Cyrus Mistry alleges that though he was promised a free hand, rules of engagement were changed when he took over and board meetings were left midway to ‘obtain instructions’ from Tata
Ousted chairman of Tata Sons, Cyrus Mistry leaves from Bombay House yesterday. Pics/PTI
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Sacked unceremoniously, a “shocked” Cyrus Mistry has levelled a series of allegations against Ratan Tata and contended that he was pushed in to a position of “lame duck” chairman and changes in decision making process created alternate power centres in Tata Group.
Mistry’s belongings being loaded in a car at the headquarters of the Tata Group
Bombastic email
In an explosive confidential email to Tata Sons board members, he accused them of replacing him “in a summary manner” as Chairman of India’s largest conglomerate without so much as a word of explanation and without affording him an opportunity of defending himself that must be unique in the annals of corporate history. “I was shocked beyond words at the happenings at the board meeting of Oct 24, 2016. Apart from the invalidity and illegality of the business that was conducted, I have to say that the Board of Directors has not covered itself with glory,” he wrote.
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Mistry said he was promised a free hand when he was appointed Chairman in December 2012 but Articles of Association were modified, changing the rules of engagement between the Tata family Trusts and the Board of Tata Sons.
Raises issues of governance
Stating that he inherited problems, he went on to raise corporate governance issues alleging representatives of family trusts, which hold two-thirds of Tata Sons shares, were reduced to “mere postmen” as they left board meetings midway to “obtain instructions from Mr Tata.” In clear signs that not all was well between him and Tata, he highlighted his predecessor’s loss-making Nano car project that consistently lost money, but could not be shut down for “emotional reasons” and because it would have stopped the supply of Nano gliders to an electric car making entity where Tata had stake.
Read Story: Cyrus Mistry's biggest mistake that led to his ouster as Tata Group chief
He alleged that it was Tata who forced the Group to foray into the aviation sector by making him a ‘fait accompli’ to joining hands with Air Asia and Singapore Airlines and making capital infusion higher than initial commitment. He warned that the salt-to-software giant might face Rs 1.18 lakh crore in writedowns because of five unprofitable businesses he inherited.
Can’t be about performance
He went on to defend his record, saying he inherited a debt-laden enterprise saddled with losses as “legacy hotspots”. He said the suddenness of the action, and the lack of explanation has led to all manner of speculation and has done immeasurable harm to his reputation as well as that of Tata Group. “I cannot believe that I was removed on grounds of non-performance,” he said going on to point to two directors, who voted for his removal, only recently lauding and commending his performance.
Tatas say ‘Tough luck Mr Mistry’
Tata’s lawyer, Abhishek Manu Singhvi told NDTV that Mistry’s removal was based on a combination of “economic, moral, propriety” factors. Asking him to not wash dirty linen in public, Singhvi also ridiculed Mistry’s statement that his removal was illegal. “Does Mr Mistry think the entire eminent board insane? They all lost confidence in him,” said Singhvi.
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