Cyrus Mistry steps up attack on Ratan Tata, says Tata Group no one's 'personal fiefdom'
Cyrus Mistry on Monday said the Tata Group is no one's personal fiefdom, in apparent reference to Ratan Tata.
Stepping up his fight against Tatas and patriarch Ratan Tata, Cyrus Mistry, the ousted chairman of Tata Sons, on Monday said the 'Tata Group is no one's personal fiefdom'.
In a letter, addressed to shareholders of several Tata Group companies, Mistry has also sought government's intervention to "remedy and repair breakdown" in the governance of trusts managing Tata Sons -- the holding firm for over USD 100 billion conglomerate.
"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 companies,” Mistry said.
"It belongs to all the stakeholders, including every one of you. I, therefore, urge all you to think beyond the here and now. I urge you to have your voice heard loud and clear. I ask you to be part of defining the future," he wrote.
Mistry's letter is addressed to shareholders of six Tata group firms, where promoters have called extra-ordinary general meetings (EGMs) to remove him from their respective boards.
In an apparent reference to Ratan Tata, Mistry also made a case for decision-making to be not concentrated in a single individual, saying conferment of all power in one man or a "high command" is unethical and a breach of trust.
In his letter to shareholders ahead of the EGM to remove him from the group's crown jewel TCS on December 13, Mistry questioned why no reasons were cited for his dismissal and wondered if this was another case of Ratan Tata's arbitrary functioning.
"The impression sought to be created was that there was something unspeakable underlying his inexplicable and unreasonable conduct. More importantly, the signal was that Ratan Tata had an absolute right to do as he willed without having to explain himself to anyone," Mistry said.
"The conferment of all decision-making power in one man or a 'high command' among them is unethical, improper and a breach of trust. It is critical that serious decisions of severe magnitude and consequence are not taken whimsically, without much thought, or for unstated collateral objectives," said Mistry, whose family owns 18.4 per cent in Tata Sons.
Various Tata Trusts of which Ratan Tata is lifetime chairman, owns 66 per cent in Tata Sons, and are all public trusts.
It can be noted that over the last 40 days, Mistry has made pointed accusations like entering the aviation business, usage of corporate jets and lack of judgement in investments which had to be written-off.
"It is necessary to have a strong method of checks and balances in the trustees' decisions, particularly if decisions they take could indirectly give them personal benefits," he said in the letter.
Mistry's letter was soon rebutted by Tata Sons which issued a statement hours after Mistry letter surfaced in press.
"Tata Sons strongly and categorically refutes the contents of Mr Mistry’s letter which are a rehashed version from his earlier statements, press reports and leakages which we have forcefully rebutted," a statement post on Tata Group's website said.
"His statements have caused the group (including the companies where he continues to be the Chairman) enormous damage and caused considerable financial loss to all shareholders, running into tens of thousands of crores," it said.
Stating that his attempts to effect reform in the group's working were cut short with his abrupt dismissal on October 24, Mistry pitched for government intervention in the matter.
"In the absence of an appropriate governance structure and ethical behaviour of trustees, it would become an inherent obligation of the government to remedy and repair breakdown in the governance of such trusts," Mistry said.
Making a strong plea for reform in the Tata Trusts, Mistry expressed fears of the vision of the Tata founders being "under threat" unless governance reforms are initiated.
"At the heart of the sustainability of the Tata Group is governance reform, throughout the institution. This would mean the government ensuring the working of the Tata Trusts, which are public charitable trusts, the property of the people of India, have a defined, transparent governance structure," the letter pointed out.
"People who have been complicit or have enabled ethical and legal transgressions or have demonstrated a blatant disregard for good governance should not be allowed to continue."
"The governance charter across the Tata Group, including the holding and operating companies, requires repair to conform to company law and global best practices viz. protection of interests of all stakeholders, including minority shareholder."
Stating that two directors had abstained during the vote on his dismissal, Mistry underlined that those who voted him out included three nominee directors of Tata Trusts and three newly-inducted directors, who had sat only for one such meeting previously.
He further alleged that two of the three new directors were inducted on the recommendation of Ratan Tata.
"This demonstrated lack of independent judgement, and disregard of their fiduciary duty, betraying the confidence reposed in them by the stakeholders," Mistry said in the letter to the over two million minority shareholders of the conglomerate.
Mistry said there were veto rights with nominee directors of Tata Trusts on group companies, but Ratan Tata and former Tata Sons vice-chairman N A Soonawala "abused" it.
"In their capacity as trustees of Tata Trusts, they took the veto rights of the trustee-nominated directors as their entitlement to dictate to these directors how Tata Sons should conduct itself," he said.
"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.
The trustee-nominated directors were used "merely as an agency of indirect control by these trustees", Mistry said, listing out a slew of such instances, including the now controversial decision to re-enter the airlines business.
"Despite the issues in, and concerns surrounding Air Asia India, the Tata Sons board, at its meeting held on November 17, 2016 (which I had not attended and sought leave of absence), appears to have unanimously approved the full investment of USD 25 million, which was on hold due to the findings/recommendations of the auditors," Mistry said.