The seven-year itch

The ongoing corporate
12 December 2003

Tuticorin: Evidently, the rat race to the control Tamilnad Mercantile Bank is turning out to be one of the longest-running corporate soap operas in independent India — seven years. And, obviously, each episode has its own twists and turns. The latest being, the bank board's late night resolution to remove the chairman and chief executive officer, R Natarajan, on 25 November 2003.

(A more recent twist is the rumour that Shiv Nadar, the head honcho of the HCL group, is interested in acquiring a stake in the bank, perhaps the 34-per cent stake C Sivasankarn of the Sterling group holds. It is this part of the stake that is hanging in balance without any voting rights.)

On 25 November, the bank's board meeting in Chennai, after considering the normal business, took a different turn. Save for the Reserve Bank of India (RBI) / central government nominee directors, the other Nadar directors declared that they had lost faith in Natarajan and wanted to take action for his "omissions and commissions".

The reasons stated are increasing non-performance assets (NPA), inaction in taking disciplinary action against the bank officials involved in the Rs 2.5-crore scam (rotation of collection cheques) at the Tirupur branch, and indiscriminate lending. Another allegation against Natarajan is that he sanctioned loan to one Dr Bhanu, who figured in the actor Rajkumar kidnap case.

The nominee directors expressed their disappointment at the manner in which the allegations against Natarajan were handled at the meeting and hence decided to leave. There is also another version that the nominee directors were asked to wait outside till the other board members come to a decision. Earlier Natarajan was asked to go out of the meeting room as the matter to be discussed concerned him and the meeting was chaired by one of the Nadar directors.

Immediately after the resolution for removal of Natarajan was passed by all the Nadar directors, Natarajan's cellular phone provided by the bank was withdrawn. It is learnt that other facilities (car, housing) were also withdrawn. And, the bank directors met again on 27 November as if it was the continuation of the adjourned 25 November meeting. It is learnt that only on that day did the resolution for the removal of Natarajan was faxed to the RBI.