Cyrus Mistry, former chairman of Tata Sons, on Monday suggested that the government should look into the governance structure at Tata Trusts and take action against people who have shown “a blatant disregard for good governance” within the trust.
In a 14-page representation to the shareholders of six Tata Group firms ahead of their extraordinary general meetings (EGMs) to decide his fate, Mistry said that the governance charter across the Tata Group needs to be repaired and Tata Trusts needs to become “accountable and transparent”.
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“The Tata Group is no one’s personal fiefdom: it does not belong to any individual, not to the trustees of Tata Trusts, not to the Tata Sons directors, and not to the directors of the operating firms. It belongs to all the stakeholders, including every one of you,” said Mistry in his representation to the shareholders.
“Without governance reform, without checks and balances and without accountability for conduct of the trustees, serious value erosion for you as members of your company is inexorable,” he said.
Mistry also told Tata shareholders not to get swayed by the decision of Tata Sons which sacked him as chairman of the conglomerate on October 24.
“I have made this representation with a sense of pride in what I have done in the past four years, putting out of my mind, the unfairness I have recently experienced at the Tata Sons board. Your company has no reason to be swayed by the conduct of Tata Sons. Tata Sons does not guarantee any financial assistance for your company. In fact, your company has done its best to help Tata Sons retain its equity ownership,” said Mistry.
Tata Sons has managed to oust Mistry as chairman of Tata Consultancy Services (TCS) and Tata Global Beverages Ltd. EGMs have been called to remove Mistry as director on these firms as well as Tata Motors and Indian Hotels Co Ltd. While TCS EGM has been called on December 13, that of Tata Steel has been slated for December 21. Shareholders of Tata Motors will meet on December 22, and Tata Chemicals EGM will be on December 23. The EGM of Tata Power will be on December 26.
Mistry in his representation has alleged that Ratan Tata, former chairman of Tata Sons and NA Soonawala, former vice-chairman of Tata Sons, in their capacity as trustees of Tata Trusts took the veto rights of the Trustee-Nominated Directors as “their entitlement to dictate to these directors how Tata Sons should conduct itself”, pointing to alleged erosion of governance at Tata Sons. Currently, Nitin Nohria and Vijay Singh are the nominees of the Tata Trusts on the Tata Sons board. Mistry has also alleged that Soonawala “wanted to conduct discussions with management and merchant bankers to dictate transaction structures”.
“They (Tata and Soonawala) interpreted the Articles of Association to mean that they could call for information and seek discussions on any subject they considered material. In the view of these trustees, the board of Tata Sons was answerable to them and through the Trustee-nominated Directors, they could not only call for such information but also dictate what decisions must be taken by Tata Sons,” said Mistry.
Mistry has also listed 10 alleged instances of “misconduct” by Tata Sons involving Group firms since he was sacked. Mistry said that the general (legal) counsel of Tata Sons has pressured the company secretary of Tata Motors to circulate an unsigned legal opinion from a law firm that is advising Tata Sons, to “gag the independent directors from expressing any view” on Mistry’s performance as the chairman of Tata Motors.