High-powered Indian-American and other CEOs at US-India Business Council vote to split from U.S. Chamber

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The board of the U.S. India Business Council- whose membership includes the chief executives of Pepsi and MasterCard – has voted unanimously to break off from the U.S. Chamber of Commerce, saying that “recent actions taken by the Chamber have left us with no alternative but to take this vote to formally separate.”

The vote by 29 USIBC board members was the culmination of a running battle with U.S. Chamber of Commerce president Thomas J. Donohue that dates back to 2010 and which came to a boil during the recent visit to Washington by Indian Prime Minister Narendra Modi.

The dispute provides a rare look at tensions among business leaders at high levels.

The board members who voted to split off from the Chamber include heavyweights such as Pepsi chief executive Indra Nooyi, Cisco executive chairman and former CEO John Chambers, former defense secretary William Cohen, MasterCard chief executive Ajay Banga and Warburg Pincus co-chief executive Charles “Chip” Kaye.

Donohue wrote a letter (obtained by The Washington Post) to USIBC board members on July 1 before the vote saying that the U.S.-India group “cannot ‘separate’ from the U.S. Chamber of Commerce without our concurrence.” The Chamber founded the group, and in his letter Donohue described the USIBC as a “program” with “no autonomous existence outside of the U.S. Chamber.”

Donohue said the same in a public letter to USIBC members July 11, saying that “the USIBC has no separate existence and its board has no legal authority.” He said the Chamber would continue to operate the program and “will not consent to the demands of a group of disaffected individuals.”

The fight between the USIBC, which has about 350 members, and the Chamber was largely about turf and independence. A member of the USIBC board said that Donohue was unhappy that the USIBC invited Vice President Pence to a meeting because Donohue wanted to invite Pence to a different event.

A person close to the USIBC board said that Donohue also wanted to oust certain members of the U.S.-India Business Council board and install others, moves that would be unprecedented in the history of the council.

In the run-up to Modi’s June trip to Washington, the Chamber also pressured top USIBC officials, including USIBC president Mukesh Aghi, according to a July 3 email to board members from the group’s executive committee.

Since the Modi visit and board vote, the Chamber has dismissed Aghi and another USIBC senior official, USIBC officials said. Aghi said in a letter that the Chamber dismissed him because he would not agree to report to the Chamber instead of to the U.S.-India group.

Chamber spokesman Blair Holmes said that “our view is he walked away from the Chamber, and therefore he resigned.”

The Chamber also abruptly fired another veteran senior official at the USIBC after he declined to report directly to the Chamber, a USIBC board member said.

The U.S. Chamber of Commerce established the USIBC in 1976, at the request of then-Secretary of State Henry Kissinger, who wanted to promote better business ties between India and the United States. Today it is one of the biggest of 15 bilateral business groups under the Chamber umbrella whose staff members work out of the Chamber’s office. Each of the groups has its own board.

Tensions first surfaced when Terry McGraw of the McGraw-Hill Companies was chairman of the USIBC. “Donohue chafed at the council’s independence. McGraw chafed at being told what to do on policy,” said a member of the board who asked for anonymity to protect his business relationships.

In February 2011, the two sides signed a memorandum of understanding that gave the USIBC autonomy on policy matters and strategic planning, with a governing committee that included three members of the USIBC’s executive committee and the chief operating officer of the Chamber. The two sides pledged to avoid conflicts.

The memorandum also spelled out financial details, saying that the Chamber would open an account in its name but for the benefit of the USIBC with restricted funds. The USIBC was to receive all the funds except those given to the Chamber to cover administrative costs. The account currently has millions of dollars that each side claims as its own, the board member said.

Donohue said in his July 1 letter said “all of the assets of the USIBC program are in fact the legal assets of the U.S. Chamber.” He called a meeting of the USIBC board for July 14. It is not clear who, if anyone, would attend. Instead, the USIBC executive committee wrote to Donohue on July 7 after its vote, urging him to pick a date during the week of July 17 “so that we can work out an amicable way to resolve this.”

— The Washington Post