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`Tata Fin will meet its financial obligations'

Our Bureau

MUMBAI, Sept. 6

TATA Finance Ltd (TFL) has informed the BSE that its board - backed by its promoters, the Tata Group - will ensure that the company meets its financial obligations to its lenders and depositors.

At the same time, the company said, there may have been misdeclarations or mis-statements in its March 2001 Letter of Offer related to TFL's preference share issue.

In a statement titled, `Tata Finance update on material developments,' TFL said its board had undertaken a review of the operations and systems of the company to strengthen internal controls and ensure correct, complete compliance with internal policies and external regulations.

By way of recap, it pointed out that TFL's board ``recently discovered certain unauthorised transactions undertaken by the then management of TFL led by former Managing Director, Mr Dilip S. Pendse.

``The unauthorised financial transactions include inter alia, diversion of funds to TFL's subsidiary, Niskalp Investment and Trading Co Ltd and certain other associate companies, whose affairs were also controlled and managed by TFL's former management.

``Niskalp and the associate companies deployed substantial part of these funds in trading/speculative activities in certain specific scrips in the stock market. These activities have led to significant losses in Niskalp and the other associate companies.

``The preliminary enquiry instituted by the board of TFL through an independent chartered accountant of repute has revealed several operational lapses and irregularities that have been committed by the erstwhile management team in the functioning of TFL and in compliance of its reporting requirements to the regulatory authorities, including possible misdeclarations/mis-statements in the Letter of Offer issued by the company in March 2001, in relation to the issue of preference issues.''

Besides terminating the services of five senior company officials who along with the former TFL managing director were allegedly party to the transactions in question, the statement said, TFL is taking legal advice ``and has been advised that there is a prima facie case of criminal breach of trust, falsification of accounts and cheating, which are punishable under the Indian Penal Code''.

A separate statement today from Mr Pendse, issued by his advocates, said, ``Tatas have been putting the blame squarely on our client in spite of knowing the fact that our client was an employee of Tata Finance Ltd and all the decisions taken by our clien t were as per the directions, formal and informal instructions, of the board of directors of Tata Finance Ltd and with full knowledge and consent of the board of directors.''

It further said that as an employee of TFL there is ``no question'' of Mr Pendse ``exerting his influence on the decisions taken by other Tata group companies such as Telco, Tata Chemicals etc. All such deals/decisions between TFL and other group compani es were taken by the respective company management and with the full knowledge of the board of directors of respective companies.''