When I often pass by Bombay House in South Mumbai’s sleepy Homy Mody Street, I marvel that the $103 billion Tata Group has been so unobtrusive, so quiet a headquarters. But now, in an unwanted glaring spotlight, one of the world’s biggest conglomerates faces the biggest credibility crisis in its 148-year history.
When Cyrus Mistry (48) took over in 2012 as the youngest-ever chairman, I felt he represented the low-profile yet transparent Tata culture more accurately than his predecessor Ratan Tata.
Four years later, Mistry’s predecessor has remarkably become his interim successor, with Ratan Tata (78) taking back the reins after the Tata Board of Directors suddenly sacked Mistry in October 24 – with no reasons officially given.
Abruptly ejecting the chairman of 660,000 employees worldwide was perhaps a first-of-its-kind event in corporate history, unprecedented even in Asia’s family dominated businesses and often patriarchal conglomerates.
The Bombay House “coup,” as sections of India’s stunned media called it, was even more shocking because Tata is big on corporate governance and ethical business practices. It’s the dimming of a rare beacon of trust in India’s muddied corporate world.
In happier times. Ratan Tata (left) with Cyrus Mistry
Sacking the Tata House chairman without notice seems like a family at breakfast suddenly collaring the head of the family, and throwing him out into the street with baggage with no explanation given.
“Compassion is the key word,” Mistry had said in one of his rare interviews. “If there is one thing that I have absolute clarity on it is that the course of action selected should not undermine the moral contract with our larger employee base. As a result, I have chosen active transformation rather than revolution as our guiding policy.” Mistry in his exit from Bombay House was denied professional courtesy, leave alone compassion.
Mistry seems to have stirred the proverbial hornets nest in Bombay House, with his realistic approach to the white elephants the Tatas gathered during Ratan Tata’s merry trophy hunting worldwide (like the $12 billion acquisition of Corus Steel in 2007) and some ‘dubious’ deals.
Cyrus Mistry lays bare what @Swamy39 has said, Air Asia is illegal deal with fraudulent transactions.
His PIL case will prove it.
— Ishkaran Singh Bhandari (@Ish_Bhandari) October 26, 2016
In 2009, writing in Asia Times, I was among those having reservations over Ratan Tata’s over-eager global expansion with borrowed money; then I questioned his “world’s cheapest car” Nano project. The Nano has since become a dud in Tata Motors, dragging down a flagship Tata Group company.
Mistry inherited drastic problems that needed drastic solutions – and in the process he upset old power equations.
The publicly courteous Ratan Tata now risks being perceived as a ‘mafia’ boss pulling the strings from behind the scenes after he retired in 2012, than as a benevolent patriarch courteously giving advise only when his successor asks for it.
The Oxford dictionary defines mafia as “A group regarded as exerting a hidden sinister influence,” and the Mistry mystery pushes the Tata Group into that category. More so as the former chairman complained of his predecessor-successor interfering with his work.
However critical I was of Ratan Tata, until this past week I considered the Tatas as India’s most credible business group. After Mistry’s strange sacking, the House of Tata appears more as a den of power brokers crawling out of hidden dungeons of Bombay House, to fiercely protect personal fiefdoms.
Turning corporate governance code into practice
The Tatas are a unique corporate group, the only one in conglomerate history where the majority stakeholder is Mr. Philanthropy; charitable trusts own over 60% of Tata Sons, Tata Group’s holding company.
But charity, as is often said, begins at home. Bombay House seems to have forgotten its own core values in the Mistry episode. “We will be fair, honest, transparent and ethical in our conduct; everything we do must stand the test of public scrutiny,” the Tata Group says in its Corporate Governance credo.
But a mafia-like secrecy seems to be more at work, since Mistry’s frank email to employees – detailing in-house challenges – was an apparent reason for his being suddenly rendered jobless. Serious governance issues within India’s largest conglomerate has implications in Asia’s third largest and world’s seventh largest economy (by GDP).
Mistry’s plight has an irony. I was away from news and Internet October 22 to November 1 while at the Dhamma Pattana Vipassana Center; there on October 29 I mentioned of the Tata Group chairman coming for a Vipassana course, as many corporate leaders have done – without knowing then Mistry was no longer chairman.
A deeper undercurrent runs through this Tata saga, a lethal addiction to power, greed and misuse of wealth. For over two years, I considered emailing Cyrus Mistry to encourage Tata Group employees to take a Vipassana course – to help turn integrity policies into practice. Vipassana practice, meaning developing insight, changes negative habit patterns of the mind with inner experiential wisdom.
To turn corporate governance codes into practical reality, many governmental and private sector companies offer paid leave for their staff to attend 10-day residential Vipassana courses taught worldwide free of cost, including in countries as politically different as China and the USA, Iran and Israel.
Mistry now may have more time to see this 26-minute video of members of New York’s Harvard Business Club, at a special event in August 2000, asking Principal Vipassana Teacher Sayagyi U Goenka (1924 – 2013) a range of questions not usually heard in a gathering of tycoons and billionaires: how to be free from fear, depression; how to deal with ‘difficult people’ and situations:
Mistry’s difficult times may be a blessing in disguise for him, but the Tata Group may be condemned having as their next full-time chairman a ‘yes man’ nodding to various in-house vested interests.
Millions of well-wishers can only hope the Mistry saga in the Tata Empire across over 100 countries, is not modern day corporate preview of puppet emperors and the Praetorian Guard in the fall of the Roman Empire.