Tata-Mistry war of words continues; focus on governance

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Despite some recent murmurs around a possible rapprochement between Tata Sons and ousted Tata group chairman Cyrus Mistry, the war of words between the two sides shows no signs of abating.

The Tata group companies will see a slew of extraordinary general meetings (EGMs) beginning December 13 with that of Tata Consultancy Services, called to oust Mistry from the board.

Talk of some kind of rapprochement between the warring sides had come up a few days ago, but the recent escalation of the battle – being fought by way of media statements from both sides – suggests a patch-up isn’t on the horizon at least for now.

The latest charges and counter charges have been traded after Mistry’s lengthy letter to Tata Group shareholders and Tata Sons’ response.

On December 6, Mistry’s office once again released a statement saying he was fighting “to protect the Tata Group from capricious decision-making by the Interim Chairman.”

The Mistry statement went on to add: “The statement [by Tata Sons] itself records that Mr. Mistry’s family holds over 18 percent interest in Tata Sons. If he were to indeed seek to make Tata Group companies break away from Tata Sons, he would have been hurting his own family’s financial interests.”

Once again pointing to the aspect of governance in the entire issue, Mistry’s office says “it is in fact these individuals prone to impulsive control who have inflicted severe damage and enormous financial loss to all stakeholders of the Tata Group, including shareholders.  They have also exposed the Tata Group to perilous violation of regulatory requirements, seeking to procure unpublished price sensitive information from listed Tata Group companies, breaking down governance.”

“Never before has the Tata Group including the philanthropic objectives of the Tata Trusts been in jeopardy to this extent and scale,” Mistry’s latest salvo added.

Tata Sons, on its part, shot back again with a short but strongly worded statement.

Hitting out at Mistry’s continuance on the boards of the group companies, a Tata Sons group spokesperson said: “The same Corporate Governance Guidelines, Mr. Mistry’s office is referring to, prescribes that a Tata employee must step down from the boards of Tata companies, after he ceases to be a Tata employee. After being replaced as Chairman of Tata Sons, Mr. Mistry ceases to be a Tata employee. It is he who is violating the Guidelines that he himself propounded, and not Tata.”

Clearly, with the EGMs round the corner, a section of independent directors in group companies also backing Mistry as chairman and Tata Trusts also being concerned about the over-dependence of the group on TCS, the stage is set for the next round of hostilities between the two sides. With Life Insurance Corporation, an important shareholder in many Tata companies, showing no signs of which way it will vote at the EGMs, some of the meetings may turn into cliffhangers. The government, on its part, is reported to have said it will not interfere in any manner in the fracas.

As the battle plays out in one of the country’s most important corporate houses, Corporate India is bracing for a hot December.