Hitting out at Ratan Tata, ousted chairman of Tata Sons Cyrus Mistry on Thursday said conferment of all decisionmaking power in one man or a “high command” is unethical, improper and breach of trust. Mistry, in his representation to shareholders contesting his removal as the director of Tata Consultancy Services, said future of the Tata Group lies in how the trustees govern the Tata Trusts.
“Trustees are required to discharge their fiduciary duties by applying their minds to matters before them, questioning, testing, debating, checking and balancing. The conferment of all decision making power in one man or a high command among them is unethical, improper and a breach of trust,” he said.
He further said: “It is critical that serious decisions of severe magnitude and consequence are not taken whimsically, without much thought, or for unstated collateral objectives.
It is necessary to have a strong method of checks and balances in the trustees’ decisions, particularly if decisions they take could indirectly give them personal benefits.”
He also alleged that Ratan Tata and former vicechairman of Tata Sons N A Soonawala dictated the trusteenominated directors as to how Tata Sons should conduct itself.
“They interpreted the Articles of Association to mean that they could call for information and seek discussions on any subject they considered material. In the view of these trustees, the board of Tata Sons was answerable to them and through the trusteenominated directors, they could not only call for such information but also dictate what decisions must be taken by Tata Sons,” he said.
Mistry added that he “did not join the Tata Group to craft a personal image for myself”, but was determined to make the “Tata Group stronger and resilient to endure future challenges”.
On November 10, Tata Sons removed Mistry as chairman of India’s largest software services firm, Tata Consultancy Services (TCS). Tata Sons holds a 73.26 per cent stake in TCS.
The Tata group has now said that Cyrus Mistry had converted the group into his personal fiefdom, which finally led to his ouster as chairman.
In a statement, the Tatas said Mistry repeatedly referred to the need for the highest norms of corporate governance, but long before the phrase became fashionable to talk about, most Tata companies already had a good track record on this count.
The statement alleged that after he became the chairman of Tata Sons, Mistry converted the group into his personal fiefdom, with unilateral actions destroying precious institutional memory of the House of Tata.
Although the Tata Trusts interact with 450 NGOs and with more than 1,000 people in the field, he chose to isolate the Tata Trusts and duplicate the infrastructure solely responsible to him for various socalled new initiatives, it added.
Commenting on Tata Trusts and their structure, the Tata statement said: “The Trusts are governed by the individual wills of Jamsetji Tata, his two sons, Sir Dorabji Tata and Sir Ratan Tata, and other founders. The Trusts have been scrupulously following the mandates set out in the Wills. That is the reason the different Trusts continue in existence for decades.”
The Tatas said Mistry has gradually over the past three/four years concentrated all power and authority only in his own hands as chairman in all the major Tata operating companies where there is no longer any representatives from the Board of Tata Sons, the main promoter and largest shareholding group, as has always been the case in the past.
Mistry was appointed the chairman of various Tata operating companies only as a corollary to his chairmanship of the parent company, Tata Sons, which has been a longstanding convention in the group. Therefore, when he was removed as the chairman of Tata Sons, any other person would have stepped down from the chairmanship of the Tata operating companies because he no longer enjoyed the support of the principal shareholders of Tata Sons.
Instead, Mistry has chosen to fight this in the media even at the cost of hurting and damaging the Tata group, including Tata companies, even while remaining as its chairman, said the Tatas.
The Tata group has enjoyed the confidence of generations of shareholders for more than a century. The shareholders of Tata group companies are eminently qualified to see through the smokescreen of baseless allegations being passed off as an appeal to shareholders, the statement noted.