From Nano to Corus: Allegations Cyrus Mistry has laid on Tata


The nearly 150-year-old Tata Group enjoys a special place in India’s corporate history – thanks to its stellar reputation on matters of ethics and integrity.
But its image took a dent after the group’s parent firm Tata Sons unceremoniously ousted Cyrus Mistry as its chairman in October 2016.

The genesis of the conflict lies seemingly in a power struggle between Mistry and Ratan Tata, who the former says continued to exercise an outsize executive role in the affairs of group companies, after stepping down as chairman a few years ago.

As the boardroom battle spilt into public domain, accusations and counter-accusations flew thick but Mistry has particularly levelled a number of serious allegations over the way the Tata Group has been run.

Recently, he filed an affidavit in the National Company Law Tribunal (NCLT) saying corporate governance had broken down in the group.

Here are some of the most sensational allegations Cyrus Mistry has hurled.

Invalid and illegal dismissal

In a letter to the Tata Sons board soon after his sacking, Mistry said he was “shocked beyond words at the happenings at the board meeting of October 24, 2016,” and said his sacking was “invalid and illegal”.

“To replace your Chairman without so much as a word of explanation and without affording him an opportunity of defending himself, in a summary manner must be unique in the annals of corporate history,” he wrote in the letter, which was leaked to the media.

A ‘lame duck’ chairman

Mistry alleged that at the time of his appointment as chairman, he was promised a free hand. However, the firm’s Articles of Association were modified later, which led to the creation of alternate power centres in Tata Group, and pushed Mistry into becoming a ‘lame duck’ chairman.

In the same letter, Mistry raised grave concerns over corporate governance issues, and said the group may have been exposing itself to violation of insider trading norms by after Tata Trusts representatives Nitin Nohria and Vijay Singh stepped out for almost an hour during board meetings to “obtain instructions from Mr Tata” – and presumably discuss financials.

Nano kept alive for emotional reasons

Mistry said that the Nano project, a brainchild of Ratan Tata, had consistently lost money and said it is being kept alive due to emotional reasons.

He also made an implicit reference to a conflict of interest when he said the Nano was not being shut down because “it would stop the supply of the Nano gliders to an entity that makes electric cars and in which Mr Tata has a stake”.

Tata’s passion for airlines behind aviation foray

Mistry also suggested that Ratan Tata’s passion for aviation was behind the decision by Tata Sons to foray into and increase investment in its AirAsia and Vistara joint ventures. My “pushback to the group’s foray into aviation was hard but futile,” he wrote.

Ethical concerns over transaction in AirAsia

“A recent forensic investigation revealed fraudulent transactions of Rs 22 crore involving non-existent parties in India and Singapore. Executive Trustee Mr Venkataraman (sic), who is on the board of Air Asia and also a shareholder in the company, considered these transactions as non-material and did not encourage further study,” Mistry said.

“It was only at the instance of the independent directors, one of whom immediately submitted his resignation, that the board decided to belatedly file a first information report,” he added.

Docomo transaction raises several questions

Mistry – who drew flak for handling Tata Group’s dispute with Japanese mobile phone operator Docomo — questioned the legality of the Group’s deal by saying “the original structure of the transaction raises several questions about its appropriateness from a commercial or prudential perspective within the then prevailing Indian legal framework”.

Corus deal

Mistry blamed Ratan Tata’s ‘ego’ for striking the 2007 Corus deal at a very high price. “Ratan Tata’s decision to acquire steelmaker Corus for more than USD 12 billion, when a year earlier it was available at half the price, went against the reservations of some board members and senior executives,”.

He further said Tata had tried selling TCS to IBM — a ‘near death experience’ for group’s crown jewel. He added that JRD Tata declined the offer.

Vijay Singh and his alleged role in Rs 3,600 crore AgustaWestland scam

In January 2014, India scrapped its defence pact with AgustaWestland for alleged breach of contract and indulging in kickbacks.

Mistry said Vijay Singh, a Nominee Director in Tata Sons, was directly involved in the Rs 3,600 crore AgustaWestland scam.