INDIA ABROAD DECEMBER 30, 2016 27 BUSINESS
he Tata Group was
started in 1868, when
the British ruled the Indian
subcontinent. The founder,
Jamsetji Tata, was a descen-
dant of Persian immigrants,
known as Parsis, who form a
tiny and vibrant community
in Mumbai. He began with a
trading business, and over
the decades the company
grew — building India’s first
steel mill, its first hydro-
electric power station, its
first locally made trains and
its first airline.
In 1903, Tata opened
India’s first luxury hotel
serving Indians, the Taj
Mahal Palace Hotel, which
is today considered a
national landmark. In 2008
the hotel was one of the targets of the dayslong
Mumbai terrorist attack by
Pakistani infiltrators that
shocked India and the
The company today has
its hand in almost every
business imaginable, from
consulting to automobiles.
Ratan Tata, the cousin of his
predecessor, took over the
company in 1991 at age 53.
He became the group’s fifth
chairman. He widened the
group’s international presence, acquiring Corus
Group, the Anglo-Dutch
steel company, in 2007 and
the Jaguar and Land Rover
brands in 2008.
Mistry — the first non-Tata family member to lead
the nearly 150-year-old
company — was elevated in
2012 after a two-year search.
However, in India’s tightknit Parsi community, the
ties can be close. Mistry’s
family, which owns a major
construction business, was
the biggest shareholder in
Tata Sons, with 18 percent,
and Mistry had been on the
board since 2006. His sister
is married to Tata’s half
– The New York Times
Continued from page 26
From a corporate perspective,
the most consequential allegations regarding Tata and the
group are those contained in the
33-page report from the Serious
Fraud Investigation Office asserting that Tata’s group was the real
applicant behind a telecom
license secured by Unitech, the
New Delhi real estate company.
A decade ago, India pried open
its notoriously dysfunctional
telecom market. In the days
before deregulation, it could take
a customer years just to get a
new phone number. People
would hang on to their phone
lines like family jewels and hand
them down to relatives.
Against that backdrop,
investors saw a once-in-a-genera-tion opportunity to build an
Indian phone empire. But applicants could seek only one license.
And the Tata Group had already
applied for a different one.
The report says that Tata,
“desperate to acquire the
license,” used Unitech as its front
in pursuit of a second license.
Unitech was one of the eight
companies granted licenses in
2008. But the Supreme Court
later ruled all the licenses illegal,
in part because government
investigations said that the
licensing fee paid by the companies was substantially below market rates.
Trial by special court
Fourteen people — including
India’s former telecom minister
and several Unitech officials —
have been on trial in a special
court on charges of cheating the
government by underselling the
licenses. A verdict is expected
early next year. All have said they
are not guilty.
Prashant Bhushan, a lawyer
and anti-corruption activist, in
2014 submitted to the Supreme
Court the government’s fraud
investigation report charging that
the Tata Group used Unitech as a
front for its telecom application.
He urged the court to direct the
Central Bureau of Investigation
to take up the case.
Bhushan also charges in the
court petition that the Tata
Group, in “glaring evidence of an
apparent quid pro quo” for a telecom license, transferred property
valued at tens of millions of dollars to the family at the helm of
the political party of the telecommunications minister at the time.
Bhushan’s actions are still
pending before the court.
A. Raja, former telecom minister, declined to comment. A
spokesman for his political party
could not be reached.
The bureau of investigation
did not respond to requests for
comment. Vivek Priyadarshi, the
bureau’s investigating officer in
the case at that time, declined to
discuss its conclusions.
In 2012, India allowed its cash-
starved airlines to accept invest-
ments from foreign carriers, as
long as an Indian partner
retained control. Yet another
Indian market — jet travel — sud-
denly looked sexier. Tata and
others raced in.
Tata teamed up with AirAsia
Berhad, a budget airline from
Malaysia, and set up AirAsia
India. This happened during
Mistry’s tenure — but he has distanced himself from the deal. In a
letter to the Tata board after his
ouster, he said he opposed the
deal, but Tata pressured him to
proceed, and Tata himself negotiated the terms with AirAsia.
“My pushback was hard but
futile,” Mistry said in the letter,
which The Times has reviewed.
The allegations of questionable payments to two companies
came after whistleblower complaints prompted AirAsia’s board
to order a forensic audit. That
audit, delivered by Deloitte India
in September and reviewed by
The Times, identified the payment of more than $3 million to
two such companies. Neither
company appears to have offices,
the audit found.
Mistry had shared the audit
summary with the Tata Sons
board members before the
October meeting at which he was
fired, a person close to Mistry
A spokesman for Tata referred
questions to AirAsia, which did
Friends in Business
At the time of Mistry’s ouster,
he was also confronting an issue
with Tata’s friend, Sivasankaran,
whose company owed the Tata
Group more than $100 million.
Sivasankaran in 2006 had
invested in a Tata telecom start-up that also received a big investment from NTT DoCoMo, a
Japanese company. In 2014,
DoCoMo exercised its right to sell
back its shares to Tata. The
money Sivasankaran refuses to
pay back represents his portion
of that buyback expense, according to correspondence between
the two sides.
Sivasankaran, in an interview,
said he had invested in the company purely out of friendship
with Tata. He said neither he nor
anyone else had influenced
Tata’s decision to fire Cyrus
A spokesman for Tata said it
was pursuing “all legal options”
to recover the money.
Tata’s friend Mehli Mistry
maintained a lengthy financial
relationship with the Tata Group.
Over the last two decades, his
companies were granted contracts for dredging, barging and
shipping by Tata Power, often
renewing them without a bidding
But after Cyrus Mistry took
over, Tata Power put Mehli
Mistry’s contracts out to bid.
Other companies won those contracts, according to two people
familiar with the bidding process.
Mistry was so disappointed at
losing the contracts that he sent a
message this year to Cyrus Mistry
through a family member, people
close to Cyrus Mistry said. A person familiar with the message
said Mehli Mistry told Cyrus
Mistry to stop interfering in his
contracts or he would take steps
to defend himself.
People close to Cyrus Mistry
say he thinks his ouster was, in
part, Mehli Mistry’s retaliation. In
his letter to the board, Cyrus
Mistry wrote, “I had to ease out
Mehli Mistry, his lawyer said,
“emphatically denied” sending
any message regarding contracts
to Cyrus Mistry and played no
role in his ouster.
— The New York Times
Steel crisis. The UK's largest steel works in Port Talbot, South Wales,
which the Tata group is looking to sell.
“I don’t want
to pay it because
Tata has not