Tatas rubbish Mistry claims ... but brand takes pounding
Stung by former Tata Sons chairman Cyrus Mistry’s letter to the Board of Directors in which Mistry elaborated how he was reduced to being a ‘lame duck’ chairman on crucial issues ranging from loss-making Tata Nano project to bleeding telco business, Tata Sons’ reply on Thursday focused more on the damage done to the public image of the country’s largest business conglomerate. Shares of Tata Group companies have dropped by up to 5 per cent and investors lost over Rs 25,000 crore in Tata Group companies during past two trading days. Clearly, it’s brand Tata that is taking the hit of the public spat between the ex-chairman, Mistry and the Tata group.
Reacting strongly to several allegations made by Mistry in his letter to the Board members, Tata Sons said: “It is unforgivable that Mr. Mistry has attempted to besmirch the image of the group in the eyes of the employees”.
Hitting out at Mistry for making ‘unsubstantiated claims and malicious allegations’, Tata Sons on Thursday said the former chairman was fully empowered to lead the group and its companies but had “overwhelmingly” lost the confidence of board members.
With the contents of Mistry’s letter, which he wrote to its Board members after being sacked, becoming public, Tata Sons regretted that “a communication marked confidential to Tata Sons board members has been made public in an unseemly and undignified manner”. The promoter company of the major Tata group companies also alleged that Mistry’s tenure was marked by repeated departures from the culture and ethos of the group.
“The correspondence makes unsubstantiated claims and malicious allegations, casting aspersions on the Tata group, the Tata Sons board and several Tata group companies and some respected individuals. These will be responded to in an appropriate manner,” Tata Sons said in a statement.
The company also rubbished Mistry’s claims that he was made a ‘lame duck’ Chairman. “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 statement 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, it added. “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 Son said. Stating that Mistry has been on the Board of the company since 2006 and was appointed Deputy Chairman in November 2011 and formally appointed Chairman on December 28, 2012, Tata Sons said he would be fully familiar with the culture, ethos, governance structure, financial and operational imperatives of the group as well as its various companies.
Tata Sons described Mistry’s letter as an effort to level accusations against individuals and company boards for “ignoring corporate governance norms” that were supposedly upheld by him while in office. It further asserted that there was a multitude of records to show that the allegations made by him were “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,” the statement added.