A day after Cyrus Mistry levelled a series of allegations against the Tata Group and predecessor Ratan Tata, Tata Sons hit back at its ousted chairman for making “unsubstantiated claims and malicious allegations, casting aspersions” on the Group and “some respected individuals”, and promising to respond to the charges in an “appropriate manner “.
In an email to the board and trustees, Mistry made a slew of allegations including fraudulent transactions, unethical practices and conflict of interest. Flagging what he called “total lack of corporate governance” and claiming he had been reduced to a “lame duck chairman”, he questioned key investment decisions in several group companies during Ratan Tata’s tenure and warned of a potential $18-billion writedown on what he described as “legacy hotspots “.
Responding to Mistry, Tata Sons, in a statement, said “it will be beneath the dignity of Tata Sons to engage in a public spat with regard to the several unfounded allegations appearing in his leaked confidential statement. These allegations are not based on facts or the true state of affairs. It is convenient to put selective information in the public domain to defend one’s point of view.”
“There is a multitude of records to show that the allegations made by Cyrus Mistry are unwarranted and these records will be duly disclosed before appropriate forums, if and when necessary, sufficiently justifying the decision made by responsible boards of directors of Tata Sons and its group companies,” it said.
“As the executive chairman, he was fully empowered to lead the group and its companies. It is unfortunate that it is only on his removal that allegations and misrepresentation of facts are being made about business decisions that the former chairman was party to for over a decade in different capacities. The record, as and when made public, will prove things to the contrary,” Tata Sons said.
Cyrus Mistry has been on the board of Tata Sons since 2006. He was appointed deputy chairman in November 2011, and formally appointed chairman of Tata Sons on December 28, 2012.
“Efforts are now being made to level accusations against individuals and company boards for ignoring corporate governance norms that were supposedly upheld by the former chairman while in office,” Tata Sons said.
Refuting Mistry’s claim that he was a “lame duck chairman”, it said the Tata Sons board gives its chairman complete autonomy to manage opportunities and challenges. “However, the tenure of the former chairman was marked by repeated departures from the culture and ethos of the group,” Tata Sons said. It also said that “it’s unforgivable that Mistry has attempted to besmirch the image” of the group.
The Tata Sons statement revealed the background for the sacking of Mistry. “The directors of the Tata Sons board had repeatedly raised queries and concerns on certain business issues, and trustees of the Tata Trusts were increasingly getting concerned with the growing trust deficit with Mistry, but these were not being addressed. The Tata Sons board, in its collective wisdom, took the decision to replace its chairman in the manner undertaken,” it said.
Ratan Tata is chairman of Tata Trusts which holds 66 per cent stake in Tata Sons while Mistry holds around 18 per cent stake.
“The board of directors of Tata Sons is composed of several eminent personalities from all walks of life. This is not a group of people who one would expect to act without exercising proper judgement in the best interests of the entities they sit on the boards of. It is unfortunate that Mr Mistry had overwhelmingly lost the confidence of the members of the board of directors for a combination of several factors,” Tata Sons said.