Oh yes, I have to tell you the story of Nitin, ‘poor fellow’, who did what the boss said but still paid a price.
But, before that sad tale, let me tell you a light-hearted story about my experience with bribery.
You may recall that, sometime back, I had told you a story about the arrival of the Reuters screen in our foreign currency exchange (forex) dealing room and the directive from the big boss to increase forex profits seven-fold.
In order to do this, we had to start trading in the forex market on our own account and not rely only on profits from commercial business (letters of credit—LCs—and remittances).
The forex brokers were delighted.
To explain, in those days, all domestic inter-bank forex deals had to be done through forex brokers, who would get brokerage from both buyer and seller. When we increased our daily trades from some 20 or 30 a day to several hundred, our trading volume zoomed, our profits zoomed, and so did our brokerage payments.
As soon as it became evident that our bank had turned into a big player, the brokers jostled amongst themselves to get a bigger piece of our brokerage pie. Traditional logic told them that they had to be on the right side of the forex dealers in our bank, viz., my and me partner, and the first step towards that goal was to... well, not grease our palms, exactly, but wet our throats, shall I say?
In the first three days after the increase in our bank’s business became apparent, each of us received some three dozen bottles of scotch from the brokers. We quietly kept them and gave our thanks.
But...
We also made it known to each and every broker that there would be rules in respect of doing business with us, such as:
- Brokers had to quote firm prices—no indicative rate, ‘will try for this rate’ and all that stuff.
- Once a deal was done with a broker, he had to produce a contract with an acceptable bank, etc.
Any violation of any of the rules, the broker would get one warning—that was all. The next violation meant being banned for one month.
One unfortunate broker soon got the one-month ban.
The month passed, and the evening before the ban expired, my partner and I each received two bottles of scotch from this broker.
The next morning, we thanked the broker and resumed business with him. Alas (for him, of course, not us), before noon he was banned for a month, once again.
Word went around, and neither my partner nor I got even a single bottle of scotch from that day onwards. The brokers realised that gifting us bottles of scotch was a waste of money—it made not the slightest difference.
Now about ‘poor’ Nitin.
Nitin was the head of trade finance in the Dubai branch of a European bank. This bank had traditionally been a market leader in opening LCs for Iranian companies for the import of various goods into Iran. At one point of time, the US imposed sanctions on Iran which included the condition that, if any bank did business with Iran, it could not operate in the US.
This condition applied to this bank because it had big business in the US. Hence, the huge chunk of Iranian business had to stop, which the bank’s Dubai office was not happy to accept. To get around this, its management hatched a plan.
The branch would fake its LCs to show that they were being opened by some innocuous trader in Dubai with no Iranian connections. Goods would arrive in Dubai and get shipped across, in local dhows, to an Iranian port. The money would come from Iran through hawala and be used to settle the LC payments.
The person who had to open these fake LCs was none other than ‘poor’ Nitin.
He knew very well what he was doing, but what to do? He had a wife and children, he needed his job, etc, etc. – 'Naukri ka sawaal hai'... So, he dutifully obeyed instructions and opened the LCs, all signed by him as authorised signatory, not by any of the management people.
All good things must come to an end, you know.
Competitor banks dared not follow the same tactics, but what they could do, and did, was to pass on word of the fake LCs to the US embassy. A brief investigation revealed the entire scam, and the game was up.
The Fed in the US summoned the directors of the culprit bank for a meeting. Seven directors, venerable elderly men holding positions of high respect in their country, were chosen to answer the summons. They were not really aware, I am told, of what the problem was, but if the Fed called you had better go. So, they travelled to Washington DC to meet the Fed.
At the Fed headquarters, they were made to sit in a corridor for over two hours. Then a young man came and casually asked, “Oh, so you are the guys doing business with Iran. Any of you speak English?”
What followed was a severe drubbing, central bank style, a strong warning, a hefty fine and a stern command to stop 'all this nonsense'.
The directors returned home, infuriated beyond measure, and took strong action.
Heads had to roll in Dubai, and whose head would it be but that of ‘poor’ Nitin? After all, he was the one who had signed all the offending LCs!
Nitin spent several months in a jobless wilderness until some friends got together and found him an opening in a small bank in Abu Dhabi. He was, indeed, grateful to have a job, any job, though it meant that he had to drive four hours a day between Dubai and Abu Dhabi because he couldn’t shift his entire household to Abu Dhabi.
Eventually, Nitin, because he was excellent at his work, did climb back to his rightful position as head of trade finance in a good bank, but he did pay the price for obeying.
So, no simple answers, my friends.
But, like it or not, the choice has to be made.
(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.)