 "Nusli Wadia accuses Ratan Tata of violating insider trading norms")
Nusli Wadia, an independent director on the board of three Tata Group companies, on Monday accused Ratan Tata, interim chairman of Tata Sons, and Tata trustee N A Soonawala of seeking price-sensitive information from Tata Group companies, thus, violating Securities and Exchange Board of India’s (Sebi) insider trading norms. Defending his role as an independent director on the Tata Steel board, Wadia said Tata was seeking to remove him from the boards as he refused to be Tata’s “yes man”.
In a letter addressed to Tata Steel shareholders, Wadia said Tata Sons and trustees of the Tata Trusts sought information and received briefings with regard to Tata Steel, which are material and price-sensitive. “This, I believe, was before the introduction on January 15, 2015 of the insider trading regulations. I believe that Tata, Soonawala and the board of Tata Sons, even post-notification of the regulations on January 15, 2015, sought access to information and documents of Tata Steel, Tata Motors and other Tata companies,” Wadia alleged.
The shareholders of Tata Steel are meeting on December 21, following a special notice by Tata Sons seeking to remove Wadia and Cyrus Mistry as a director from the company’s board.
The financial, strategic presentations and data sought could be regarded as a violation of the insider trading regulation as unpublished material and price-sensitive information and knowledge was sought, Wadia alleged.
Besides, in 2015-16, Tata and Soonawala demanded that certain important and strategic matters be shared with them as trustees, with regard to the affairs of Tata Motors and Tata Steel. “As a result, I believe that presentations with regard to Tata Steel Europe, its strategy, its financials, its proposed merger with ThyssenKrupp and other material and unpublished price-sensitive information and matters were presented to Tata and Soonawala – a violation of the Sebi Insider Trading Regulation,” said Wadia.
Wadia said there were serious concerns, with regard to statements made by Lord Kumar Bhattacharyya (Prof of Warwick University, UK) which may attract the provisions of the Insider Trading Regulations. Wadia said Bhattacharyya in a speech in the House of Lords on July 7, 2016, claimed that he had influenced and advised Ratan Tata to buy Corus. “The question that arises is in what capacity did Lord Bhattacharyya make these statements and with whose authority he committed your company, make announcements to the UK Parliament, the UK public and the Indian public. He has no role or responsibility in your company,” he added.
“I also differed strongly providing continuous financial resources towards Tata Steel Europe from the year 2012 prior to Tata stepping down. From that date to now, the capital employed in the business has risen by approximately Rs 25,000 crore with nil return,” Wadia said.
Besides, any return on investment to the shareholders of Tata Steel from its investment in Tata Steel Europe looks a near impossibility. “The shareholders of Tata Steel have already suffered a serious impairment of close to Rs 35,000 crore and are likely to have further substantial impairments in the future. The total capital employed now on account of Tata Steel Europe is in the region of Rs 75,000 crore,” said Wadia.
The very purpose and foundation of Tata Steel by founder Jamshedji Tata in 1907 was to fulfil the dream of Make in India when all the steel consumed in India was being imported from the UK. “It was his pride and belief in India that is today being espoused by Prime Minister Narendra Modi through his vision Make in India. Tragically, in contrast, we now read in the British and Indian press ‘Ratan Tata hailed as saviour of UK steel industry’,” Wadia said.
In a letter addressed to Tata Steel shareholders, Wadia said Tata Sons and trustees of the Tata Trusts sought information and received briefings with regard to Tata Steel, which are material and price-sensitive. “This, I believe, was before the introduction on January 15, 2015 of the insider trading regulations. I believe that Tata, Soonawala and the board of Tata Sons, even post-notification of the regulations on January 15, 2015, sought access to information and documents of Tata Steel, Tata Motors and other Tata companies,” Wadia alleged.
The shareholders of Tata Steel are meeting on December 21, following a special notice by Tata Sons seeking to remove Wadia and Cyrus Mistry as a director from the company’s board.
The financial, strategic presentations and data sought could be regarded as a violation of the insider trading regulation as unpublished material and price-sensitive information and knowledge was sought, Wadia alleged.
Besides, in 2015-16, Tata and Soonawala demanded that certain important and strategic matters be shared with them as trustees, with regard to the affairs of Tata Motors and Tata Steel. “As a result, I believe that presentations with regard to Tata Steel Europe, its strategy, its financials, its proposed merger with ThyssenKrupp and other material and unpublished price-sensitive information and matters were presented to Tata and Soonawala – a violation of the Sebi Insider Trading Regulation,” said Wadia.
Wadia said there were serious concerns, with regard to statements made by Lord Kumar Bhattacharyya (Prof of Warwick University, UK) which may attract the provisions of the Insider Trading Regulations. Wadia said Bhattacharyya in a speech in the House of Lords on July 7, 2016, claimed that he had influenced and advised Ratan Tata to buy Corus. “The question that arises is in what capacity did Lord Bhattacharyya make these statements and with whose authority he committed your company, make announcements to the UK Parliament, the UK public and the Indian public. He has no role or responsibility in your company,” he added.
Wadia Vs Tata
Wadia said he was being sought to be removed from the Tata Steel board as he, as an independent director, differed with several proposals of Tata. “I was strongly of the view that Tata Steel should concentrate on the rapidly growing Indian market, and develop its new greenfield steel plant where the margins and returns would be far superior. My strategic view was that Tata Steel would become the No. 1 steel company of India. Unfortunately, that is not the case today. The Kalinganagar project has been severely delayed with substantial cost overrun and has come on stream with three million tonnes alone as against a proposed original six million tonnes. As a result, its financial returns have been impacted substantially,” Wadia noted.“I also differed strongly providing continuous financial resources towards Tata Steel Europe from the year 2012 prior to Tata stepping down. From that date to now, the capital employed in the business has risen by approximately Rs 25,000 crore with nil return,” Wadia said.
Besides, any return on investment to the shareholders of Tata Steel from its investment in Tata Steel Europe looks a near impossibility. “The shareholders of Tata Steel have already suffered a serious impairment of close to Rs 35,000 crore and are likely to have further substantial impairments in the future. The total capital employed now on account of Tata Steel Europe is in the region of Rs 75,000 crore,” said Wadia.
The very purpose and foundation of Tata Steel by founder Jamshedji Tata in 1907 was to fulfil the dream of Make in India when all the steel consumed in India was being imported from the UK. “It was his pride and belief in India that is today being espoused by Prime Minister Narendra Modi through his vision Make in India. Tragically, in contrast, we now read in the British and Indian press ‘Ratan Tata hailed as saviour of UK steel industry’,” Wadia said.