The public spat between Tata Sons and Cyrus Mistry took an uglier turn on Thursday, when the company justified the sacking of its former chairman and referred to a trust deficit with Mistry who, it said, did not address concerns of the board members. The highly regarded company said Mistry had made “unsubstantiated claims and malicious allegations, casting aspersions on the Tara group, the Tata Sons board and several Tata companies and some respected individuals”.
In a hard hitting response to the sacked former chairman's communication to the board of Tata Sons, the company said, Mistry had complete autonomy to manage opportunities and challenges, but his tenure was marked by “repeated departures from the culture and ethos of the group”.
Stating that Mistry, who has been on the board of the company since 2006, was appointed deputy chairman in November 2011 and was formally appointed chairman of Tata Sons on December 28, 2012, the company said 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.” The statement went on to add that as the executive chairman, he was fully empowered to lead the group and its companies.
Bringing into play the eminence of people on its board, the company said, it was not a group of people who one would expect to act without exercising proper judgment in the best interests of the entities they sit on the boards of. "It is unfortunate that Mistry had overwhelmingly lost the confidence of the members of the board of directors for a combination of several factors.”
The directors of the Tata Sons board, according to the statement, had repeatedly raised queries and concerns on certain business issues, and trustees of the Tata Trusts were increasingly getting concerned with the growing trust deficit with Mistry. But, these were not being addressed, the company said, adding that the Tata Sons board, “in its collective wisdom, took the decision to replace its chairman in the manner undertaken.”
"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."
Tata Sons also said “ 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 statement pointed out that it was a communication marked confidential to the Tata Sons board members, and said it was a “matter of deep regret that the communication... has been made public in an unseemly and undignified manner”. They also said they would respond to it “in an appropriate manner”.
According to Tata Sons, the strength of the Group is not just confined to its value system and ethics in the board room but to a very large extent by the adherence to the values by its 600,000 plus employees whose spirit and cooperation has built the Group to where it is today. “It is unforgivable that Mistry has attempted to besmirch the image of the Group in the eyes of the employees”
“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. These allegations are not based on facts or the true state of affairs. It is convenient to put selective information in the public domain to defend one's point of view. There is a multitude of records to show that the allegations made by Cyrus Mistry are 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 interim Chairman Ratan Tata in his first interaction with senior leaders has stressed to them the need to continue focusing on building great businesses while emphasising on delivering strong shareholder returns. Board members of Tata Sons have in the past stressed on the need to be more decisively focused on bringing down debt, sharpening focus on both the portfolio and capital efficiency.
