Indrajit Gupta: Silence of the lambs

Till date, not a single credible reason has been put up by the august Tata Sons board for dismissing Cyrus Mistry as chairman

Cyrus Mistry’s recent letter to the Tata Sons board and the trustees of the Tata Trusts is devastating for any corporate watcher. 

If the assumption was that Mr Mistry would quietly resign and move on, that has completely boomeranged. And how. The entire cast of characters: The directors at Tata Sons, the trustees at Tata Trusts, the boards of some of the publicly listed Tata companies, and Ratan Tata himself, will have a lot of questions to answer from shareholders, employees, analysts and regulators.

Till date, not a single credible reason has been put up by the august Tata Sons board for dismissing Mr Mistry as chairman. Except for some rumblings on television about unnecessary divestments from a battery of celebrity lawyers, a particular lobbyist of dubious reputation and some ham-handed attempts to plant stories in the media.

Instead, Mr Mistry’s riposte is direct, clinical and factual. And thanks to social media, it has been more widely read than any legal route would have managed to achieve. There will certainly be a response to his letter in some form or manner. Whichever way this goes, be rest assured that the institutional damage to the Tata group will be incalculable.

There are a number of pertinent questions that this sordid Tata-Mistry saga raises.

1. What was the evidence of wrong-doing and poor performance that was placed before the board to demand Mr Mistry’s ouster? Was it tabled, discussed and minuted, as part of due process? Especially, when the nomination and remuneration committee at the board is said to have lauded his contribution a few weeks ago.

2. Even if there was clear evidence to suggest that he resign, why was this additional item sneaked into the agenda and not shared in advance with Mr Mistry, who was to chair the meeting? Such subterfuge raises suspicion and does little to inspire confidence that the spirit of the governance process was followed, especially at the highest echelons of the Tata group.

3. Mr Mistry has raised some serious ethical questions about two high-profile projects, where he was given no option but to fall in line: The aviation JVs with Air Asia and Singapore Airlines and the Nano small car project. And he has suggested that Mr Tata had his own personal business interests tied to the continuance of the Nano project. If this is true, has this potential conflict of interest ever been clearly disclosed to shareholders? And was there enough of a business plan, beyond mere hubris, to open up a new frontier in the aviation business? If the chairman himself wasn’t convinced about the feasibility of the plan – but forced to accept it as a fait accompli – does it not amount to a clear subversion of the governance process?

4. In the same aviation transactions, there have been questions of impropriety raised about certain fraudulent transactions, worth nearly Rs 22 crore, conducted between non-existent persons in India and Singapore. What is the current status of the investigation following the first information report on those transactions? Why was the managing trustee R Venkatraman trying to paper over them?

There will be more prickly questions that will invariably pop up. It will be a messy boardroom battle, the likes of which we have perhaps never seen before. A lot more dirty linen could get aired in the days and weeks to come, before any kind of cleansing process can begin.

In the middle of this brouhaha, a seasoned business leader raised a valid question in a conversation over SMS: Couldn’t Mr Mistry have walked out with a handshake, a smile and silence? His point: When have such fights has ever served a purpose anywhere? Never overstay the welcome. After all, it only makes for entertainment for onlookers and damages the enterprise you called your nation, your cause, your purpose, until the last press meet or the town hall.

My response was simple: At least we now know what was really going on inside. Or else, none of this would have ever come out. After all, isn’t sunshine the best disinfectant? At least, this way we wouldn’t continue to live in our mythical world, where we treat our renowned business leaders as royalty. Because, it serves very little purpose.

And if there is one larger point that is worth mulling over, it is this: We as Indians, seem to place more trust on individuals, rather than commit ourselves to building stronger institutions. Be it in business, sport or politics, we raise our leaders to the level of a super hero and end up deifying them, instead of strengthening the governance of our institutions and the rules by which they ought to be managed. And time and again, when these very same leaders appear to have feet of clay, we cry foul, almost as if we have been deeply let down. Let’s wake up and smell the Tata coffee.

The writer is co-founder at Founding Fuel, a new generation media and learning platform aimed at serving a community of entrepreneurial leaders