Govt flags Rs 3.2 crore variable pay to IIM Rohtak director, seeks probe

The ministry's internal audit wing has flagged irregularities, stating that the IIM Rohtak director's pay exceeded 200% of his fixed salary, breaching standard practices

The Ministry of Education (MoE) has raised concerns with the Indian Institute of Management (IIM) Rohtak regarding a variable pay of Rs 3.2 crore awarded to its director, Dheeraj Sharma, over three years—2018-19, 2019-20, and 2020-21. The objections come from the ministry’s internal audit wing (IAW), which flagged irregularities in the payment, according to a report by The Indian Express.

The IAW’s investigation followed a series of complaints forwarded by President Droupadi Murmu, who, in her capacity as 'visitor' of all IIMs, had passed the concerns to the government on October 6, 2023. The complaints not only highlighted the variable pay issue but also raised concerns about financial irregularities and the irregular issuance of mobile phones to faculty members at the institute.

According to the IAW, the process used to determine Sharma’s variable pay was flawed. They noted that the payment was more than 200 per cent of his fixed salary, which contravenes standard financial practices. The audit body stated that variable pay should typically constitute a small percentage of total earnings, and it criticised the institute for exceeding those limits. The IAW concluded that the payment lacked “financial prudence.”

The MoE has written to IIM Rohtak on two occasions, seeking clarification on the audit’s findings, specifically asking for details on how the variable pay was calculated. The ministry has also urged the institute to identify those involved in approving the payment and outline steps to recover the excess amount.

What are IIM's rules on variable pay?

Under the IIM Act, a director’s variable pay is determined by the institute’s Board of Governors based on specific performance parameters. However, the IAW pointed out that the board’s approval for Sharma’s variable pay in 2018-19 and 2019-20 came before the institute’s regulations under the Act were formally notified, rendering the procedure “void.” Additionally, the board had included the institute’s financial health as a performance metric, but the IAW found that this was artificially inflated by adding unspent funds and interest into the corpus.

In response, IIM Rohtak has denied any wrongdoing, saying that Sharma’s variable pay was approved by the Board of Governors in full compliance with the IIM Act. The institute further noted that the payments had been shared with the ministry a year and a half ago, and that the Comptroller and Auditor General (CAG) found no irregularities in the process.

Despite the institute’s defence, the IAW remains firm in its stance. They also criticised the fact that Sharma’s variable pay exceeded 200 per cent of his total salary, a move they argued was inconsistent with best practices.

This issue adds to Sharma’s existing challenges. He has been under scrutiny since 2022 for allegedly misrepresenting his academic qualifications when applying for his position in 2017. Although the government acknowledged in court that Sharma did not meet the requirement of holding a first-class undergraduate degree, he was reappointed for a second term as IIM Rohtak’s director in February 2022, despite objections from the ministry’s representative on the Board of Governors.