A question of values: are all lawbreakers evil?

Chapter 1

A meeting of minds.

After breakfast at 7 am everyday I have five hours of free time before lunch, and I decided to make use of this daily interval for writing. I am a free bird during this time, not bothered by the officialdom surrounding my current place of residence. I decided to write down my story mainly to keep myself occupied doing something other than lament my fate, as a practical diversion from re-reading my books collection or replaying those fateful events in my recent life.?If you have guessed by now that I am in some sort of prison somewhere, doing time for my misadventures you are only partially right. About being in a jail, I mean. I am now lodged in the famous Arthur Road prison in Mumbai in the midway point of serving a five year sentence for abetting fraud and misappropriation of funds. About culpability and my own role in the entire multi billion dollar caper, all I request is that you hold your judgment till you hear the whole story from my point of view. Who knows, you might gain some perspectives about the motivations of a man with solid professional background to do things completely alien to his upbringing and professional training. So, hang in there, will you, till I complete this story?

The logical place to begin is to tell you something about myself. I am a first-class chartered accountant, articled from a big four accounting firm. No, I was not a gold medallist in my batch, and that was only because the examiners were too staid and traditional?with no imagination to appreciate the creative answers that stood out of my answer sheets. As you can see I don’t suffer from any lack of self confidence right through my career. For nearly twenty years after my CA I worked in a proper multinational company gradually inching up to the level of Chief Accountant. The thing about being an accountant in an MNC is that the manoeuvrability in doing any sort of creative accounting is severely curtailed, if you follow what I mean. Corporate Finance Manuals are everything in these companies, and as an accountant you can violate them only on pain of dismissal. Coming from a family of serious professionals, I had absolutely no problem being on the straight and narrow, but work life at this mid-way point seemed to be unchallenging and hence unexciting. Ten more years of the same routine, I was sure that I would end up as the finance director of the company. Somehow that prospect was not appealing, even boring, to a relatively young, fortyish man, who I became by that time.

While I was in this state of semi-satisfied professional existence, I got a call from a head hunter suggesting that I meet the chairman of a well-known Indian company. ‘These people are looking for a CFO who will sit on their board and direct the entire accounting and finance function’ she was trying to oversell the job. At that time, for a man from an MNC background many Indian companies appeared somewhat less than perfect, downright dubious even, however big and well-known. Suppressing my skepticism about the company and out of curiosity I agreed to meet the chairman for a meeting at his residence in Bangalore on a Sunday morning.

That was how I found myself in the spacious library cum office of the chairman’s bungalow in Upper Palace Orchards. I was well?ahead of time, and a South Indian version of butler seated me in the library; waving away his offer of coffee I started looking around the library. It was a large sunlit room with a tall ceiling, and all four walls of the room stacked with books from floor to ceiling; there was even a movable ladder along the walls to reach books on the top shelves. At one end of the room there was a desk-top PC which presumably contained the catalogue of books stored there, several thousands in my quick estimate, to help locate any title or author. All shelves were neatly labelled, all books numbered in the Dewey system, all very professionally done.?Someone displaying a show-off home library was a new experience for me, in all my encounters with many movers and shakers of the industry. As you have probably made out by now, I was a confirmed cynic who could not believe that the chairman would have read many of these books on display in his library. I pulled down some books from several shelves at random for a quick inspection, and you must believe me when I tell you that all of them were neatly underlined in the right places, proof of a diligent reader accessing them frequently. In the section marked ‘American Literature’ I could see Ernest Hemingway nestling cheek by jowl with other American greats like Steinbeck, Mark Twain and even that incurable sex addict, Philip Roth. Since I had time on my hands I pulled out Hemingway’s ‘The Sun Also Rises’ written in that tight economic prose which made him famous.?

I was seated on the sofa leafing through the pages of old man Ernest. The door clicked open and a tall, bespectacled man in a simple white bush shirt entered the room. Seeing the book on my hand, the chairman said without any preamble ’Oh, I see that you are already acquainted with Hemingway; what do you think of his writings?’ Faced with an open ended question I responded, ‘Hemingway’s lean and athletic prose is all very well, but not all his books have stood the test of time. For example, his Nobel prize winning ‘The old man and the sea’ is a difficult read, and I struggled with it for weeks’ I said it more to provoke the chairman than any serious conviction about Hemingway’s writing. I do that a lot according my wife, Gowri, needlessly irking people. Predictably it started the chairman off on a long discourse about Hemingway’s writing style, ‘Look, Hemingway himself called his style Iceberg theory: facts float above water; but the supporting structure and symbolism operate out of sight’. I must tell you I was deeply impressed?with my first moolakat with the chairman; anyone who could effortlessly reel off phrases like iceberg theory had that kind of sway over me.

‘I am Gopal Sastry and you may call me Gopu’ the chairman was introducing himself with a disarming charm. ‘Govindarajan Achar is rather mouthful, I will therefore call you Govind if it is okay with you’ he continued his charm offensive. We then briefly went through the typical professional interview routine, touching upon my background, career path with its highlights and stumbles, rounding off with my personal family details. Finally he came to the question that I was very much waiting for, ‘So what do you think of our company and its financials, Govind?’ As you have assessed by now, I am no slouch when it came to professional matters. I had done my homework for this meeting. Only a couple of days earlier before coming to Bangalore I spent a few hours analysing their numbers on the internet, and I gave a sharp bullet point version of my assessment, ‘Though the company’s gross margin numbers compare favourably well with your competitors’ performance, there seem to be some unusually difficult short term funding issues. Secondly there are many higher than normal indirect expenses like office rentals, overseas travel and sales commissions which need a closer analysis’. Gopu was looking at me with a bemused smile as if I was dealing with mere trifles when really serious and more urgent matters were waiting.

Lunch time rolled around by then, and the chairman took me in his car to a well known but moderately priced Chinese place for lunch. If you must know, it was a well maintained older W124 model of Mercedes. Over Hakka noodles and chop suey Gopu became more expansive about his plans for the company. ‘You know, Govind, the time is right for creating an Indian version of GE or IBM; at this time our company along with a couple of others in our industry are well positioned to take advantage of the global interest in Indian talent. If you ask me, my only ambition is to make our company a global leader and everything else in my life is secondary’, he said it with much conviction. In the dim restaurant lighting his eyes sparkled with genuine ambition, and I believe he truly believed his vision himself. Like every practical executive I have a finely tuned bullshit detector for top bosses bloviating without restraint, and even I couldn’t detect anything amiss about Gopu’s open declarations about his plans for the company.

That lunch opened my eyes to two other facets of the man. Though he came from a wealthy landowning family from the Cauvery river basin in Karnataka and went to school in a small town American university, he had a strange and unexplained admiration for famous college names and brand name qualifications, typical of a middle class upbringing. You could easily fool him, I thought, if you were from IIT, IIM or Stanford and Harvard for that matter. Such was Gopu’s fascination with elite qualifications. Second and a more important characteristics I noted about him was his strange vulnerability about his own place in the commercial universe. Halfway through lunch while he was expanding on his early days as a businessman he narrated his feelings as a small timer, ‘I must tell you, Govind, once I was returning home from a project site in?Cuttack. I was on the top berth of the train’s AC two-tier coach leafing through Fortune and Businessweek magazines. Looking at the pictures of IBM vice presidents, I thought to myself if I would ever deal with senior people from big MNCs like IBM and GE on an equal?basis. Fifteen years on, thanks to my company and the work of my team members, I am able to meet the CEOs of such companies one on one’. When I heard him speak these words I sat in stupefied silence for a few minutes. In all my managerial experience, which by then was considerable, no senior man at the top management level in a professional company would ever admit to any such vulnerability or lack of confidence on their part. Having seen by then several preening and self regarding top executives, my respect for Gopu as a decent human being shot up at that moment.

As lunch was winding down, Gopal Sastry came to the point of our meeting. ‘You see, Govind, I am needing a top financial brain to support me in my ambitions to build a top international company from India. From what I have seen so far, you seem to have the right attitude for the task, your critical views on Hemingway notwithstanding. The only question you have to answer for yourself is whether you are flexible enough as a practical professional for this role in our set up.’

As the car was speeding towards the airport, I came away with a complex set of emotions about Gopal Sastry, the man. ‘Here is a simple looking man endowed with intellectual curiosity, and a subtle thinking process. He wears his money and power very lightly, and displays a strong middle class value system. Where he is going wrong is in his unquestioning worship of elite educational qualifications, probably he had not met enough empty suits from IIT/IIM or even Harvard/Stanford. By the way, what did he mean by being flexible, does it mean what I think it means?’

Chapter 2

Stepping on a downward slope

I didn’t realise it at that time, but that interesting meeting with Gopal Sastry in Bangalore was the beginning of my several tempting and eventually fatal encounters with my own Mephistopheles thereafter. As a first step I decided to take up the offer of Gopu to be his CFO, to act as a sort of Dr.No in finance and accounting. After careful thought, and knowing full well that being ‘flexible’ in the financial context meant displaying extraordinary culinary talent in dealing with financial books, I was ready for something dramatically different from the staid and narrow financial environment then prevailing in MNCs. Of course I had enough financial and other incentives to move to Gopal Sastry’s outfit: for one thing, I had more than doubled my salary, I would sit on the board of a NYSE listed company and would have unquestioned?powers to deal with all financial matters. I would no longer be restrained by boring finance manuals on what I can do. If anything, I would be the one creating these manuals.The only person who was skeptical about the whole move was, as it usually happens, my wife who could not believe that a grandson of a Vedic scholar from Srirangam temple would knowingly enter into a situation which can at best be described as dodgy. She extracted a promise from me that I would not be personally involved in anything shadowy in the company, and not personally gain from any financial adventure that Gopal Sastry and company were engineering. ‘Not to worry, my dear Gowri, my mother didn’t raise any dumb children; I will be more than careful’ I blithely assured my wife before boarding the flight to Bangalore. As it turned out, it was only the second part of my deal with Gowri that I kept, but that is running ahead of the story.

The first three months on the CFO job were really interesting, particularly for a man coming from an accounting manual oriented environment. There were financial irregularities galore wherever you turned. Kickbacks from suppliers and service providers, inflated rental values on dozens of high end corporate premises, unwanted international travel, international consulting companies milking the company: you could find all of them and many more, all presumably funnelling money back into the promoters’ account. In addition, the controls on operational aspects of the company were pathetic: sales chaps were bringing orders for less than it cost to deliver them, the delivery system had no semblance of accounting for efforts vis a vis the target prices to be reached. If you have a suspicious mind, as my wife always accuses me of having, you can always spot such financial irregularities with one quick glance. The entire company was crawling with people who were gaming the system in several different ways, and claiming that somehow they were depositing the proceeds in the promoters’ accounts. Unbelievable, but that was what I found there. However, I kept my own counsel about these matters for the time being. ‘If Gopu wants to tolerate such leakages from the company he himself owns substantially, it is his outlook’. Further I finally understood the real meaning of the enigmatic smile that crossed his face when I first met him and talked about the company’s financials. Obviously he could not suppress his amusement at anyone taking the company’s numbers seriously, given all these leakages.

I waited patiently for the right opportunity to talk to the chairman. By then I had clear ideas, some of them very uncharacteristic and devious, on how to meet his need for funds which could not be easily traced. The opportunity came in Europe with both of us seated in the first class coach of the Tunnel shuttle, speeding from London towards Brussels. Away from the office environment with well manicured French countryside flashing by, I had three hours to make my pitch. To the chairman’s credit he was sitting with knitted brows absorbing what I had to say about the company and I gave it to him straight. ‘Gopu, you must know that our entire financial system is riddled with leakage in far too many places, to be kept discreet. Simply great many people are involved at many levels, and you wouldn’t know who is doing things on their own account instead of on your behest. Secondly, this pernicious ‘anything goes’ culture has permeated into the operational aspects of the company, costing us a lot in operational inefficiencies’. The chairman asked, ‘I am not in disagreement with you, Govind, but what do you now advise me to do?’ Given a direct opening like that I eagerly expanded on my proposals, ‘the first thing we must do, Gopu, is to get rid of this sickening kick back percentages culture. At every point in our transactions. We must believe and act like a clean company in all our dealings, and must be seen as such by the outside world. We must stop the present nonsense of hundreds of people doing stupid things. And while we are at it, we must implement the operational excellence framework, so that people in sales and delivery are made to operate within tightly defined performance parameters. We must implement proper information systems, review processes, tight budgeting principles, the whole enchilada’.

That amused smile which I am getting used to a lot nowadays once again crossed the chairman’s face. ‘All well and good, Govind, but tell me how will I get funds outside the company to implement my ambitious programmes, if we don’t generate them from our operations?’ I was fully ready for this question. ‘I have a plan, Gopu, for getting funds for your ambitions, but it would involve setting up parallel operations. The plan goes like this. I suggest we set up three independent boiler room operations each of which would generate financial transactions outside the company, but using the company’s system infrastructure. This plan is devious, certainly illegal, most probably criminal, but it can be done very discreetly with only a handful of trusted people involved’. A serious look of surprise came upon the chairman, as if he could not believe that an MNC financewala would come up with ideas on financial short cuts which were borderline illegal, no, delete the borderline part.?

I went on further elaborating these schemes in greater detail. ‘Boiler Room number 1 will be generating bogus invoices on non existent customers, booking sales and accounts receivables as entries; BR1 would complete the entire cycle of such fake sales on a quarterly basis mixing it up with actual receipts and actual sales. If we keep these fake revenues to about 5 or maximum 10% of real sales, we would be able to balance these entries convincingly’ . The chairman wanted to learn more, ‘what about the other two boiler rooms?’. Egged on like this I continued, ‘BR2 will deal with fake payroll, adding on 5 to 10% of our new intake of employees to our payroll costs; it would credit these fake employee accounts and later take away these funds on a monthly basis. And finally coming to boiler room number 3, it would be generating additional equity shares under our ESOP scheme, again about 5-10% over the real ESOP volumes, in favour of unnamed beneficiaries.’ Gopal Sastry was smitten with the elegance and neatness of these three boiler room schemes, ‘For one thing, taken together they can generate enough funds for my future plans; and they are so discreet, we will only need a handful of trusted people. I know already who I should tap for these operations. What will be your role in it, Govind?’

‘That is the beauty of this scheme, Gopu. Neither you, nor me for that matter, would be directly involved in any of these boiler room operations. We both stay away from them as far as possible and our finger prints would be nowhere to be found. You will go about expanding your business plans and I would be busy cleaning up the financial systems in our regular set up.’ I gave him my most reassuring smile. For the next one hour or so we were trying to pick?holes in my boiler room schemes, doing risk mitigation in the language of management types. ‘As long as we stay within limits, closer to 5% than 10% of the numbers we are trying to manipulate, and the whole thing is kept between a handful of people, we can run this system for a long time. But remember, Gopu, if you exceed the ten percent limit, we will be found out in no time at all, the edifice would collapse and that would be personally catastrophic for both of us’

At this time you would be forgiven for thinking ‘This Govind chap, for all his professional sophistication, is bit of a shit. Here he is the grandson of a Vedic scholar from Srirangam giving ideas to a crooked businessman on how to cook his books of accounts. What has got into him?’ I had good reasons for doing what I did, and you have to be patient till you reach the end of this story before you come to any judgement about me.

Before the train reached Brussels Midi station, the chairman thoroughly understood whatever I was proposing, boiler rooms and all, and enthusiastically endorsed the whole thing. We both agreed that we would initiate the new approach the moment we went back home to Bangalore the following week.

Chapter 3.

The fall following a spectacular rise.

For ten years after our train ride to Brussels, we were on a roll. I mean the company, its chairman and even your humble narrator. The company beat all performance parameters, quarter on quarter, and its stock was riding high on the stock exchange, both NSE and NYSE and everywhere else our stock was traded. I was smiling inwardly, telling myself that a five or ten percent boost in sales numbers with no costs attached would work wonders for any company. Our chairman Gopal Sastry was the darling of the CEO community all over the world, quickly becoming a champion of the corporate governance movement. Gopu was basking in the adulation of chattering classes in the business world, appearing on the cover of glossy magazines here and spouting wisdom from the TV screens there. He was in his element those day, as a regular inhabitant of the Davos crowd rubbing shoulders with top bankers, finance ministers and tech tycoons. I had never seen him happier. It all goes to show that in the present day business world, if you can speak in full and complete sentences, you can hold total sway over many people, no matter what scams you are pulling underneath.

What about poor little me, you may well ask. I became the quintessential clean up artist inside the company, getting rid of that disgusting kick back culture of the earlier era. To his credit, Gopu never once interfered in whatever I did to the bring the company’s processes and systems to an outstanding international standard. My monthly review meetings with the sales and operating teams became the stuff of internal corporate lore, when every last item of non-performance completely exposed. Sure, I fired a number of people who were cooking up their performance data, or padding expenses or otherwise engaged in suspicious transactions. The company’s operations soon became the epitome of good professional practices. The professional in me enjoyed a quiet pride in turning around the real part of the company into an efficient, performing machine.

In all this tamasha, I followed two unvarying rules. One, I kept a very low public profile and stayed out?of the limelight. I mean completely. Not for me the fawning write-ups in the business press and glowing accounts of my business prowess. I declined all requests for press interviews and spurned all kinds of idiotic awards like the ‘CFO of the year’. The only time the public saw me was during the quarterly video calls with investment analysts, where people noticed my direct and sharp answers to their queries. Articles about me, if they appeared at all, always included phrases like, ‘publicity shy and low profile’. The second rule which I never broke was to keep a safe distance from the boiler room operations, and not to have anything to do with how they operated which can be traced back to me personally. I knew Gopu had appointed a crooked accountant to run these boiler rooms, working independent of each other under his guidance, all strictly oral and nothing written down. All I had to do was the consolidation thing: to add the results of their efforts every quarter to the company’s financial numbers and massage the whole thing a bit. Other than adding the fake sales and payroll numbers to the sales revenue, accounts receivable and bank balance accounts I had nothing to with boiler rooms at all. Even those entries I made sure that some innocent junior accountant would do these transactions, without raising undue doubts.

All good things come to an end sometime or the other. Even well conceived scams, however conceptually elegant they might be. After ten years of good run, I might even say great run, I could sense that our chairman was becoming greedy for more power and recognition. He was beginning to step far and wide, much beyond his financial ability to initiate big projects. He began a big play for construction and infrastructure projects, which needed a lot of upfront equity investment, funds which he did not have. Therefore, much against my specific advice, he turned up the volume of these boiler room operations. From the ten percent limit which I emphatically told him to stick to, he was moving the needle to 15, 18 and even 20% of the genuine transaction values. The resulting accounting entries were going all over the place, and any moderately competent investment analyst could spot something was going wrong with our cash positions against reported sales. One night I confronted the chairman at his residence on this very matter, ‘I know what you are doing, Gopu, and it is not going to end well. Already analysts are asking me why we are delaying payments to suppliers and service providers, while we show large bank balances. It is just a matter of time before people find out about the boiler rooms’. The chairman was visibly perturbed about the potential impact of his over reach, said ‘So what would you advise me to do?’ I swallowed hard before responding to him, ‘Look, Gopu, it is not going to be easy, but we don’t have many options at this stage. First we must shut down all these boiler room operations right away and hide their tracks. I will begin to clean up their effects in our books, which process will take me about six months. You will have to pony up the funds to clear the bank accounts, since we have to undo all the fake transactions in our bank balances. And we must of course come out of all these fancy new projects you have undertaken recently’. As he was watching me silently absorbing all this news, I gave him the final blow ‘While we are at it we must also find a way to sell our company off to an international outfit; some months back people from GE and IBM were making a tentative approach to me along these lines. I can approach them to assess their interest’. This was a serious body blow to the chairman who had invested his entire personality and every bit of his existence in his company, and there was no way he was going to part with it. Like some people who become maniacally optimistic when pushed into a tight corner, he began to see the bright side, ‘I think you are over reacting to the 20% numbers, Govind. At the most a couple of quarters, and we will pull through as we are, riding out this blip. So hold your horses, man, and keep cool’. I disagreed with him on the spot, and repeated my advice about winding down the boiler rooms right away.

In the event we did not have six months, perhaps not even two months, before things hotted up. One night around one am I got a call on my mobile phone. I was surprised to see it was from our chairman. ‘Govind, I am downstairs in the lobby of your apartment. Why don’t you come down so we can talk?’ I hurriedly put on my trousers and shirt and rushed downstairs. I was struck by the pitiful sight of the patrician figure of Gopal Sastry looking haggard and stressed out; it was evident that he was in some serious mental turmoil. Instead of taking his car where his driver could hear us talk, I insisted on driving my car with him seated next to me. For the next couple of hours we drove around aimlessly in the quiet streets of nighttime Bangalore. And talked. Boy, did we talk. The chairman updated me with the latest. The company’s bankers and?auditors had initiated a criminal complaint against the company in the past twenty-four hours and the enforcement directorate was beginning a serious investigation of the company, its chairman and CFO in that order. He was completely flustered. ‘What is to be done now, Govind? How do we handle this matter?’ I was dreading this very moment ever since I learnt about the chairman exceeding the safe limits of ten percent, but this was not the time to point it out to him. I tried to calm him down while hiding my own apprehensions, ‘There is no way to ‘handle’ the Enforcement Directorate, Gopu, as you charmingly put it. They are a law unto themselves. We have no good options now. You just have to deny everything, saying you have no personal knowledge of the activities going on underneath. You have to brazen it out, Gopu, and it would take a lot of mental stamina. And one more thing. You should blame the whole thing on the CFO, that is myself; on all accounting matters, you can truthfully say you did not concern yourself with the details and the CFO did’. The chairman who was expecting me to distance myself from the whole matter was rather surprised. ‘If I blame everything on you, man, you will be in serious trouble. What will you do?’. I gave him what I thought was my most reassuring and confident smile, ‘You can watch me in action, Gopu. This is the very moment I have been preparing for the past one year or so, ever since you amped up the numbers to 20%. I have my own plan, and don’t worry, it does not involve implicating you in any way’

In those possibly final moments of my employment in the company, our roles were reversed. Now it was me giving instructions to the chairman, ‘Go home, Gopu, and pack a duffel bag with comfortable clothes, shaving kit, medicines, books and walking shoes. That is all you will need for the next few months if not years. Have no further contacts with the boiler room chaps, and the man who ran them. I hope you have not written any mails to them nor signed on any document from them. Most important, do not answer or initiate any telephone calls on your land line and mobile numbers; assume they are all bugged in nine different ways.?Finally this is a serious, Gopu, and the next few months will test every bit of your resolve to save yourself. Self preservation is the only goal now for both of us. You are on your own here, keep that in mind.’

That was the last time I saw Gopal Sastry, the chairman of the erstwhile aspiring global conglomerate. Even though I myself was in a serious legal trouble mostly due to his over extending ambition, I was genuinely ambivalent about what to think of the man. All his learnings from the books in his lovely library, Hemingway’s iceberg theory and all, did not teach him not to step outside practical limits. As you can imagine, I didn’t spend much more time thinking about him that night. I had my own fish to fry, as they say.

Chapter 4.

The final fade out.

I was arrested one midnight not many days after my night time drive with the chairman. It was a classic KGB inspired manoeuvre: the sleuths swoop in after 1 am, quickly show you some hastily signed documentation and drag you away in front your screaming wife in the police Sumo van. When they came to take me, the ED chaps were flummoxed to see me ready, packed duffel bag and all, and no screaming wife in sight. That was so, since I had alerted Gowri in the previous six months to the possibility of my arrest. Considering how efficiently I was arrested, what followed was very anti-climactic. Neither me, nor, I suspect, the chairman were clearly told exactly for what crimes we were being arrested. Vague and indefinite allegations were made about swindling the company by creating false sales records, cheating the shareholders by inflating company’s profits and in general playing fast and loose with the company’s accounts. We were lodged in different prisons for interrogation in detention which I believe is the official term. I could not say how well the chairman was bearing up with his changed accommodation. My training in my early life with hostels and campsites kicked in, and I didn’t mind very much the bad food and poor sanitary conditions.

In all this confusion, the news media went to town doing what they do best, namely indulge in speculation without any foundation of facts. Overnight, the chairman was transformed from a former corporate governance guru to a diabolical charlatan sucking the blood of honest shareholders. Gopal Sastry’s fancy watch collection and his past utterances in Davos were mockingly featured, confirming to me that there was no real news to go around. There were also some dark reports about yours truly, saying ‘how Govind Achar had fooled everyone by his smart repartees in analysts conferences, with brilliant display of fake?numbers on his fingertips’. In the eyes of the press, I became a Dr.No of finance, giving these devious ideas to the chairman.

In the meantime, I had my own problems with the sleuths from the Enforcement Directorate to deal with. I stopped them when they started questioning me in Hindi, since many of them were from the heartland. My competence in Hindi was limited to a few choice swear words, and I didn’t think they were in a mood to listen to them. That was how I was landed with Vimal Kumar Fialoke, a senior deputy director in charge of investigations. Fialoke was a competent interrogator very fluent in English and only moderately fluent in modern accounting practices, thus giving me a slight edge. However, he was a consummate professional with a subtle and beguiling interrogation technique, lulling his prey into complacency before pouncing on him at the first sign of any lapse. Fialoke and I went at each other for about fifteen sessions each lasting about ten to twelve hours; halfway through this process, it was becoming clear to me that Fialoke did not have much concrete matter he could confront me with on fraud. He waved a lot of papers at me: auditors’ statements, bankers deposit receipts, even copies of fake invoices asking me how I explained them. In such cases I would explain in a greatly exaggerated?calm tone of voice, ‘These documents are well and good, Fialoke saab, but tell me where is my signature in any of them? What is your proof that I was personally initiating any of these frauds?’ To his credit, Fialoke remained silent when confronted with questions about my direct involvement. I was hoping it was the same case with the chairman and his interrogators.

By then it was nearing two years after my arrest and no charge sheets had been filed against me, or the chairman for that matter. From what I could piece together the ED had tracked down about 80% of the false invoices and 20% of the fake payroll operations, and the biggest surprise of all, they had no clue about the dummy ESOPs we gave to the chairman and his family. There simply was no trace of Boiler Room number three, god bless its creators and operators. When I came to that conclusion, my respect for the man who ran the boiler room operations shot up. Srinivas Kolluri is the man to go to if you ever needed a crooked accountant; I initially thought Kolluri was an oily character but he had outwitted the entire government’s investigation machinery by hiding his tracks effectively. While the crimes of false invoices and payroll had been traced with good documentation, the ED simply could not establish a direct link either to me or the chairman, to prove we were the ones to green light these crimes.?

When I became sure of my ground on these facts, I decided to amp up the matter from my side. I threw a fit when Fialoke came to interrogate me for the nth time. ‘Look here, mister. I have been put in this dungeon for the past two years, with all my bank accounts and assets frozen. You are yet to show me a shred of evidence that I actually signed off or acquiesced in these fraudulent schemes. I demand a hearing in front of a judge in the appropriate court of law.?Till that happens I will refuse to meet you nor participate in any more of your silly fishing expeditions’

Either as a result of my tantrums, or the increasing political pressure on the ED to close all outstanding cases, I got my day in court. I was ready for it and in fact made a production number of my court room appearance. I made sure that Gowri sat in the front row, along with my son and daughter, a solid display of my middle class origins if ever there was one. Then I made a point of representing myself in my own case, dispensing with any high powered legal help. Likewise I declined the offer of getting freshly laundered clothes for my court appearance, preferring to be in my prison garb since I didn’t care one way or other about how I looked. When my turn came I rose up slowly and started speaking in a clear voice. ‘Respected judges, you must wonder why I am representing myself without the aid of a lawyer in this complex case. The fact of the matter is that as a middle class professional, I simply cannot afford any lawyer with all my life’s savings and assets frozen by the ED. But then it is not a complicated defence for me, and I can adequately defend myself from the flimsiest kind of evidence presented against me.’ After this initial salvo I continued in the same vein ‘Conceding, without admitting, that false revenue records and fake payroll may have been created in the company, there is no single slip of paper, email or conference call records to show that I as the CFO or indeed my boss as the chairman were directly implicated in any of these heinous schemes. I submit to you gentlemen that we are just innocent bystanders, just as shocked as everyone here.’ I went on driving home the same no-proof defence for some more time.

Then I changed tack and directed the court’s attention towards myself. ‘What this case has done, gentlemen, apart from falsely accusing me, it has destroyed my entire professional standing. Before all this happened the financial information systems and the rigorous review processes we had set up in the company were the envy of all top companies. Now two years on, this unjustified accusations on the CFO have impugned the very man who wrought the entire edifice from first principles. For the last two years, the only reason the company has been able to withstand all kinds of turmoil swirling about its reputation, is the solid financial and operating system we put in place in my time’

By that time I was soaring and ready for the final, solid blow. ‘Finally, gentlemen, I urge you to ask the most important question of all. Assuming, without admitting to any of these crimes, what did I gain from this multi billion dollar caper? Just for a moment, reflect on what motivates a middle class man to commit financial crimes. ED’s team here would tell you that they had turned over all my bank accounts, assets, apartment ownership and every last bit of kit and caboodle. My total net worth is in single digit crores, all in India, and perfectly reasonable for a man who held top finance positions for the past twenty years. A pitiful amount for a top crook, you will admit. What is the point of engineering a billion dollar crime if you cannot grab a tiny sliver of its proceeds? It is clear that I had no financial motivation to guide, advise or indeed engineer a crime of this magnitude. The illogic of the ED’s position on this very point escapes me’ I sat down slowly winding up my discourse. I looked at my wife, Gowri, who was giving me a sharp look. Then and there she realised that I had kept my promise about not taking a paisa out of the company’s doubtful transactions.

It would have been nice to say that my dramatic court appearance that day altered the course of the case. That would not be true and I will come to that in a bit. What really changed that day by my somewhat overblown histrionics in the court was the public perception of me. Thanks to mobile phone audio recordings and the commentaries of several lawyers gathered in court that day, I became an overnight press sensation. From a Dr.No type of evil doer, I was beginning to be seen as good guy caught in bad circumstances. The central argument that I personally gained nothing out of the whole deal appealed to the nation’s executive class which was brought upon the WIFM factor. What Is In It For Me, is always a reliable way to identify motivation.

I might have thought I had pulled a good court room stunt, the Indian version of Ralph Richardson in Witness for the Prosecution, but the court remained unconvinced. Anyway, just as I had expected, nothing changed in the case. It wound down to its somewhat predictable end with me getting a five year sentence, with time already served being counted. Gopal Sastry, poor chap, got seven years besides getting stripped of his company’s ownership. I believe he had a series of health setbacks while in prison and was frequently hospitalised. In my case, I kept myself reasonably busy writing this narrative and helping my fellow inmates with their petitions and appeals for clemency.?

I came out of Arthur Road prison three and half years after the night I was arrested, a free man this time.

Chapter 5.

Following the law, an alternate point of view

Strictly speaking, the story should have ended in the last chapter with me coming out of jail, allowing the reader to make what they want out of the characters and their motivation to do what they did. ?But then, it would not satisfy some of you who care to know how we justified our ‘fraudulent’ actions to ourselves, and hence this chapter. I will keep it brief, I promise.

The first question most people ask me is why I did not cut a deal with the ED, giving evidence against the chairman, thereby saving myself from going to prison. I could have easily done that, by giving some juicy bits of information to the ED and getting out of the whole ruckus. But then, it would have been a demeaning thing to do, insulting behaviour for a pompous guy like me. Remember, who was the prince among men who first planted all these fancy boiler room ideas in the chairman’s head? That would be me, no questions. Furthermore, I genuinely did not want to harm anyone who did not harm me in any way, the chairman included. I so hate this modern tendency of wanting to get ahead in life by trampling upon others.

Even discounting the soft corner I had for Gopal Sastry, I did not believe the chairman did all these fraudulent schemes to make money for himself. I told you already his lifestyle was rather simple, sturdy old car, middle class values and all. Unlike other business tycoons, he did not buy himself multiple residences abroad, nor spend time cavorting with fancy movie stars. His only indulgences were his fancy watch collection and an ever-expanding library, not very expensive hobbies if you really looked at it. The entire proceeds of these infamous boiler room operations went into building up the company, in terms of skills, facilities and yes a great international reputation. None of it would come cheap, you should know that. Consider these facts, if you doubt me. When the fraud was found out, the company had reported a top line revenue of US dollars 3 Billion. Assuming 20% of the reported revenue were bogus numbers, it was still a 2.4 billion dollar company in real money. Now tell me, in the recent times how many Indian companies had achieved 2 billion dollar revenue in an internationally competitive business? Not many. If you must know, when the our company was sold as a result of all this drama, the people who bought it had clocked up an annual revenue of just 200 million dollars on their own steam. A mouse swallowing an elephant, that is what it was. Now take all these facts into the mix and ask yourself this question: was it wrong for a man from a traditional farming family in the Cauvery basin, to bend a few rules so that he can build a top performing company with global reputation? I am sure you will arrive at a different conclusion this time. Furthermore, you have to give him some credit for staying home, and facing the music in India. He didn’t run away and hide in London or the Bahamas, till things cooled down at home.

Having said all that, my personal view is that the chairman had made two critical mistakes in his approach. The first one is that he exceeded the ten percent limit, due to a combination of greed, ambition and some darkly hinted at political pressure. Had he strictly stayed within the limits laid down by me, who knows we would still be cranking out our schemes happily. The second mistake? He got caught, man, and that was a fatal error. Every successful crook knows that rule about not getting caught.

Even today, many of my friends tell me that I should have stayed in the MNC culture and not ventured outside. At least you would not have gone to prison, they tell me. The only response I have for them is that they do not know how the real environment operates in these companies. For an ambitious professional, in his mid career, who wants to achieve things without the confining influences of procedures, these limitations could be stifling.

Finally, was it right for me and for that matter the chairman, to cook our books and show false results to the investing community? Now let me warn you not to drag my grandfather from Srirangam into this discussion, as he had nothing to do with it. Frankly I am getting a bit fed up about this comparison with this Vedic Scholar stuff. I have a decent explanation for the whole thing, and this is how it goes. All laws in the world, relating to commerce, business and perhaps even social conventions, were made by people who had succeeded in their lives. Some of these successful people, no, make it most of these people, achieved their success by violating these very principles in the first place. And once they reached the top, they went around creating road blocks for others to succeed, in the form of these rules and regulations. If you don’t believe me you can look up the history of stock exchange rules and their governing structures. You will find the biggest and shadiest of inside traders at the top. Put another way, if you are a straight and law abiding player in business or commerce, sticking to closely defined regulatory paths, you can never achieve any degree of phenomenal success. Exactly that was the goal the regulatory environment was designed to achieve, that is to keep down the unwashed, the common man, and in this case corporate players without pedigree and connections. People like the chairman, and to a limited extent myself, have known about these philosophical limitations of prevailing laws, and try from time to time to break away from them, not always successfully.?

Paraphrasing what Antony Hopkins said in one of his movies, ‘what one man has done before, another man can also do’. Coming to our present context, the governance structures with their rules and regulations on commerce and business are only man-made, and not some god-given edicts. Who is to say they are the only right things to follow, and all others are wrong? That is all I am saying.

September 19, 2021.