InfoGroup removes Vin Gupta as Chairman
By siliconindia   |   Friday, 01 August 2008, 00:18 IST
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Bangalore: For Vinod Gupta, the invincible journey of 36 years that he has had being at the helm of the business and consumer database provider InfoGroup, came to a pathetic end when he was removed as the Chairman of the company board following a shareholder lawsuit against the company and a probe by the market regulator Securities and Exchange Commission (SEC) over an alleged misspending. Gupta, who agreed in an 8-K filing to pay his U.S. based company back $9 million over the next five years, is still subject to the lawsuit and to a probe by the SEC. The decision, which was pursuant to an independent review by a Special Litigation Committee of infoGROUP's board on issues raised in derivative litigations filed against the company, allowed Gupta, who holds 40 percent of InfoGroup's stock, to continue as CEO of the company. The committee had determined that various related party transactions, expense reimbursements, and corporate expenditures were excessive. Though investors are angry at him, list industry sources seem to have a sympathy towards the Indian origin business man, as who was the one to found the company with a meager investment of $100 and foster it to the current fame. Borrowing that money from a bank to get started, he turned the company from a one-man operation to a global employer of over 5,000 with revenues of $750 million. He was recognized in Bill Clinton's book Giving, describing the company as one that "has made a concerted effort to hire people who were on welfare, as well as people who are disabled or who have to support themselves after getting out of unsafe domestic situations." InfoGROUP, the parent company of list firms including Millard Group, Direct Media, Edith Roman, and Walter Karl, went public in 1992. But throwing a jibe at him are many like John Lenser, president of catalog consultancy Lenser. He says one should be careful when he is growing on others money. "In any position where someone owns a private company, and it either goes public or you add a partner, a change of behavior has to go with that. It's the fiduciary responsibility to the shareholders and stockholders," he said indirectly hinting that Gupta should not have spent money without the knowledge of the parties concerned. A lawsuit filed last year by Cardinal Value Equity Partners and two Dolphin Partnership investment funds against Gupta accused him of improperly using company money to pay for the use of a skybox at the University of Nebraska's Memorial Stadium, a yacht, jets, cars, and condos in Hawaii and California. But according to Gupta, these were legitimate business expenses, such as for entertaining clients.

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