There’s no love lost between Cyrus Mistry and the Tata board of directors.
A day after an explosive letter written by Cyrus Mistry to the Tata Sons board was leaked to the media, the Tata Group has hit back with a detailed statement regarding Mistry’s departure. The statement says that Mistry had “overwhelmingly lost the confidence of the Members of the Board of Directors”, and hence was removed from his position.
The letter also acknowledges the allegations made by Mistry in his letter. In particular, Mistry had said that there were irregularities in the way the group was run, and Ratan Tata was pulling the strings even while not being in charge. In his most serious accusation, Mistry had said that it was hard for the company to shut down its loss-making Tata Nano project because of Ratan Tata’s personal stake in a firm that Nano supplied gliders to.
Tata Sons seems to deny all allegations, saying that “there is a multitude of records to show that the allegations made by Mr. Cyrus Mistry are unwarranted and these records will be duly disclosed before appropriate forums.” It also added that “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.”
But the very fact that this statement exists hints that a public spat has already broken out – Mistry’s letter was leaked and carried by major news outlets yesterday, and Tata Sons has issued a public statement today. A war of words between a fired Chairman and his board is unprecedented in the 148 year old history of the Tata Group . No matter how this situation develops, the Tata Group’s reputation is taking a beating – and it’ll take a lot of work to fix it.
Here’s the full text of the statement:
Mr. Cyrus Mistry, the former Chairman of Tata Sons, has been on the Board of the Company since 2006. He was appointed Deputy Chairman in November, 2011, and formally appointed Chairman of Tata Sons on December 28, 2012. He would be fully familiar with the culture, ethos, governance structure, financial and operational imperatives of the Tata Group as well as various group companies.
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.
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. 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.