Beyond Half Truths

Updated: Sep 10 2002, 05:30am hrs
The war of allegations and counter allegations between Tata Finance Ltds (TFL) sacked managing director Dilip Pendse and the mighty Tata Group continues. And the various plaints, affidavits and counter affidavits filed in court are a happy hunting ground for the media. Every new revelation, dramatic or otherwise, deals another blow to the Tata image while doing nothing to clarify the situation. At the root of the problem is the Tatas confused handling of this messy situation. The group initially made a virtue out of the resignation of the entire board of TFL one of its spokespersons said as much in a television interview. But the board resignation was a face saver that was necessary to avoid punitive action by the Reserve Bank of India (RBI). By resigning and promising to stand by depositor dues, the board got the RBI to go easy on them and allow them plenty of time to set right the various violations and irregularities discovered in TFL. Clearly, the resignation was no virtue. After all, a director of Tata Sons and chairman of TFLs subsidiary Niskalp Investments (J E Talaulicar) was accused of insider trading, but he hasnt been asked to step down from the Tata Sons board. Similarly, our reports make it evident that Fredie Mehta, an investment specialist, was sent the Net Asset Value (NAV) of TFL on a daily basis during the problem period. Even if, as the Tatas allege, Dilip Pendse used to stick reassuring little post-it notes on the NAV papers saying that everything was okay with the investments, Fredie Mehta was qualified and competent enough to see through the ruse and ask pertinent questions or sound the alarm. After all, he ran an investment company, which also owned several of the rapidly depreciating investments that Niskalp had on its books.

The problem with the TFL imbroglio is that the Tatas may have wanted to make it an employee problem: A few rogue managers taking the company for a ride. Unfortunately, thus far there is little evidence supporting this view. A F Ferguson, which was commissioned by them to investigate the issue, did not support this contention. So, they rejected its report and were seriously offended when the media questioned the propriety of their action. While Tatas have resented the suggestion that they had pressured A F Ferguson into sacking its senior partner Y M Kale to retain the Tata business, our recent reportage strengthens that theory. After the fiasco of a badly handled explanatory advertisement, the Tatas have opted to remain mum on the plea that the entire matter is in the judicial pipeline; that while one side may be willing to indulge in selective media leaks, the Tatas themselves will speak out in defence at the appropriate time. This strategy may be well-advised for now, but eventually the Tatas will have to come up with more convincing answers to retrieve lost ground.