Tata Sons on Sunday said that Cyrus Mistry’s continuance on the boards of various group companies is likely to lead to fragmentation of the group.
It also said that Mistry had misled the selection committee set up in 2011 to pick the Chairman of Tata Sons and therefore needed to be removed from all positions he held within the group.
In a note to the shareholders of all group companies, Tata Sons said that Mistry had made “lofty statements” about his plans for the Tata Group.
“After waiting for a period of four years, almost none of these management structures and plans have been given effect to. Clearly, in our opinion, the selection committee was misled in its choice of Mistry,” Tata Sons said in its statement.
The Tatas also blamed Mistry for going back on his commitment to distance himself from his family enterprise, Shapoorji Pallonji Group. “Mistry retracted his position and indicated that he could not find a way of doing so. Such conduct by Mistry was inappropriate and created a sense of breach of trust on his part. This retraction created grave concerns on Mistry’s ability to lead the Tata group devoid of personal conflicts and put to risk the high standards of selfless governance, that lie at the core of the Tata philosophy,” it said.
Tata Sons said that on the one hand, Mistry was alleging Tata companies faced legacy issues, and on the other, he was seeking to entrench himself in the boards of such Tata companies, whilst making false allegations against such companies.
“In our opinion, his actions are driven by a perverse motivation to cause harm to the “Tata” brand and to intentionally erode shareholder value,” it said.
The Tatas said that Mistry is going against the Governance Guidelines Framework, which he had introduced in 2015.
“There is a clause to the effect that all employees of a Tata company should, after their employment ceases, immediately resign from the boards of all Tata companies where they are functioning as Non-Executive Directors. “Therefore Mistry, on ceasing to be the Executive Chairman of Tata Sons, should have immediately resigned from the boards of all other companies under his own guidelines. Yet he has chosen not to do so in wilful breach of the Governance Guidelines Framework.”
Tata Sons said that Mistry’s criticism of corporate governance with regard to the Tata Trusts comes from “total lack of knowledge and understanding of the role of the Tata Trusts.”
Mistry’s response Responding to Tata Sons’ statement, Mistry’s office said: “Repeat a lie a thousand times and hope it becomes a truth, seems to be Ratan Tata’s last-ditch effort to overcome a monumental disaster his actions have unleashed.”
“Mistry did not sit on a single board of the SP group other than his family investment company. New engineering and construction contracts from the Tata group to the SP group came down to nearly zero from the level of ₹1,100 crore when Mistry had assumed office,” Mistry’s office said.
“Ratan Tata’s conduct has eroded the Tata brand and values materially. Mistry’s family, as the owner of over 18 per cent interest in Tata Sons, is as injured by any injury caused to Tata Sons.
“Far from hurting the Tata Sons businesses intentionally, Mistry is saving the Tata group from the whimsical ineptitude of Ratan Tata,” it added.