Can a college principal be on liquor company's board?

SES says decision of Indu Shahani, principal of Mumbai's HR College, to become a director of United Spirits raises an 'ethical issue'

Indu Shahani, the principal of Mumbai’s HR College of Commerce and Economics, is no stranger to corporate boards. The college website shows the former city sheriff sits on those of a half dozen, besides international universities and organisations.

But, one directorship she took up three months earlier has opened a controversy. In August, Shahani was appointed an independent director on the board of United Spirits, the company that sells popular liquor brands such as McDowell’s, White Mischief and VAT 69.

J N Gupta, managing director, Stakeholders’ Empowerment Services (SES), says Shahani’s two roles are contradictory, “While there is no legal bar from a teacher (principal) becoming a director on the board of a liquor (spirit) company, SES has raised the issue purely on the issue of propriety and ethical grounds, keeping in mind the directive principles (Article 47) of the Constitution and various other laws. SES found the two roles to be having conflicting objectives.”

An SES report giving voting recommendations for resolutions coming up at the company’s extraordinary general body meeting (EGM) scheduled for Friday, says the presence of a well-known academician and principal of a leading college on the board of USL presents an “ethical issue”.

“SES has two major concerns — one, she, being an academician and role model for students, is a party to violating laws of the land by the company. Second, being on the board, she is obviously interested in growth and prosperity of the company, which implies that she as a board member works for increasing the sales and eventual consumption of alcohol. SES finds this a violation of the Directive Principles of the Constitution of India.”

SES also objects to the fact that after the entry of Shahani, the USL board has recommended putting up of several resolutions, which include agreements for advertising of USL’s products. The law and guidelines in India relating to advertising of spirits is contained in the Cable Television Networks Rules, 1994; Cable Television Networks (Regulation) Act, 1995; the ASCI code for self-regulation in advertising and the Press Council of India guidelines on principles and ethics. The underlying principle and tone of all these is that advertising for spirits (alcohol) is not permitted.

The amendment of 2009 to the Cable Television Networks Amendment Rules very clearly talks about surrogate advertising and how to determine whether an advertisement is surrogate or not. “In the case of USL, the company states in all its reports and presentations that it is a spirits company. Therefore, it is very easy to conclude all the advertisements and promotions are surrogate,” says SES in its report.

“SES is not at all concerned whether consumption of alcohol is good or bad, as it is an individual’s choice and is best left to the individual. Nor is SES is stating whether it is moral or immoral to consume alcohol. However, SES finds a huge governance issue where a board is a party to violating the laws of land directly or indirectly, with full knowledge. To SES, it is an ethical issue as well,” said its report.

Shahani did not respond to an email seeking comments or to subsequent reminders. In reponse to questions about advertising, an USL spokesperson said, “USL always conducts its promotional activities within the guidelines of the law.”

Gupta said he had raised the issue with the University Grants Commission, to which the college is affliated, and the Union human resource development ministry but without a response. He referred to Article 47 in the Constitution of India which says, “… in particular, the State shall endeavour to bring about prohibition of the consumption, except for medicinal purposes, of intoxicating drinks and of drugs which are injurious to health.”