The readers may be wondering what might have happened when we ultimately met the CMD at his chambers on that dramatic day. To be frank, I expected it to be not much different from what happened at the Secretariat earlier. But facing the topmost authority of the bank fully knowing that he had not appreciated the report on the company could have been the toughest proposition for me. But I was left wondering about the scenario just like the readers of my story. It remains a matter of imagination till today because the meeting never took place! The CMD became so busy that the DGM ultimately asked us to go and told us to get back only if we were intimated again.
My experience with the DGM at the Secretariat made me think on one particular aspect of the report prepared by me. Even though the DM made it very clear to the DGM that the report was prepared at his instance, I could make out that the primary responsibility for the contents of the report was being fixed on me. By asking me to handle these files exclusively, the DM was relieving one layer of persons below me from the responsibility. In the normal course, the officer handling the file was responsible for the basic information provided in the report. My responsibility would have been secondary along with the SM and the DM. The real intention of the DM was to protect him on a future date, as he was confident of my ability to meticulously report all the irregularities in the account. But in the process he was putting me in the frontline – at my own peril of course! This fact had been proved by the conversation we had with the DGM earlier.
While coming back from the HO, I asked the DM the advisability of continuing with the fortnightly reports. He straightaway told me to continue. Actually the conversation with the DGM had made one thing clear. The report was factual and there was absolutely no dispute on its contents. By placing all the irregularities on record, the branch was making it clear that it could not be held responsible for the account to go bad at a later date. Any sanctions given in spite of the irregularities would only be at the full responsibility of the sanctioning authority. The DGM at the Secretariat had been annoyed by this fact when he dubbed the report as an ‘inspection report’. He could not digest the fact that the branch was putting the onus on the CO/HO!
As it turned out later, it was this single fortnightly report that saved the skin of several branch officials during the ‘post-mortem’ of the account. I continued submission of the report till I left the branch three years later. After some more years the account became totally sticky. A special team from the Circle Office was asked to conduct an in-depth study to fix the responsibility. The report came in handy at that time. The team concluded that there was nothing that was not known to the sanctioning authorities while continuing and sanctioning additional limits. It also found that all the adhoc facilities and deviations from sanctions were having specific sanctions from the relevant authorities. It gave a clean chit and absolved the branch officials from the primary responsibility, which would have been otherwise fixed on them as a matter of routine!
I had earlier made a mention that the company was reported to be coming out with a rights issue of shares shortly. We received an official intimation from the company to the said effect along with a copy of the prospectus. We came to know that our bank had been notified as the bankers to the issue with due permission from our Head Office. The positive side of the development was that the company would have funds at its disposal to clear the overdues in the bank.
One of the requirements for the rights issue was that the company had to furnish the performance in the latest quarter (Apr-June in this case) in the prospectus to enable the shareholders to take a decision based on the same. I went through the same and found to my astonishment that the company had shown sales of nearly Rs2 crore for the quarter even though it had sales of only around Rs50 lakh in April and May as per statements given to the bank. The proceeds of the said sales were also not reflected in the bank accounts as we found out from the records.
I had a discussion with the DM and SM. The company had held back the stock statement for June and the quarterly information data for the Apr-June quarter even though they were overdue. We called the Finance Manager of the company for a discussion. He told us that the same were under preparation and will be submitted shortly. When asked about the sudden jump in sales, he requested us to await the statements.
I have earlier mentioned that the Corporate Cell had been provided with excellent staff even at the clerical level. Hardly one week later Mr.Madhusudan who was handling these statements came rushing to me with the statements given by the company. He told me that the company had shown a sudden jump in sales to the extent of Rs1.5 crore in the month of June! He said he could not appreciate the same as they were not reflected in the company’s accounts with us. Our bank was the sole bankers to the company.
We had a detailed discussion with the DM and SM. We were quite aware that the company had no resources to generate such sales in a particular month in the absence of the requisite raw material. It was also not clear as to whom the said sales were made as no bills had been submitted to the bank for collection/discount. As the bankers to the rights issue it was important for the bank that the data given in the prospectus was accurate.
The Finance Manager was called for the discussion once again. He stood by the statements telling us that the sales had actually taken place. He also told us that the company had sold the stock on consignment basis to a single party in Bombay. We could not countercheck the same from excise duty records as the company’s products were totally exempted from the duty.
We then asked the company to furnish us the stock dispatch records including the consigner copy of the lorry (truck) receipts. The DM instructed me to visit the company’s office for verification. The company took two days for the purpose. When I ultimately visited the office, the company official produced an entire set of consignor copies of lorry receipts. The entire lot was from a single book and one could easily make out that they were written in a hurry on a single day. Even though the lorry company was in the bank’s approved list, the transactions appeared to be quite suspicious on the face of it. As per the receipts, the entire stock had been dispatched to Bombay to a single client who appeared to be a proprietorship firm.
Our DM had by this time reported the matter to the DGM of the Circle Office over phone. The matter became so serious that the DGM visited our office for a discussion by the time I came back from the company’s office. He was anxiously waiting for my comeback. When I told him about the serial consignor copies of the lorry receipts, he thought there was need to make further investigation. He told the DM that the branch may have to depute a person to Bombay to verify the stock at the consignment agent. He left the branch after some time.
The DM immediately made out a letter to the DGM covering all the aspects of the company’s sudden jump in sales. He recommended for an inspection of the stock held in Bombay at the consignment agent’s godown. Even though he did not tell me officially I could make out that he had mentioned my name for the purpose in view of my seven-year experience in Bombay Inspection Department.
The task was expected to become a virtual nightmare for me. I was 100 percent sure that the company could not have practically dispatched that much of stock to Bombay. Naturally it would not be in a position to show the physical stock to me. But what exactly could happen at Bombay in the absence of stock could be anybody’s guess. As far as the company was concerned it was a matter of making its rights issue a success. I doubted whether I could come back to Bangalore in a single piece! Even if I came back I was not sure what kind of report could I submit in the background of what happened earlier at the CMD’s Secretariat. Indeed I was facing the toughest situation in my service at that juncture.
------- (To be continued)
A V Krishnamurthy