“What could he do, poor fellow,” said my friend, “he had no choice. Naukri ka sawaal tha, na?”
He was talking about a friend of his (whom I didn’t know) who had retired from a senior position in a public sector bank (PSB). The story was about how this 'poor fellow' had but to sign-off on a loan that was sure to go bad because his boss had phoned him to convey the instructions of a big political honcho.
I nearly said, 'Total BS,' but I controlled myself and said, very mildly, that there was always a choice, but it had a price.
I won’t get into the rather heated conversation that followed and will instead explain what my comment meant.
Bosses giving verbal instructions (with 100% future deniability), is nothing new. It happens in every organisation, more or less frequently.
In some organisations, there are traditional mechanisms for managing such orders.
At my old bank, you could ask the boss to put his instruction in writing, but that would be rather rude, old boy, don’t you see? Instead, you could send him a memo saying, “This is to place on record your instruction to ….” and get his secretary to acknowledge receipt on the duplicate of the memo. In later years, you could send an internal mail saying the same thing.
The beauty of this system is that your boss knew that you could do this, thus placing his instruction on record and, hence, he would not give you a direct instruction in the first place. Instead, he would suggest that you do it. If you accepted the suggestion, well and good. If not, well…
The annals of history in the bank recorded that, once upon a time, a devious manager would initial cheques, but with a pencil, not a pen. On the basis of this 'approval', the cheques would be paid. If ever the need arose, the manager would retrieve the cheque(s) from the record room and erase his initial.
His underlings found the solution – place pieces of cello-tape over the penciled initials!
Sometimes, you might have to figure out an innovative solution to the problem – how to disobey a verbal instruction without appearing to do so.
Here is an example.
The chairman of my (Middle Eastern) bank summoned me to his office. I entered to find Mr Maqbool, the chairman of a large business group, sitting with him. My chairman explained the matter.
We had a delinquent client, a relative of Mr Maqbool, whose unpaid loan of US$500,000 was secured by a large property mortgaged to our bank. The deal was – Mr Maqbool would pay the bank US$300,000 in full settlement of the loan outstanding and take over the property, and the bank would write off the remaining US$200,000. The loan had a US$250,000 provision on it already, and thus the bank would get a US$50,000 write-back of provision.
My chairman explained that the borrower had come crying to Mr Maqbool and, out of the goodness of his heart, he had agreed to intercede with the bank to close this long-standing matter. Mr Maqbool nodded in agreement.
Not bad, would you say?
The problem was – I knew that our chairman was a devious fellow, and anything that he wanted the bank to do would invariably have a personal angle to it. So, I had to find out where the 'kaala' in the 'daal' was.
The matter was not directly under my jurisdiction because I was the corporate banking head, and such loans came under retail loans. I called up Bashir, the head of retail, and asked for the file.
Bashir was a smart young man who had got into the chairman’s bad books by refusing to do things that he had been asked to do and, once or twice, I had come to his rescue. This is why the chairman had chosen me, not him, to make the deal happen.
Fortunately, Bashir’s thinking was in tune with mine.
We found that the file did not contain any recent valuation of the property. Never mind - Bashir had contacts within the real estate market. A few phone calls, and he found out that the market value of the property was US$600,000 - fully double what was being offered to us.
We looked at each other and knew that we both understood what the game was. Mr Maqbool would pick up the property at half the market price, our chairman would get a nice ‘gift’, the borrower would be bullied into silence, and our bank would write off US$200,000.
Question was – how to stop this?
I asked Bashir, “Can you get a back-dated valuation for, say US$550,000?”
“Back-dated?” he asked, evidently puzzled.
“Yes, of course,” I said. “The chairman must not know that we did the valuation after the deal came up, right?”
Bashir nodded and got to work.
Within hours, we had a valuation from a respectable firm, dated 14 months earlier, for US$525,000. The owner of the firm, the husband of Bashir’s second cousin, was quite 'helpful'.
I went back to the chairman, showed him the valuation that had been ‘sitting in the file’ and explained that we could not accept US$300,000 – the auditors would kill us.
The chairman gave me a scathing look, but there was nothing he could do.
Within a week, Mr Maqbool settled the loan in full and got the property (still US$100,000 below market price) while we wrote back a substantial amount of provision.
I do not know whether my chairman got anything.
Many months later, I was chatting with a client at a social gathering when Mr Maqbool came up to us. My companion began to introduce me, but Mr Maqbool said, “No need, no need, I know Mr Banerjee already. I lost US$200,000 because of him.”
There was a shocked silence. I did not know where to look.
Mr Maqbool broke the silence with a loud laugh.
“Never mind,” he said as he shook my hand, “I always admire a smart man who protects his employer’s business.”
Okay, nice story, you may be thinking. But what about the choice, the price, and all that stuff?
Ah, next time…
(Deserting engineering after a year in a factory, Amitabha Banerjee did an MBA in the US and returned to India. Choosing work-to-live over live-to-work, he joined banking and worked for various banks in India and the Middle East. Post-retirement, he returned to his hometown Kolkata and is now spending his golden years travelling the world, playing bridge, befriending Netflix & Prime Video and writing in his wife’s travel blog.)