April 2001. When all the top executives of Tata Group reached the office that morning, they found a letter on their table. No one knew who had sent the letter. The same envelope reached the tables of Tata Group chairman Ratan Tata, SEBI chairman, and editors of all business newspapers. When the contents of the letter came out, there was an uproar. The question was about Tata's reputation. That letter had serious allegations against Tata Group's company Tata Finance and its managing director Dilip Pendse.

What was there in that letter?
The allegation was that Dilip Pendse looted people's hard-earned money. He cheated investors. At that time, Tata Finance was Tata's flagship company and was growing rapidly. It was financing everything from cars to houses. It was doing FDs and giving good returns. Lakhs of people had invested their savings in Tata Finance. When the news of the letter and its claims were published in the newspapers, it caused an earthquake.

R Gopalakrishnan and Harish Bhatt write in their book 'Jamsetji Tata: Powerful Learning for Corporate Success' published by Penguin that this news was very shocking for the Tata Group. The reputation of the group was everything to it, which was built and nurtured over decades. The Tata Group immediately started an investigation into these allegations. The audit revealed that there was indeed some irregularity and the company was almost on the verge of bankruptcy. The management of Tata Finance had made many suspicious investments, due to which the company had almost gone bankrupt. The company had a huge debt of about Rs 2,700 crore. Out of which Rs 875 crore was the money of 4 lakh small depositors. For many of these people, this was a lifetime's savings, which they had kept for retirement, children's marriage, and their old age.

How did the fraud happen?
Now Tata Finance was not in a position to return the money to these investors. During this time, another reason for the crisis came to light. Tata, under the leadership of Dilip Pendse, had lent about Rs 525 crore to some of its subsidiaries, including a company named Nishkalp. A large part of this money was invested in the stock market. Gopalakrishnan and Harish Bhatt write that Dilip Pendse, the managing director of Tata Finance, was considered a trustworthy person, so this fraud was a big blow. The audit of Tata Finance revealed that the company had invested in bad and speculative stocks. Some of these transactions were done to earn personal profit.

When the value of these shares fell, the original investment vanished and the company incurred losses. This was a very delicate moment for the Tata Group, as this group was considered a symbol of honesty in the country. Now the question was how would the Tata Group deal with such a big fraud.

Then Ratan Tata came forward.
At that time, Ratan Tata was the chairman of Tata Sons. He himself decided to take the initiative and deal with this matter. Immediately a board meeting of Tata Sons was called, which is the parent company of Tata Group. Ratan Tata suggested to the board of Tata Sons that they should stand firmly behind Tata Finance and money should be made available from the parent company immediately to meet the financial needs of the company. The board supported Ratan Tata's suggestion. At that time, the amount of more than Rs 500 crore was very big. If Tata Sons alone had paid the debt on Tata Finance after the fraud, then there would have been legal complications, because Tata Finance also had many other shareholders. Tata Sons was a promoter shareholder, but its liability was limited.

However, Ratan Tata (Ratan Tata News) said bluntly that this is the time to fulfill moral responsibilities more than legal ones. He announced that Tata Sons would do two things immediately. First, the interests of every investor will be fully protected so that no one who trusted the Tata name has to suffer a loss. For this, Tata Sons itself will provide funds. Second, this entire fraud will be thoroughly investigated so that the guilty people can be punished legally, no matter how senior or influential they are.

The helicopter was kept on standby On
25 July 2001, Tata Group issued a public statement on the whole matter for the first time, admitting that Tata Finance was in trouble due to fraud. This statement also said that Tata Group will ensure that the money of any depositor of the company is not lost. For this, Tata Group's holding company Tata Sons, and its associate company Tata Industries immediately provided a cash amount of Rs 615 crore and a corporate guarantee to Tata Finance, so that every investor could be paid on time. Apart from this, it was also planned that any investor who wants his money back will be paid immediately from every branch of Tata.

In 2001, systems like online banking were not so developed and most of the transactions were done in cash. Gopalakrishnan and Harish Bhatt write that Tata Finance had kept a helicopter on standby so that funds could be airlifted to any branch immediately if needed. Because it was a matter of Ratan Tata's word. However, this helicopter did not have to be used. Out of 4 lakh small depositors, only a few withdrew their money. Meanwhile, the company also hired external auditors and got the entire matter investigated. In the first week of August, Tata Finance and Tata Industries filed an FIR against Pendse and some other former Tata Finance employees in the Economic Offenses Wing of Mumbai Police because Ratan Tata had clearly said that he would not rest until the culprits were punished.