“Ratan Tata Shouldn’t Be Holier Than Thou” Says Governance Advisory Firm Founder Anil Singhvi
Ratan Tata himself made many mistakes during his term as chairman, says Anil Singhvi.
The manner in which Cyrus Mistry was sacked as Chairman of Tata Sons has never been seen in the corporate world, according to corporate veteran Anil Singhvi, the founder of Institutional Investor Advisory Services (IIAS), a firm that consults on corporate governance and proxy advisory matters.
“Never Seen Such A Dismissal In All My Career”
“Tata Sons seemed to have worked more like a pedestrian company,” whereas it should’ve set an example for industry on how to deal with such situations, Singhvi said in an interview to Bloomberg Quint’s Menaka Doshi.
“Mistry Was Caught Unaware”
Cyrus Mistry may have been completely unaware of the fact that he was about to be replaced, said Singhvi, citing personal information that BloombergQuint has not been able to confirm. He claimed Mistry was to travel overseas on Saturday for some “very complicated business transaction.”
Singhvi said had Mistry been aware that he wasn’t doing well and that the board wasn’t satisfied with his work then he wouldn’t have scheduled a transaction of such a nature right before the board meeting on Monday.
He went on to criticize the process of Mistry’s sacking and expressed surprise that the chairman of a $100 billion group was dismissed as easily as any ordinary entrepreneur, say shopkeeper, who’s been replaced overnight because he allegedly wasn’t running the shop well.
On Ratan Tata
Singhvi criticised interim Chairman Ratan Tata’s role in the dismissal of Mistry, saying that Tata had made many mistakes after he succeeded JRD Tata as chairman.
Mr. Ratan Tata today is held in very high esteem, but when he joined soon after JRD, he ran into a lot of controversies whether it was Darbari Seth or whether it was Ajit Kelkar and Russi Mody. Even Indian Hotels hasn’t recovered since then.Anil Singhvi, Founder, IIAS
When asked if he agreed with the Tata Sons board’s assessment that Mistry was unable to resolve the many challenges facing the Tata Group, Singhvi said “I think it is very uncharitable to take the view that Mistry botched Tata Steel and Docomo matters”.
In the matter of the Tata vs NTT Docomo case, Singhvi also said that it wasn’t Mistry’s fault but yet he was trying to resolve a “very funny” deal that the Tatas had made in the past.
How A Board Sacks A Chairman
The law is clear on how a chairman of a board is to be replaced, says Singhvi, suggesting that the events of October 24 don’t quite add up. While describing the process of such a replacement Singhvi wondered how the matter was brought up for discussion or voting without the chairman’s (Mistry) approval.
Will Mistry Continue As Director Of Tata Sons?
Tata Trusts are the majority shareholders in Tata Sons, with a combined 66 percent shareholding. 18 percent of the Tata Group holding company is owned by the Shapoorji Pallonji Group.
Singhvi points out that such public charitable trusts function under the charitable acts of the respective state governments and ordinarily their trustees do not have voting rights.
He says such voting rights are only invoked by a charity commissioner when he has enough reasons to do so. Thereby suggesting that the Tata Trusts can vote only if the charity commissioner gives an approval. BloombergQuint has yet to confirm the due process in such a matter.
But the Shapoorji Pallonji family is not bound by any such approval, hence, if they decide to challenge the decision to dismiss Mistry, it would be a messy situation, Singhvi explained.
He also discussed potential scenarios - whether Mistry would continue as director on the Tata Sons board and his replacement on the boards of other listed Tata Group companies.