(This story may be unbelievable, but it is absolutely true)
My friend SRP had built a very successful business spread across the Gulf countries, India and the far East. His home base and head office were in the Gulf, but he travelled a lot to his various offices to oversee operations.
Finance, however, was handled entirely by MS, the chief financial officer (CFO), who was also his old friend and married to his first cousin. My friend trusted MS absolutely because their bonding was three-fold—friend, kinsman and relative.
SRP would invite me home from time to time to have a drink and discuss various business ideas, using me as a bouncing board.
During one such meeting, SRP had told me that the annual income from his business was about US$5mn-6mn (million), his total household expenses were about US$1mn a year, and his accumulated savings to date, apart from several properties, amounted to about US$35mn. Apparently, MS handled his savings portfolio and SRP neither sought, nor was given, any details thereof.
Eventually, MS decided to resign and start his own consultancy. Reluctantly, SRP let him go, and even helped him by setting up an office for him in the same city. SRP also released his personal secretary to manage MS’s office.
A few months later, SRP unexpectedly called me one morning and asked if I could come and meet him as soon as possible on an important matter. Intrigued by this unusual request, I met him that afternoon.
SRP said that his newly-appointed CFO needed money to pay some urgent bills and had tried to transfer money from the ‘B’ account at the bank to the main operating account. To his surprise, the bank had said that there was no money in the ‘B’ account (though the company’s books showed a substantial credit balance). Further, the bank refused to give details of the transactions in the ‘B’ account, saying that the signature of MS, the sole signatory, was needed.
MS was in the US on holiday with his wife and daughters (he was a US citizen) and not available. The new CFO was stuck and SRP didn’t know what to do. That is why he had called me.
No money in the ‘B’ account? Sole signatory? My banker’s instincts sounded a red alert.
Nevertheless, so as not to panic SRP, I suggested that we look in MS’s new office. Perhaps there was some file that could tell us where some money could be found.
SRP nodded and called MS’s secretary to ask that access be given to the files in the office. This girl had been SRP’s secretary earlier, and so she readily agreed.
Long story short—we hit pay-dirt!
File after file contained documents and details of many different investments made by MS in the name of a partnership firm in which he held 99% shares and his wife (SRP’s cousin) held 1%. I spent the rest of the afternoon and evening going through all the files to create a complete picture of what had been going on.
- MS’s firm had invested nearly US$40mn in various tax havens all over the world, using wholly-owned SPVs to buy mutual funds and properties.
- The initial money for every investment had come from the ‘B’ account I mentioned earlier.
- In many places, MS had given specific declarations that he was NOT a US citizen, and for ID purposes he had used his old Indian passport (which he had apparently not surrendered or cancelled despite getting US citizenship).
It was crystal clear that MS had stolen a huge amount of money from SRP over the years, and besides, he had deliberately lied about his US citizenship. Consequently, he had violated various US laws because, being a US citizen, he was required to declare his worldwide assets, and the income thereof, to the US government (IRS) which he had not.
SRP’s initial reaction was—Okay, he stole my money. How do I get it back?
The ideal solution would be to get hold of MS, threaten him with exposure and the consequent criminal charges, and make him return all the money.
But how to get hold of MS and put pressure on him to confess?
The solution presented itself.
His wife was due to return from the US soon because schools were re-opening, but MS was due to return sometime later.
I consulted a retired police officer and found the right way forward.
- Engage a reputed audit firm licensed to do a forensic audit.
- Give them the evidence—copies of documents from MS’s investment files.
- Get from them a thick report certifying theft and fraud by MS’s firm.
- File a criminal case against the firm with the police citing the forensic audit report as prima facie evidence.
SRP agreed, I spoke to a big-4 firm, gave them the files and, within 48 hours, the report was prepared and the case was registered with the police.
Now, we waited for MS’s wife to return from the US.
Why the wife, you ask?
Ah! She was the 1% partner in MS’s investment firm, you see, and legally liable, as a partner, for any wrong-doings of the firm. Besides, she had signed every paper along with MS, probably unknowingly.
If we had her arrested for fraud, MS would be in a fix.
The plan worked. MS’s wife was arrested on arrival at the airport and put in jail.
When this news reached her family in India, there were frantic long-distance phone calls all over the world. Of course, MS was hounded by his wife’s family to get her out of jail, but SRP also came under huge pressure for having put his cousin in jail for a crime done by her husband, not by her.
I found SRP dithering.
I did remind him that MS had stolen all his lifetime savings. Moreover, despite pleas from his family to meet SRP and sort out the matter, MS had flatly refused to even call SRP, let alone face the police by coming back. So, why should SRP worry about his cousin being in jail, when her own husband wasn’t concerned?
But finally, to my total disappointment and disgust, SRP capitulated and withdrew the case. The wife was released and immediately flew off to the US with her daughters, never to return to the Middle East.
Soon thereafter, I left the Middle East and lost touch with SRP.
Out of curiosity, I did check ten years later. A simple Google search showed that SRP was still trying to recover money from MS through civil suits in various jurisdictions. Evidently, he had not reported the matter to the IRS probably because his cousin, being a partner in the firm and having signed every investment-related paper along with her husband, would become liable too.
In these ten years, SRP must have rebuilt his savings. So, he hadn’t really lost all his money, after all, just some forty-ish million dollars!
A question for you: What would you have done in his shoes?
(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 (until Covid, that is), playing bridge, befriending Netflix & Prime Video and writing in his wife’s travel blog.