(Bloomberg) -- Cyrus Mistry, the ousted chairman of Tata Group, accused its biggest shareholders of eroding governance at India’s largest business empire and portrayed himself as a defender of independent decision-making in a letter to investors in Tata companies. The conglomerate refuted his allegations.
Mistry made his appeal on Monday before a series of extraordinary general meetings from Dec. 13 to Dec. 26, which were sought to remove him as a director from six companies including Tata Power Ltd. and Tata Motors Ltd., owner of Jaguar Land Rover. The investor votes were called after Mistry resisted efforts to step down as chairman of key group companies following his Oct. 24 removal as head of holding company Tata Sons Ltd.
In a 14-page missive, Mistry accused family patriarch Ratan Tata and NA Soonawala, trustees of charitable organizations that own a majority stake in the holding company, of overstepping their roles and attempting to improperly control decision-making. Tata Sons charged Mistry with concentrating power and authority in his own hands and diminishing the role of its board. The feud between Mistry and Ratan Tata has escalated since a boardroom coup that brought the latter back to the head of the $100 billion Tata empire.
|Companies||EGM Date||Mistry’s Post|
|Tata Consultancy Services||Dec. 13||Director|
|Indian Hotels||Dec. 20||Chairman|
|Tata Steel||Dec. 21||Director|
|Tata Motors||Dec. 22||Chairman|
|Tata Chemicals||Dec. 23||Chairman|
|Tata Power||Dec. 26||Chairman|
“The Tata Group is no one’s personal fiefdom: it does not belong to any individual, not to the trustees of Tata Trusts, not to the Tata Sons directors, and not to the directors of the operating companies,” Mistry wrote in the letter. “Governance reform is a must at the level of Tata Sons, and even more importantly at the level of Tata Trusts.”
Tata Sons, in a two-page rebuttal said that “genuine selfless governance” had driven the group for over a century.
“After he became the chairman of Tata Sons, it is Mr. Mistry who converted the group into his ‘personal fiefdom’, with his unilateral actions destroying precious institutional memory of the House of Tata,” Tata Sons’ said in the e-mailed statement Monday.
The response followed Mistry’s claim that Ratan Tata and Soonawala used board members of Tata Sons, nominated by charities started by the Tata family, to exert “indirect control” on the group. The two men interpreted the group’s articles of association to mean they could call for more information and seek discussion on any subject they considered material, Mistry wrote.
A third of directors on the Tata Sons board are nominated by the charitable trusts. If the trustees were to start managing the conglomerate’s business operations, overstepping the governance structure in place at Tata Sons, it would jeopardize their tax exemptions and may put the group’s future at risk, Mistry said.
Tata Sons rebutted, saying the trusts were governed by the individual wills of the group’s founders and have followed mandates set out in those wills. The statement accused Mistry of damaging the group and causing financial loss to shareholders by holding on to the chairmanship in operating companies and choosing to “fight this in the media.”
“Tata companies do not exist in a vacuum but benefit from being part of the Tata group which is most evident in times of difficulty,” according to the Tata statement. “It is all this that is at stake.”