raj Rajaratnam, the founder of the Galleon Group hedge fund, that Warren Buffett’s Berkshire Hathaway planned to invest $5 billion in Goldman Sachs at the height of the financial crisis. Gupta, then a board member of the Wall Street bank, has denied the charges.

The ISB spokesperson said today: “We also note the statement of counsel for Rajat Gupta which asserts that the allegations are totally baseless. The ISB community is confident that Rajat Gupta will be vindicated.”

This is the third time in recent years that a top ISB official has got embroiled in a financial scandal.

In October 2009, Anil Kumar quit the ISB board after getting caught, like Gupta, in an insider-trading row in the US.

In January 2009, M. Ram Mohan Rao stepped down as the dean of the business school following disclosures of his alleged connivance in the Satyam scam. The company has since been renamed Mahindra Satyam.

Gupta, the first person born outside the US to become worldwide managing director of consultants McKinsey, has already resigned as director from the boards of other US companies, including American Airlines.

The ISB, which has tie-ups with the Kellogg School of Management at Northwestern University and the Wharton School at the University of Pennsylvania, was the brainchild of Gupta and Anil Ambani. Both had requested then Andhra Pradesh chief minister Chandrababu Naidu to provide 250 acres on which the B-school stands.

Naidu’s gesture helped Andhra bag the institute that Maharashtra and Karnataka were also vying to get.