Chugh Pawn In New Itc Boardroom Battle
A section of the ITC board is questioning former chairman K L Chughs retirement package which was cleared by the company board after he decided to step down from the post over a year ago.
This section may get the issue listed on the agenda for the board meeting slated for May 20. It has also objected to Chugh being allowed to continue as chairman emeritus despite allegations of foreign exchange regulation violations by ITC during his tenure.
The move to discuss Chughs compensation package is seen by insiders as a move to put ITCs largest shareholder, BAT Industries, on the defensive. However, sources close to BAT said the decision to rake up a controversy on an issue which had been resolved and forgotten was illogical, especially at a time when ITC is facing numerous other problems. Chugh had fought a running battle with BAT before finally deciding to quit as chairman in late 1995, two years before the end of his tenure. As part of his package, BAT agreed to compensate Chugh for his premature retirement according to the provisions of the Companies Act.
The Act stipulates that the amount of compensation should not exceed the remuneration which the retiring person would have earned for the unexpired residue of his term or for three years, whichever is shorter.
The compensation package was cleared by the annual general meeting of ITC in 1996.
The package is now being questioned on the ground that the Companies Act forbids such a payment in case the person in question is guilty of any fraud or breach of trust or gross negligence. Pointing out that BAT was aware of various irregular deals during Chughs tenure through audit reports, the section charges that Chugh was given a favourable deal in return for his stepping down from the chairmans post.
Chugh had earlier turned down BATs request to quit as ITC chairman, which had led to an escalation of their bitter conflict.
The section opposing Chughs package points out that the minutes of the board meeting held in September 1995 note that BAT chief Barry Bramley had congratulated K L Chugh and acknowledged that the company saw extraordinary growth during his tenure. On behalf of BAT, Bramley had proposed that Chugh be awarded the post of chairman emeritus. Bramley had also suggested that ITC should pick up the tab in case Chugh accepted an assignment as Assocham president.