‘Lucier. My name is Lucier.’ Without waiting for any reaction, he continued, ‘Pardon my rudeness, Dr Cardoza. But it is important.’
Cardoza nodded. ‘I am sure it is. Going by the way you barged in.’
‘Surely you’ve read about the incident in Tennessee where a fourteen-year-old shot the assistant principal of his school? This was a couple of months ago.’
‘Nicholas Klingman? More than a couple of months, in fact.’
‘Yes. In March,’ confirmed Lucier.
‘What about him?’
‘Our investigations show that it was a drug-related killing, but the school is concealing facts so that its reputation isn’t impacted. We found out that Nicholas Klingman had brought in the .22 calibre semi-automatic gun to trade it in for two OxyContin pills. Unknown to his parents, he had smuggled out the gun from his father’s vault and hidden it in his bag, amongst his books.’
‘And this is relevant because?’
‘This incident has restarted the debate on gun rights, Dr Cardoza. As a consequence, there has been a fair bit of public outrage over the Second Amendment in the past few months. Many pro-gun-control lobbyists have been using the media and this incident to whip up mass hysteria against guns.’
Cardoza nodded. ‘Go on. I am listening.’
‘The Democrats too seem to be interested in keeping this alive and fresh in public memory. It will help them as we get into election mode eighteen months from now.’
‘So?’
‘All of us know and acknowledge that the crime rate in the USA is higher than in most other countries in the developed world. That’s not because the US has liberal gun-control laws and consequently a higher proliferation of weapons. On the contrary, the crime rate is high because the US has more poverty than many other developed nations. It’s this poverty which leads to crime and violence. Gun control will achieve nothing. It will just make it difficult for decent, law-abiding citizens to possess guns.’
‘Mr Lucier, I have a research paper due for submission to a journal by tomorrow. I have a class for which I need to prepare. I’d be grateful if you could stop going around in circles and tell me what you are talking about. And I am finding it difficult to comprehend what your interest in this entire matter is.’
‘Well, Mr Cardoza, I represent the NRA.’
‘Aah … the National Rifles Association. You guys are leading all the lobbying against any amendment to the gun rights. You don’t want any of this gun-control bullshit. I should have guessed.’
‘We want you to research human behaviour. Behaviour that leads to crime. Research that adequately demonstrates that gun violence has nothing to do with gun rights. Or for that matter, lack of gun control. The NRA will be happy to make sure that the institute gets funded appropriately for the research.’
Cardoza smiled sarcastically. ‘So you want to presuppose the end result before the research itself?’
‘Well. No … but … you see, Dr Cardoza …’ Lucier began stammering.
‘A single incident of gun violence in a school in Tennessee gives the NRA the jitters and it wants MIT to give authenticity to its presupposition that gun control is unnecessary. So that all your gun shops can make a killing, pun unintended. It is common knowledge, Mr Lucier, that you and your organization have opposed even basic regulations which would make things like introduction of child locks in guns, monitoring of gun shops, background checks on gun buyers and so on mandatory. Buying a gun today has become as easy as buying a Barbie doll because of you.’
‘You misunderstand, Dr Cardoza.’
‘Rubbish!’ Cardoza shouted at the top of his voice. ‘You want me to lend credibility to the research so that you can use it as one of your tools in driving public opinion against the Democratic Party’s presidential candidates who have vowed to put an end to your misdeeds. I am not naive, Mr Lucier.’
‘That is not a completely correct representation, Dr Cardoza. But on the right track, I must confess.’ Lucier was calm and composed. Cardoza was getting worked up. ‘Nevertheless,’ continued Lucier, ‘we are willing to fund this project and its chair with a grant of ten million dollars. Of which, should you be interested, you will not be asked to account for two million.’
Cardoza got up from his chair. ‘Thank you, Mr Lucier. The offer is surely a generous one. But I am constrained to decline it. It is against my grain to take up a project which clashes with my moral values. I am fundamentally in favour of gun control and for me to take up a research assignment which is in conflict with that value system will not be appropriate. I’m not even going into the offer of personal gratification that you referred to.’
Lucier got up and walked towards the door. He had just opened the door and stepped outside when Cardoza called him back. ‘On a related note, MIT never accepts grants of any kind from parties which may have a vested interest in the research findings.’
‘Good day, Mr Lucier. You might want to call in advance whenever you decide to come in next,’ Cardoza’s secretary taunted him as he walked out.
20
Mid-2006
Mumbai
Aditya had managed to keep Lal and the audit committee quiet. Lal’s daughter had secured admission to Yale for a postgraduate degree in management and her fees had to be paid. It was no surprise that the amount was transferred from GB2’s Geneva branch.
In return, Shivinder and Deven Khatri had approved a corporate social responsibility programme for a similar amount, to be spent for the upliftment of textile workers in Tiruppur. As expected, the money was paid to an NGO run by Narayanan in the area.
In the corridors of the Snuggles HQ in Boston, Shivinder was a rising star. The growth in the last two years had been quite impressive too, at least on paper. Shivinder was given a fair bit of leeway in running the company. By mid-2006, he was inducted into the Asia-Pacific Board of Snuggles. After all, wasn’t India one of the largest markets? There was only one restriction imposed on him: any expansion in the distribution and franchisee network had to be approved by the board. Unknown to the India management, a team at Snuggles in Boston was working on an acquisition which would give them access to a large franchisee network in Asia. This was the rationale behind the curtailment of franchisee expansion.
Despite all this, Shivinder was worried. The receivables position was unnerving. They didn’t have any solution in sight. There was one, but Shivinder was not in favour of it. They could sell the stock which they had piled up in Narayanan’s Coimbatore warehouse to regular retailers and use the payments those retailers would make against that to offset the outstanding amounts. But the problem was that a given retailer would only buy a certain quantity. If they supplied most of that from the warehouse, supply from the genuine production line would come down considerably. It would eat into their regular sales, and consequently, the sales volumes that they would show in their regular financials would dip. They would again be forced to resort to fraudulently beefing up sales using the same method that they had used in the past. He was stuck with a problem that he didn’t know how to fix.
It was a rainy day in August. Shivinder and Deven Khatri were on a market visit. Strange for a CFO to go on a market visit, but Deven was seen as Shivinder’s shadow. Wherever Shivinder went, he took him along. This time they had come to the Snuggles store on Linking Road in Bandra—one of the first stores to be rebranded with the Snuggles logo and signage after the acquisition. Shivinder spent some time there talking to the staff. The franchisee owner was also present.
‘Mr Singh, when are you giving me the approval to open another store? I have just bought a commercial complex about half a mile down this road. Nike and Adidas have three stores each on the entire stretch of Linking Road, and we have only one. We are losing business.’
‘I know. As of now, we are not opening any more stores.’ Shivinder lamented the fact that they were not allowed to open new stores without the approval of the board. He had tried a couple of times, but the board had declined. Globally they
were trying to acquire another footwear major. If that went through, it would give them access to another two hundred exclusive stores in India. Till that was finalized, the board did not want to go down the franchisee expansion route.
‘In fact, if you have that kind of liquidity, why don’t you pick up some more stock? The sales team can work out very good discounts for you,’ Deven added as an afterthought.
‘The store is right in front of your eyes. Show me an inch of space where I can stock more shoes. This store is maxed out. If you give me some more stores, I’ll be able to do better.’
‘It is difficult as of now,’ said Shivinder. ‘But I’ll keep it in mind.’ And he got into his waiting Mercedes with Deven and headed back to their office.
They were now passing through a crowded part of Linking Road—a half-mile stretch that had made it a popular shopping destination. The small 4-foot by 5-foot shops on the pavement sold every conceivable piece of clothing, jewellery, chappals and shoes, and catered to a wide female audience. There wasn’t a time of the day that could be called a lean period. Shivinder passed that stretch wondering how women are able to shop at almost any time of the day, and how they manage to find something to buy in almost any shop they enter. ‘Retail whores!’ he exclaimed to himself as he left Linking Road and entered S.V. Road on his way to his office in the Bandra Kurla Complex.
He was lost in deep thought about the receivables problem. Sixty-five crores of receivables had been cooked up. How was he going to plough the money back? A Nike store went by on the right. The store displays were brilliant. ‘That’s how we should do it,’ he pointed out to Deven. A little ahead, they crossed an Adidas store. He looked at it and said to himself, ‘How nice it would be if we could have multiple stores on this stretch.’
As if he was reading his mind, Deven commented, ‘Wish it was our store! Fabulous location.’
Shivinder smiled. Slowly the smile became wider. He looked at Deven, excitement palpable on his face. ‘It will be. Soon.’ And he turned away, his gaze firmly set on the shops which were speeding by.
He dropped Deven off at his office and drove straight to GB2. Aditya was in his room.
‘I need to talk to you.’
‘Dude, you should at least have called me. I am just heading for a meeting.’
‘Cancel it. We need to talk.’ He turned back, shut the door to Aditya’s cabin and added, ‘Now!’
Aditya knew that this was not just another meeting. He called his secretary and told her to reschedule his meetings and sat down on his chair. ‘Shoot!’
Shivinder started talking. He spoke non-stop for fifteen minutes. Finally, when he was done, Aditya stretched back, closed his eyes and rested his head on the headrest of his seat. It was beginning to fall into place.
‘Only if you help me through this will we be able to pull this off, Adi.’
Two weeks later
Deven dashed into Shivinder’s room with a big smile on his face. ‘Over twenty-five calls since morning.’
‘Only twenty-five?’ There was a hint of disappointment in Shivinder’s voice. ‘Twenty-five is not going to help.’
‘Shivinder, it’s 12.30 p.m. And we dispatched the letters only last evening. I didn’t expect even a single call today.’
‘Let’s see how many come our way.’
The previous evening, following Shivinder’s plan, Snuggles had invited applications for fresh franchisees. This was a closed-group invitation, sent out to four hundred existing franchisees of Snuggles, who were earlier with Step Up Shoes. But there was one change from the earlier times that Step Up Shoes had called for franchisee applications. This time around every franchisee application was to be accompanied by a non-refundable demand draft of ten lakh rupees—an amount which would be refunded only in case the application was turned down. Step Up Shoes had never done this. In the scheme document, it was mentioned as a Snuggles worldwide practice.
Shivinder had carefully planned it all. The franchisee enrolment scheme was sent out only to those retailers with whom Shivinder had a long history. They were people he had dealt with in the past and there was trust on both sides. Shivinder was doing this despite the fact that he had been prohibited from expanding distribution without board approval.
By the end of the week, they had received three hundred applications for opening up new franchisee stores. A ten-lakh-rupee deposit from each applicant meant a total collection of thirty crores.
Within the next three days, a new account was opened in GB2 for Snuggles. The Snuggles board had authorized Shivinder and Deven to open a bank account wherever they deemed fit. That board resolution came in handy. In any case, when the head of investment banking wants an account to be opened, there is little that anyone can do. All the franchisee application cheques were deposited into that account. GB2 was happy. It had acquired a current account with a huge balance.
‘It is all falling into place,’ Aditya told Shivinder one evening.
Shivinder smiled and cheerfully slapped him on the back. ‘I have signed off the appointment letters. We have approved these three hundred franchisees. No one in Snuggles will know that they exist. These franchisees will not exist in our global IT systems. Deven will track them separately.’
‘This was a brilliant one from you, Shivinder.’
‘Getting the sales head and logistics head to be on our side always helps. Right?’
‘Absolutely.’
‘Once we have recovered our sixty-five crore rupees from them, we will slowly regularize these franchisee appointments and bring them into the mainstream.’
‘We have already recovered thirty crores through franchisee fees. Only thirty-five more to go.’
Shivinder laughed. It was so loud that Aditya quickly looked around to see if anyone noticed. ‘Are you kidding me, Aditya? That money lying in GB2 is our money. Why would I ever use it to settle the shortfall in receivables.’ There was a glint in his eyes. A shine which told Aditya that there was more to it.
Aditya raised his right eyebrow. ‘What’s the plan?’ He knew Shivinder’s body language very well by now. Shivinder got up from his chair, turned around and walked towards the window. Aditya continued, ‘We have to offset the receivables, dude. Snuggles needs to get sixty-five crores for the shoes it was supposed to have sold.’
‘Snuggles will receive the entire money for the shoes it sold, Aditya. Now chill.’
‘But how?’
‘Aditya, for the last year or so, sixty to seventy crores’ worth of stock of Snuggles is lying in your father-in-law’s warehouses. This is the stock we falsely invoiced and shipped out of our factories but instead of sending them to stores, we sent them to your father-in-law’s warehouse. The stock left the factories and our vendors also got paid for having manufactured those shoes. Now they are just lying there rotting. When will that come in handy? We will just repackage that stock in new boxes.’ Shivinder continued, ‘Re-sticker them with current dates and supply them to these new franchisees. They will pay us for those and we will apply them against fraudulent receivables that we have shown in our books.’
‘Oh yes,’ Aditya remembered. He felt a bit stupid that he had not figured that out when Shivinder had recommended opening the franchisees. Shivinder was smarter than what Aditya had initially imagined. The franchisee deal was a masterstroke: issuing new franchisee licences to the same set of franchisees against whose names they had booked the fraudulent sales—the very same franchisees who swore by Shivinder because he had built them up from scratch when he was in Step Up Shoes—and also making more money than what either of them would ever have made in their lives.
By December 2006, the entire receivables problem was taken care of and the Snuggles balance sheet was sorted out. Sixty-five crores had gone into the account and the overdue receivables had been settled. The financials that Snuggles India would present for the year in April 2007 would be squeaky clean. The thirty crore rupees in GB2 was safe. It did not have to be touched. Shivinder and Aditya
were happy and relieved.
A parallel infrastructure had been set up. The opportunity it offered them for making money was limitless. But the thing about greed is that once it gets you in its clutches, it doesn’t let go. The battle that day was won by greed. The war too had to go its way.
21
January 2007
Mumbai/Boston
Cardoza had just returned from his vacation. Like most other Americans, Cardoza too went on his annual jaunt in December. This time around, he had decided to camp in South Asia. On his way back, he had made a one-week stopover in India. A couple of lectures at the premier management institutes in Bangalore and Ahmedabad helped him pay for his trip. His prime motive though, was to spend a week with Cirisha and review the work she was doing in the field. He wanted to make sure that the grants were being spent in the right fashion. A fair bit of his time went into assessing the on-ground execution of his projects. The Bill & Melinda Gates Foundation had in principle agreed on a grant of thirty million dollars to MIT for research in the Asia-Pacific region and Cardoza wanted to make sure that they were geared up for it.
‘Young man, why don’t you too come to Boston? It’s a fine place. Great campus. You will have a fabulous life there,’ Cardoza said to Aditya, sipping on a hot cup of Americano. Aditya had driven Cardoza and Cirisha to the Barista Lavazza outlet in Bandra reclamation for a post-dinner coffee, a night before he was scheduled to fly out of India.
Aditya just smiled. ‘I have a reasonably good career going, Michael. I can’t just give it all up.’
‘I am sure America wants some good people to come there. In any case your bank is headquartered in Boston, right? Can’t you pull some strings?’
‘Sure. If things work out, why not? I would love to move. The family can be together more often.’ He looked at Cirisha as he said this. She just smiled, a bit confused whether Aditya said this out of sarcasm or really meant it.
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