In a dramatic turn to India's biggest boardroom spat, ousted Tata Sons chairman Cyrus P Mistry today quit from boards of six key operating companies of the group but not before launching a scathing broadside against Ratan Tata and vowing to shift his fight to a "larger platform".
Mistry, who had continued to be on boards of operating companies even after his ouster as Chairman of the holding company Tata Sons on October 24, again raked up "breakdown of governance" and questionable dealings including release of more funds to airline venture Air Asia under interim chairman Ratan Tata despite "findings of fraud and wrong-doing".
"It has now been eight weeks, waiting for concrete reasons to be provided by Mr. Ratan Tata for the illegal coup he staged on the 24th of October. Nothing cogent has been forthcoming," he said.
In a statement and a video recorded message, he said, "Having deeply reflected on where we are in this movement for cleaning up governance and regaining lost ethical ground, I think it is time to shift gears, up the momentum, and be more incisive in securing the best interests of the Tata Group."
He added that with this thought in mind, "he decided to shift this campaign to a larger platform and also one where rule of law and equity is upheld".
Mistry's statement comes ahead of five Tata companies -- Indian Hotels, Tata Steel, Tata Motors, Tata Power and Tata Chemicals calling extraordinary general meetings starting from tomorrow to oust him as a director on company boards after Ratan Tata, a scion of the conglomerate's founding family, replaced him as chairman of the group's holding company.
Tata Consultancy Services has already voted to remove Mistry from the board while two unlisted firms including Tata Industries too have removed him.
In separate regulatory filings, operating companies, including India Hotels, Tata Motors and Tata Steel said Mistry has resigned from their respective boards with immediate effect.
Ratan Tata and Noshir Soonawala, Trustees of Tata Trusts, who had retired from Tata Sons after multiple extensions, have refused to give up participation in key decisions involving Tata Sons and the operating companies, thereby "exposing the Tata Group including the Boards of Directors of various listed companies to serious regulatory consequences."
Mistry said he had raised the issue of recovery of large sums of money due from one Sivasankaran to Tata Sons in the September 15 Board Meeting, securing approval to litigate.
"Within a few days, Tata Sons received a legal notice instead - clearly indicating a leak from Tata Sons," he said adding despite him tabling a forensic report containing "findings of fraud and wrong-doing at Air Asia India", further funds were released under interim chairman Ratan Tata.
"Under the Interim Chairman Mr. Ratan Tata, a subsequent
Board Meeting of Tata Sons was held on November 17th. With full knowledge of the fraud, further funds were released to Air Asia India. Yet, no concrete steps, expected of an ethical organisation to fix responsibility for the fraud have been taken till date," Mistry said.
Discussion on his forensic report on wrong doing in Air Aisa never happened, he said.
"These are but some live examples. We all are aware of the 2G Spectrum scam and its unfortunate imprint on the reputation of the Tata Group. Even today, we hear of potential prosecution of those involved from the Tata Group," he said.
Stating that bringing to the fore these ethical issues can have "a short-term adverse impact" on the Tata Group, Mistry said he feels strongly that such short-term pain is necessary for the long-term interests of employees, public shareholders and other stakeholders of the Tata Group.
"As a large shareholder of Tata Sons and a proud long- term partner, my family will also equally suffer this pain," he said.
Even though being replaced as chairman of Tata Sons on October 24, Mistry continued to be on board of the operating companies, including heading some of them.
Following his refusal to step down from the board of operating companies, Tata Sons had asked the operating companies to call for EGM to remove him as a director.
While experts said the EGMs will have to go as per schedule, the outcome will have no material bearing except in case of companies like Tata Steel where Tata Sons is also seeking removal of independent director Nusli Wadia, who has openly sided with the ousted Chairman.
Mistry, 48, said the objective of effective reform and best interests of employees, shareholders and other stakeholders of the Tata Group "would be better served by moving away from the forum of the extraordinary general meetings".
Calling his predecessor Ratan Tata coming back as interim chairman after his removal from Tata Sons as "illegal coup," Mistry said he had in his representation to shareholders detailed, "supported by documents, the governance breakdown in Tata Sons caused by actions of trustees of Tata Trusts."
"In recent weeks, the conduct of those at the helm of affairs has further unmasked the absence of ethical standards," he said.
Terming his fight as "movement for cleaning up governance and regaining lost ethical ground," he said, "It is time to shift gears, up the momentum and be more incisive in securing the best interests of the Tata Group."
He said he has decided to "shift this campaign to a larger platform and also one where the rule of law and equity is upheld".
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Though Mistry did not elaborate on the platform, commentators said he might be considering moving courts against his ouster.
"I had initially not thought that one would need to seek an external forum to adjudicate issues that should never have arisen in the first place," he said. "I believe my actions today are consistent with protecting the long-term interests of the Tata Group."
Mistry said "by removing" himself from the EGMs, he is seeking to reinforce his consistent position that "this is not a fight for a position but a fight to more effectively secure long-term reform to keep the Tata Group on a sustainable path."
"Mr. Ratan Tata and Mr. Noshir Soonawala, Trustees of Tata Trusts, who had retired from Tata Sons after multiple extensions, have refused to give up participation in key decisions involving Tata Sons and the operating companies, including those listed in India and abroad," he said.
He thanked stakeholders for their support and urged them to continue to ask the right questions and demand the right actions.
"Events of the past eight weeks have been about saving a legacy. A legacy of values and ethics inherited from the founder of the Tata Group, Jamsetji Tata," Mistry said.
Tata Trusts, which controls about 66 per cent of Tata Sons, wielded no voting power until about 15 years ago. Company law vested voting power in the hands by public trustee appointed by the government who would decide how to vote shares held by the public charitable trusts.
"My family's voting strength constituted the largest minority voice outside the government. In this role, over the decades, we consistently implemented the values and ethics of Jamsetji Tata and our actions protected this incredible institution," he said.
