Mumbai: Adding a fresh twist to the nearly two-month-old battle with Tata Sons Ltd, Cyrus P. Mistry on Monday announced his decision to not contest the forthcoming extraordinary general meetings (EGMs) and instead step down from the board of all the operating companies where he is a director.
In his first media interaction since the boardroom putsch that forced him to exit, Mistry said he is shifting gears and taking the fight with Tata Sons to a bigger platform, hinting, perhaps, at legal challenges to come. He said Tata Sons’s coercive behaviour and uncertainty facing the shareholders had made him decide to quit. Edited excerpts:
What prompted this decision to step down?
I think the reason for the decision is wedded in the history of the Pallonji family, which has always supported the Tata group. What I have seen in the last eight weeks is a significant coercive behaviour from Tata Sons with employees and other stakeholders, and as you see in their EGM notice, a threatening attitude, creating a situation of tremendous unease.
My belief is that from here, the platform has to change to the legal side to ensure we protect the shareholders. The output is still the same—what we are ensuring is governance reform and ensuring the ethical values of the founder... I will continue to pursue that very vigorously. What we have seen in the last eight weeks as far as the EGMs are concerned—the process has shown a lack of governance which I have detailed out. It has thrown up many ethical issues that have come to the fore. What we also saw in the last eight weeks is the huge amount of uncertainty, which I wanted to put to bed.
What was the trigger for the move to step down?
There was no trigger. One has to reflect from time to time. What we have achieved so far, is to initiate a dialogues for change and reform. What one would achieve by going ahead with the EGMs would be more destructive than productive.
History shows that we have always looked at the best interest of the group. I believe the best interest of the group will be served by taking this to a new platform.
I can’t discuss the legal strategy, but you will see it unfold.
What would be the status of the EGM (of Indian Hotels) which was to take place tomorrow (Tuesday)?
I think the EGM will be cancelled.
What other steps will you take to ensure that all these governance reforms are carried out?
We have brought the dialogue on the table, both from the point of view of governance and ethics, and I think that is today in people’s minds. I believe you will see shareholders in the near future demanding (better) governance.
Have there been any instances that make you feel that some of this has already come to the fore?
Yes, I think I will not go into the details of which one, but there have been instances of that.
And I think also what is important was to first take me out of the equation because if I am in the equation, it gets clouded. I want to take myself out of the equation to make sure this is not a battle about me; this is effectively a battle for company governance reform. So by doing so, I have taken myself out of the position. I have been consistent if you see on the same thing—in my EGM, in my representation.
Again, I have reiterated this in my letter to the TCS (Tata Consultancy Services Ltd) shareholders. Many shareholders are ready to abstain to send a message to the company that this is not something that they wanted to do.
Would Mr Wadia’s moves have had an impact?
Mr Wadia has taken his own independent decision, and I think Mr Wadia might well continue with his position.
His position is different from mine; his position is from an independent director’s point of view, and, clearly, the fact that I am not contesting the EGM, strengthens his position because there is no question of him supporting me. I think he has always been for the institution of independent directors and that’s the fight that he will continue I am sure.
What’s the end game in terms of governance reforms that you want to achieve?
I think from my perspective what’s important is that the (Tata) Trusts themselves look at an appropriate governance structure, whether that’s including succession planning, decision-making, and the interface with Tata Sons.
Tata Sons itself at the board (level) has to reform and understand how it interacts with the Trusts and with the operating companies. And I think that’s the part of the reform that needs to happen on the governance side. If you look at it on the ethics side, I think people who have been involved in any unethical actions have to vacate office. I think that’s crucially important.
Why did it take you so long to raise these issues?
If you look at it, all of these issues, whether they are governance reform and ethics, are exactly what I have been raising in Tata Sons. My role in Tata Sons is actually to raise those issues. My shareholders representation has raised the same issues. I have raised those issues again in the TCS letter, so I have been consistent.
You will also see that in my statement and you will see that statement in the video (Editor's note: Mistry released a video on Monday explaining his position) that effectively these were part of the board agenda the day that I was removed, and most probably a part of the reason I was removed as well.
Did you these issues before the 24 October board meeting?
The governance issues have been raised for a long time; the debate on performance of governance or structures of governance have been there for more than six months may be close to a year.
You said in your letter that Ratan Tata said the reason (for removal) will go down with him to his grave...?
I am waiting. Eight weeks have gone by today, have you heard a cogent statement? I’m waiting.