‘It is true for all of us, isn’t it?’ She ran her fingers through his hair. ‘Just hope people don’t lose faith in the team. That is more important.’
‘Hmm …’ he acknowledged just as his phone rang. His lawyer was calling. Vicky had been summoned to the police station.
He put the phone down and stared blankly at the television. Police station? Why did it need to go there?
He was so lost in his thoughts that he his didn’t notice the small message running on the ticker at the bottom of the screen.
40
June–July 2016
DELHI
‘CAD has crossed 4.5 per cent of GDP: On RBI’s advice, FM announces curbs on import of gold: New 80:20 scheme for gold imports launched’ read the ticker at the bottom of the screen.
Earlier that day, Aditya Kesavan, along with his team of advisors, had met the Finance Minister and apprised him of the issues that the country was facing. The rise in crude oil prices was rapidly depleting the sovereign foreign-exchange holdings. It meant that the country would run out of foreign exchange soon if steps were not taken to control the outflow. And outflow of foreign exchange could only be reduced if imports were reduced. The largest import item was crude oil, whose prices were continuously rising. But it was not something which could be cut.
The second-largest import item was yellow metal. India imported a thousand tonnes annually and almost half the current account deficit was due to the import of gold. The import of gold and the consequent requirement of foreign exchange was also driving up the dollar rate. It was fast becoming critical to cut the import of gold to reduce the foreign-exchange outflow.
Under immense pressure from the centre, Aditya Kesavan recommended two key policy changes to stop the slide of the rupee and bring the huge current account deficit under control.
a) Impose a higher import duty on bullion imports, thereby making gold expensive and reducing demand.
b) The 80:20 gold scheme.
The import of gold into India was a complicated process. Since bullion was a regulated market, the government had thus far allowed only certain scheduled commercial banks and state-owned agencies to import gold. These banks and agencies would import and then supply gold to traders, jewellers and anyone who required the metal for jewellery manufacturing. Apart from these institutions, star trading houses, export-oriented units, etc. could import gold for the sole purpose of exporting the entire quantity after value addition, i.e. after turning gold biscuits into jewellery.
Aditya Kesavan had proposed to the government that to reduce CAD, it was important that the import of gold was reduced. Curtailing imports would impact running businesses. The next best alternative was to allow import of gold only if 20 per cent of the gold was worked upon and subsequently exported. That would result in a foreign-exchange inflow on account of the exports and hence it would aid both the foreign-exchange demand and reduction in CAD.
And so it was mandated that banks and state agencies importing gold would be allowed to import the next lot only if 20 per cent of the imported lot was exclusively made available for the purposes of export.
The Finance Minister immediately accepted the proposal. At a meeting of the Finance Secretary and the Cabinet Committee on Economic Affairs, this 80:20 policy was given the green signal and the required paperwork was completed the same day. That evening, Aditya Kesavan announced the move at a press conference. So while media channels did carry the news, it didn’t make ripples. After all, it was a tidbit compared to the IPL scandal that had just started cooking.
Which was why Vicky Malhotra, whose life was about to change because of that one tiny news item, missed actually reading it.
₹
That night, Aditya tried reaching out to Vicky Malhotra, just to check if everything was okay on the match-fixing front. Vicky didn’t pick up his phone. The reason was that his phone was kept on the table in the interrogation room. When it started ringing, the CBI Director interrogating Vicky saw the name flashing on the screen.
‘Why is the RBI Governor calling you?’ he asked Vicky, who shrugged his shoulders and said, ‘I don’t know. He’s a friend.’
41
25 October 2016
DELHI/HAZRATGANJ
The phone kept on Kabir Khan’s table rang five times before he picked it up.
‘Sir, it’s me, Victor D’Souza,’ the CBI officer investigating the Hazratganj car crash spoke very softly. Once again, Khan thought about how the man’s demenour was so unlike a typical CBI officer’s. He was far too soft.
‘Tell me, Victor,’ he said.
‘We need some information from the Reserve Bank of India.’
‘Go on, I’m listening.’
‘We have not yet been able to identify the fourth dead man in the Hazratganj crash. If I were to go by the SBI branch manager’s version, the fourth guy is the one who seemed to be the kingpin. The leader of the gang.’
‘But where does the RBI come into this?’ Kabir asked him, a bit peeved at the roundabout nature of the conversation.
‘Sir, most of the bundles recovered from the dead are new ones. They don’t even have a bank stamp on them. Normally, when a cashier gives out a currency bundle at a bank, he stamps the bundle, just for identification. So it is obvious that the bundles have not exchanged hands too many times. If we find out from the RBI where the notes were sent to, we can figure out the source. We can find out whose money it is.’
‘So what do you need me to do?’ Khan asked.
‘I have just sent you a mail with all the details. If we can use your good offices to forward that to the RBI and request them for details on where the currency was sent, it would be really helpful,’ Victor said.
‘Okay. Consider it done. I’m sure RBI can at least tell you which currency chest it was sent to.’
‘And also,’ Victor continued. ‘Since we haven’t been able to figure out the identity of the kingpin, we have sent the biometric data of the deceased to NCRB. I will follow up with them, but if you throw your weight around, it could help.’
The National Crime Records Bureau (NCRB) had a database of fingerprints of all those who had a criminal background. It was a central repository of biometric data pertaining to everyone who had been arrested or convicted of any crime in the past. Victor was hoping that since the deceased had been found with huge amounts of cash, chances were that they weren’t exactly clean guys. If not in Hazratganj, they might have criminal records somewhere else in the country.
‘Sure, D’Souza, I will do that right away. Send me the record number please. I will speak to the chief of NCRB,’ Kabir Khan said, and then added, ‘Have you tried to match the information with Aadhaar data?’
‘Sir, I thought the biometric data collected for Aadhaar cards could not be used by law enforcement,’ Victor sounded confused.
‘We are the CBI, Victor. We can use any data that we need to,’ Kabir declared. ‘But you are right. I will first try to get info out of NCRB. If I am not able to, then I will knock on UIDAI’s doors.’
42
June–July 2016
MUMBAI
The 80:20 scheme, coupled with the hike in import duties, had a drastic impact on gold prices over the next few days. Aditya Kesavan’s strategy seemed to be working.
Within three days, gold prices went up by 10 per cent. And over the next two weeks, import of gold dropped dramatically. The demand for forex for import of the yellow metal tanked. This had the desired effort on the rupee, which firmed up and started a slow climb towards ₹65 to a dollar.
Vicky Malhotra, who was already reeling under the impact of the match-fixing scandal and the MyBestDeal.com debacle, was suddenly staring at another situation – Suyog Gold. He had already raised ₹600 crore under his Mera Gold scheme. Consumers had paid up in the hope that three years later, they would get their gold. Malhotra’s gamble had been simple. Collect money now. Park the money in lucrative investments. Buy real estate. Make significant returns in three years. Pu
ll out money after three years. Buy the gold required to be given to consumers. The balance would be his profit. His business model was contingent on two key factors – the price of gold rising slowly and his investments yielding him high returns.
And now, his plan was looking like it was going to fail massively. The import duty, coupled with reduced availability of gold in the domestic market on account of the 20 per cent export criteria, had resulted in the price of bullion going up. His plan couldn’t take the sudden increase in gold prices. All of a sudden, he was staring at a huge loss. Even with his investments making money, it still wasn’t enough to curb this loss, and unless gold prices came down progressively over the next three years, Vicky Malhotra was going to be in deep waters.
He grabbed his phone and dialled a number.
‘I was expecting you to call,’ the person on the the other end of the line said.
‘Why?’ Vicky asked.
‘This 80:20 scheme. I knew it would destroy your sleep. In one stroke, it has neutralized everything you expected to make from Suyog. And I knew that in your moment of desperation, you would call me,’ the man’s voice was smug.
‘What do I do? I am fucked,’ Vicky said desperately. ‘For all I know, the price of gold three years down will be more than the corpus I would have collected for it.’
‘Well, it’s simple,’ came the unperturbed answer. ‘Return the money. Say you are withdrawing the scheme. Force majeure.’
‘I can’t,’ Vicky said.
‘Why?’
‘There is no money left.’
There was an intake of breath. ‘What do you mean, there is no money left? Where did the six hundred crores you claimed to have collected go?’
‘Spent. At least a bulk of it. Forty-odd went into MyBestDeal.com. Hundred-odd into property. I have three hundred crores left in my bank. How will I raise the balance if I’ve to pay everyone back? I can’t pay back partially, can I?’ he asked with hope in his voice, though he knew the answer before it came.
‘No. You can’t. The moment you say you are paying back the money, you will have queues outside your agents’ shops and houses. It is either all or none.’
‘Then what do I do?’ the despair in Vicky’s voice
was growing.
‘As far as I can see, this situation might be beyond help. You should not have used this money to subsidize your other businesses. You are screwed, my friend.’
‘I called you for help.And this isn’t even sympathy, Mehul,’ Vicky fired back, stung.
‘Fine. Note down this number.’ Mehul Modi dictated a telephone number that Vicky jotted down. ‘If there is someone who can help you, it is this guy. I will brief him. Call him after that.’
‘What’s his name?’ Vicky asked.
‘Danish Khosla.’
43
July 2016
MUMBAI
‘The CBI is planning to bring you in.’
‘For what reason?’ Vicky Malhotra asked, the lines on his forehead deepening as he frowned. Over the last few months he had aged rapidly, the greys in his hair prominent now. They were sitting in Danish Khosla’s suite in Taj Lands End.
‘They are waiting for the CBI Director to return from his overseas conference,’ Khosla said.
‘But why do they want to call me in? What is the charge?’
‘Sanat Rao has confessed. He has given a statement that you were in the know,’ Khosla replied.
‘That bastard!’
‘He is singing like a canary. He has shown them some messages from you and a couple of other promoters of Telengana Tigers,’ Khosla said.
‘What does this mean for me?’ Vicky asked, beads of sweat appearing on his forehead despite the airconditioning in the room.
‘Well, sooner or later, you will be arrested on charges of match fixing,’ Khosla said flatly.
‘How much time do we have?’
‘If my source in the CBI is to be believed, you have seventy-two hours, on the outside.’
‘And what about the issue with the bullion prices?’ Vicky asked. He wasn’t being able to think straight.
‘Well, Mr Malhotra, pardon me for saying this, but the bullion prices should be the least of your concerns right now. To enjoy your six hundred crores from the Suyog Gold scheme, you need to be out of prison tomorrow, right?’
Vicky Malhotra let out a big sigh. He leaned forward and asked, ‘So what do I do now?’
‘That’s not a difficult question to answer,’ Khosla said nonchalantly, and then went on to tell Vicky exactly what he should do.
At the end of the conversation, Vicky Malhotra got up and walked out of the room. He got into his car and drove to his office in Juhu, walked up to his second-floor office, opened the safe, pulled out a few documents, including his passport and some papers pertaining to his account in St Kitts and Zurich. He sat in his chair for a few minutes, worked on his computer for a few more, and then got up and walked out.
‘Airport,’ he instructed his driver as he got into the car.
On the way, he called Mehul Modi. ‘Thank you,’ he said after a brief conversation. ‘The conversation with Khosla was very useful.’
44
August 2016
MUMBAI
Aditya was in a foul mood when his deputy governor Chakravarthi walked into his room. Customer service in the banking and financial services’ world were under Chakravarthi’s jurisdiction.
The reason for Aditya’s mood was the call he’d just received a few minutes ago. The Finance Secretary, Ranjeet Kumar, had once again called to bring up the issue of the RBI increasing the dividend that was to be payable to the government. It wasn’t the insistence on the dividend that had pissed off Aditya, though. During the conversation, the Secretary had mentioned to him that the FM wanted Aditya to meet Le Da Spire’s chief, Carlo Pinotti. ‘Mr Pinotti might be visiting India in a few months. He wants to meet with you. The Finance Minister has asked me to specifically tell you to meet with him and sort out the issues that the RBI has with Le Da Spire,’ Ranjeet had said, much to Aditya’s chagrin. And when Aditya had protested, the Secretary had dropped a bombshell. ‘You need to make this right. The Finance Minister might not be averse to doing business with them.’ This had shocked Aditya, and he was still recovering from it when the Deputy Governor walked in.
‘Yes, Mr Chakravarthi,’ Aditya looked up from his desk.
‘It seems that we have a peculiar situation. Over the last three days, we have got over fifty mails asking for clarification on a certain gold scheme launched by a local company. What’s surprising is that all these mails have come in after we announced the increase in import duties and the 80:20 scheme. After the price of gold went up,’ Chakravarthi said.
‘Go on,’ Aditya prompted.
‘A local company, Suyog Gold, has launched a scheme which to me looks like a Ponzi scheme.’ The mention of Suyog Gold got Aditya’s attention. He motioned for Chakravarthi to go on.
‘According to the gold scheme …’ Chakravarthi began, but Aditya cut him short. ‘I know the scheme. What about it?’
‘Worried that the spurt in gold prices may put their investment at risk, some of the customers who have invested in their deep discount schemes have gone back to the distributors – the gold traders who have a franchisee arrangement with Suyog – and asked for cancellation and refund. But all of them have been turned away. They have been told that the amount is non-refundable.’
‘Hmm. So what do you want to do about this?’ Aditya asked.
‘I wanted to check with you if we should issue a caution notice to the public, asking them to stop dealing with such companies and that schemes like these are not legal. They are Ponzi schemes. They will keep collecting money from more and more consumers, with the new consumers paying for the gold that has to be given to the old customers. At some point in time, the music will stop and the company will collapse, taking with it the consumers’ money.’
Aditya thought for a while and then sa
id, ‘That may be too harsh an approach, don’t you think?’
‘Harsh?’ Chakravarthi countered. ‘Not at all. Such fraudsters should be in jail. And the public should be cautioned against them.’
‘Fair enough, Chakravarthi. But where do we come in? Is it in our remit? Just because thirty or forty people complained to the Reserve Bank of India, do we step in? Tomorrow, if buyers of furniture come and complain, or if buyers of electronic goods come and complain, would you get involved?’ And he walked around to Chakravarthi and placed his hand on the man’s shoulder. ‘I know you mean well, but do we even have jurisdiction over such complaints?’
‘Possibly not,’ Chakravarthi replied uncertainly. ‘But …’
Aditya hastily cut him off again. ‘Then why should this case be any different? We have nothing to do with this scheme. It is a private transaction between two legal entities. We have no locus standi, do we?’
‘Technically, I suppose you are right. But we are the ones who facilitate gold imports,’ Chakravarthi argued. ‘Don’t we?’
‘Yes. But we don’t monitor jewellers. We don’t certify jewellery. And we don’t regulate jewellers,’ Aditya said
‘I’m not sure I completely agree with you, but I don’t disagree either. So, what should we do?’ the Deputy Governor asked.
‘Let pass’ on this information to the law enforcers. Maybe to SEBI as well. Let them take a call. It’s not for us to decide the matter,’ Aditya said.
‘Ok. Sounds good,’ Chakravarthi said as he got up to leave.
The moment Chakravarthi left the room, Aditya took out his mobile and made a call. He couldn’t get through. Feeling restless, he began pacing the room. First the diktat to meet Le Da Spire in three months and now the Suyog Gold scheme. This day just kept getting worse. He picked up his phone and dialled another number. This time the call was answered.
‘Hello stranger,’ Pallavi’s sweet voice came through the speaker.
‘There could be a problem, Pallavi,’Aditya said, his tone grave.
Don't Tell the Governor Page 11
