Ousted Tata Sons Chairman Cyrus Mistry’s camp on Thursday termed as “unsubstantiated claims and half truths” a series of allegations by the company, which stated that he betrayed trust and tried to seek control of main operating firms of the over $100 billion group.
Responding to a statement by Tata Sons, sources close to Mistry said after 17 days of silence on his “unjustified and unexplained removal”, there was still no “word of explanation as to why it became necessary to remove him summarily violating natural justice and without explanation”.
The statement, they said, “has not much but selective data, unsubstantiated claims and half truths”.
On claims that Mistry had an ‘ulterior motive’ of taking control of companies, a source said: “Giving the example of Indian Hotels only because independent directors — one of whom is also a director of Tata Trust — demonstrated true independence, is not in keeping with Tata governance standards.” The sources also said removing TCS from data in assessing Mistry’s performance stating he does not really contribute materially to the company and to blame him for all problems inherited by him such as Tata Motor’s passenger vehicle business in India is “inherently fallacious to any unbiased observer”.
Mistry camp also refuted allegations of “significant issues of conflict of interest in relation to the Shapoorji Pallonji Group” saying “it is a smear campaign unworthy of either the Tata Group or a response, particularly when it (is) known that Mr Mistry had instructed all Tata companies not to enter into new contracts with that Group”.
Insisting that the Nomination and Remuneration Committee (NRC) of Tata Sons lauded Mistry’s performance on June 28, the sources said the NRC’s report was adopted by the complete board the following day.
“Tata Sons is yet to state what necessitated the replacement of Mr Mistry on October 24 without any notice or an opportunity to defend himself,” a source said.
Calling the Tata Sons statement as a reflection of “desperation”, a source said: “All the ‘reasons’ in the letter, would have, and should have, been tabled and recorded in the minutes of the many Tata Sons board meetings held over four years of Mr Mistry’s Chairmanship. Unfortunately for them, no such record exists because these allegations are simply not true.”
‘Cyrus betrayed our trust, tried to grab control of main cos’
Launching a scathing attack on ousted chairman Cyrus Mistry, Tata Sons on Thursday accused him of betraying trust and trying to seek control of main operating firms of the over USD 100 billion group. In a nine-page statement, the promoter of the major operating Tata companies made a point by point rebuttal to the letter which Mistry had written to its board members a day after he was ousted on October 24.
Tata Sons accused Mistry of trying to gain control of the Indian Hotels Co Ltd — the firm that runs Taj Group of Hotels — by using independent directors. Mistry-headed IHCL, where Tata Sons holds just 28.01 per cent stake, had last week in a filing to stock exchanges stated that independent directors have backed the Chairman and his leadership.
“In hindsight, the trust reposed by Tata Sons in Mr Mistry by appointing him as the Chairman four years ago has been betrayed by his desire to seek to control main operating companies of the Tata group to the exclusion of Tata Sons and other Tata representatives,” the Tata Sons statement said.
It accused Mistry of demolishing the historic management structure where Tata Sons exercised control over its group companies.
“We now have an unacceptable new structure where the Chairman alone is the only common Director across several companies and this situation could not be allowed to go on,” it said.
Punching holes into Mistry’s performance over four years, it listed Tata Steel Europe, DoCoMo-Tata Tele joint venture and Tata Motors’ Indian operations as “problem companies” where there was no “noticeable improvement in operations” and the situation has worsened with widening losses, increasing debt and declining market share. “Even with no turn-around...the only action taken was to write-off huge amounts against these companies,” it said.