English
It was shocking for all the top executives of the Tata Group in April 2001 when they arrived at the office. An anonymous letter was found on the table, naming the company’s top officials as fraudsters.
In the letter, a serious fraud allegation was levelled against senior company official Dilip Pendse, which shocked the top officials and prompted them to swing into action. The letter alleged that Pendse was involved in a Rs 500 crore fraud at Tata Finance.
It was cited in a letter that Tata Finance had cheated its investors. Tata Finance was the flagship company of the Group and it was giving good returns to its investors. The company was providing finance on cars and homes.
Gopalkrishnan and Harish Bhatt mentioned in their book, Jamsetji Tata: Powerful Learning for Corporate Success, that the news was very shocking for the group. The Tata Group began a probe into the allegations levelled against the officials. During the audit, it was found that the company had made suspicious investments, which ultimately led to its bankruptcy. The company had a debt of Rs 2,700 crore.
Tata Finance was not in a position to return money to its investors. Company officials had invested in high-risk stocks for profit and personal gain. Dilip Pendse, once considered a close confidant, put the Tata Group in a state of nervousness and shock.
At that time, Ratan Tata was the chairman of Tata Sons, and he stepped in to address the situation. Ratan Tata called a meeting of the Board of Directors, where they decided that Tata Sons would back Tata Finance with Rs 500 crore from the parent company. However, Tata Sons could not make this payment due to its obligations to shareholders, and the transaction was also limited because it was acting as a promoter shareholder.
Ratan Tata took it as a moral obligation and assured investors that they would get their money back. He decided that a full probe would be conducted and that those guilty would not be spared. In 2001, there was no online banking. It was reportedly said that Ratan Tata had placed a chopper on standby to carry cash to other offices, but the chopper was not used, as only a few very small investors had withdrawn their money.
Tata Finance and Tata Industries had filed an FIR against Dilip Pendse and a few other officials. Ratan Tata had stated that he would not spare the guilty.
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