He left the office at four. More than the coffee, thoughts of Jacqueline had successfully stopped all his sleep cells from working. The excitement was showing on his face and in his mannerisms. Wasn’t he glad that he was alone in the car? The meeting with Jacqueline had been fixed for 4.30 p.m. at her office. The Vodafone office, where Jacqueline worked as head of customer service, was only a ten-minute drive from NFS and Manish was standing before Jacqueline’s office fifteen minutes ahead of schedule. Jacqueline was extremely pleased to meet him. The last time the two had met was over two years ago, and she was very nostalgic about it. When he was her supervisor, she had simply adored him.
The meeting was brief, lasted about fifteen–twenty minutes. There was a small interruption wherein Jacqueline had disappeared back to her workstation only to resurface within five minutes with a bunch of papers, which she handed to Manish. A quick cup of coffee, and he was on his way to the airport. His feelings were a mix of elation at having cracked the case and depression at having unearthed something sinister. He now had enough dope to keep Aditya occupied throughout the plane journey.
Aditya was already waiting inside the airport lounge when Manish joined him. As luck would have it, their flight was delayed by thirty minutes and they were stuck in the lounge. Manish looked tired and had a five O’clock shadow. He was patiently waiting for Aditya to ask him abut the details of his investigation. After an excruciating wait of ten minutes when Aditya didn’t ask him anything, Manish couldn’t resist.
‘Do you want me to tell you all that I have found out?’
‘Go. Get yourself a sandwich. Eat in peace. Let’s get on to the flight. You will then have an hour and thirty minutes of uninterrupted time from me.’ Manish didn’t have a choice but wait till they boarded.
‘How are you finding Singapore?’ Time for some casual conversation as they had another forty-five minutes to go for boarding to be announced.
‘It is okay Aditya.’
‘You don’t seem to be too excited.’
‘India is India Aditya. No other country can be as good. Career is great, but I miss my family and friends. Seema is finding it difficult to adjust there.’
‘I can understand. Natasha too found it very difficult to adjust in London when we went overseas for our first stint. She missed her parents, her friends, etc. She nagged me to death to come back to India.’
‘Seema does the same.’
‘So does this mean that you want to come back?’
‘If there is an opportunity, then definitely yes.’
‘Opportunities will come my friend. Soon. Have some patience and keep faith.’ Aditya never drew a line without blurring it. Manish smiled. He understood bits and pieces of what Aditya was hinting at, but he could not be too blatant about his aspirations with Aditya. He kept his calm and poise. As long as Aditya understood his aspirations and desire to come back, it was fine with him. He knew Aditya would do something for him.
Aditya had asked his secretary to tele-checkin both of them and she had dutifully put them on seats next to each other. Finally, they boarded and the flight took off. They were both in business class so there was no chance of a third individual next to them overhearing their conversation.
‘Shoot,’ said Aditya the moment the flight had taken off. Manish was waiting for this moment. He turned towards Aditya and started speaking.
‘Aditya, let me start from the beginning. I reached office this morning and met the key guys involved. I met Victor, who gave me all the documents for this case. He showed me the application form, the verification reports, the fraud check reports, the underwriting logic and also shared with me the details of the collection activity carried out in Tulsiram’s case. I reviewed the receipt books, checked the receipt book audits and also met with the collection agent who was following up with Tulsiram. An agent called Sunder. I also met with Nirmal, the location head, who has done the recent receipt book audits.’
‘Okay. What is the outcome?’
‘Let me take you through my deductions of each individual activity. I don’t know why, but I feel that you already know the outcome. Your hypothesis in the beginning is probably correct. But if you permit, I would still go step-by-step and walk you through what I found out.’
‘OKAY. I am all ears. But make sure you finish this before we land in Mumbai . . . and please ensure I don’t sleep off.’
‘Ha ha! No Aditya. Coming back to the issue, the documents based on which the loans were given to Tulsiram, were all clean. No issues there. It fitted into our loan policy and the person who approved the loan was well within his rights and there was no mistake there. Anyone else would have done the same thing.’
‘OKAY, so nothing wrong in that part of the story.’
‘No Aditya.’
‘Go ahead.’
I then asked for the receipt book audit reports, collection receipts for November and also the last three receipts of Tulsiram, since he had paid in cash.’
‘Hmm . . .’
‘This is where the problem started. There were lots of errors in the receipt books of November. However, the receipt book audit report stated that everything was in order. It did not pick up even five percent of the errors which were there – some of them were blatant errors, which had been ignored.’
‘What kind of errors?’
‘The receipts were incomplete, the amount details were not clear in many and in many cases the customer acknowledgement was missing. And the worrying bit is that in some cases, the receipts were blank. In some, the customer copy of the receipts were also in the receipt books, suggesting that maybe the customer was not even given a copy of the receipt. Forget that, it could even be that the customer never made the payment.’
‘Any trends?’
‘Almost thirty-five percent of the payments received in the last three days of the month did not have the customer signature. A number of payment receipts corresponding to the payment received in the last two days of the month were blank. This is what the sample check threw up. Not many of them reported in the receipt book audit.’
‘What does this mean in your interpretation?’ Aditya was like one of those people who would love to read the last few pages of a thrilling suspense even before reaching the middle of the book.
‘I will come to that Aditya. Just give me a minute. Let me complete the story.’
‘Okay. Go ahead.’
‘November was the worst. A cursory check of the payment made file for November showed me that of the payments received on 30th November, four payments were made by cheque from the same bank account. An account which belonged to neither of the four customers. Four different customers with different names, living in four different corners of town cannot have the same bank account number. Clearly someone is paying for these customers.’
‘And that someone is?’
‘Us.’
‘What? Are you sure?’
‘Yes Aditya. I am reasonably sure of this. All these cheques came from the account of Vasudev Reddy.’
‘So! How can that be US?’
‘Vasudev Reddy is not a customer. He is the proprietor of Shobha Debt Recovery Services, our collection agency in Hyderabad. Why would a collection agency pay customers overdue instalments from its own bank account?’
‘Understood.’ This was meant to be more of an acknowledgement of the fact that he was listening to.
‘I pulled out and reviewed the last three months’ bills pertaining to Shoba Debt Recovery Services. In every month there has been a huge payment of approx Rs 40,000 made to this agency towards “Professional Services rendered”. This is over and above the regular billing to this agency which is as per the approved collection agency payout grid.’
‘The “Professional Services Rendered” is only a façade . . . to camouflage the excess payment made to the agency.’ Aditya’s eyes were closed, but he was listening.
‘You are bang on Aditya. My guess is that this money is being used by the agency to pay the in
stalments of the customers who are overdue. When I quizzed Raman Bhaskar about this, he had no clue. He went all over the place without giving me a concrete answer on what this amount pertained to.’
‘He is the one doing it . . . the bastard.’ Aditya was fuming by now.
‘Probably Aditya. Let me explain how this works. Raman Bhaskar has a target to achieve. He is tasked with collecting the dues from a certain percentage of customers who are delinquent. As long as he meets his targets, the delinquencies will be under control and no one questions anything. Everyone is happy.’
‘I know.’
‘The problem starts when he is not able to collect from delinquent customers. The reasons could be many. Customers may not be able to pay or maybe customers have taken the money and run away, something we call as “Skip” customers. This starts impacting the portfolio performance. We start writing off these loans and the losses mount. The first to get impacted is the collections manager on site. He misses his targets and hence his incentives tank. As the problem grows, it starts impacting the business guys as well. They are accountable for profitability of the portfolio. Lack of collections and higher delinquencies would even impact Gowri.’
‘Stop lecturing Manish.’
‘Sorry Aditya. I got carried away. You know how passionately I feel about these things. Anyway, the collections guys have found an innovative solution for this. Pay the collection agencies a little bit more than what they should be contractually paid. For instance in the case of Shobha, we needed to pay only Rs 1,32,000 as a payout for the work done by them in September. We paid them 1,72,000. Vasudev Reddy used the balance 40,000 to pay the instalments for customers who he could not collect from. Those customers go out of the delinquent list and hence the portfolio looks good and everyone from the collection agent to Gowri is safe. The problem gets camouflaged. And the targets for the collections guys are met and they make their incentives.’
Aditya was listening to Manish intently. He knew how this worked. However, for once he did not want to cut Manish’s flow of thoughts.
‘It works brilliantly Aditya. If a customer, who has a loan of Rs 1 Lakh for which he pays an instalment of Rs 2000, defaults on six instalments, NFS would write off the entire loan. Assuming in November a customer had six instalments overdue and doesn’t pay before 30 November, then on 1 December NFS would write off the entire loan amount as a loss in their books, i.e. Rs 1 Lakh as a loss.
‘Instead, if someone, in this case – the collection agency, pays one instalment before 30 November, then on 1 December, the customer will only have five instalments due. Hence the loan doesn’t get written off. A loss of 1 lakh is saved. At what cost?’
‘Only Rs 2000,’ Aditya impulsively reacted.
‘Right Aditya. The collections managers and the agency work hand-in-glove. The agency will normally not pay from their pocket and would bill NFS these monies . . . As Shoba Debt Recovery Services has done through the “Professional Services Rendered” bill. The collections managers clear these expenses, which are invariably multiple small bills and hence do not come under the scanner of anyone checking them. Our collections expenses go up but we save on write-offs. With 40,000 payout to Shobha Debt Collectors, they could have paid back instalments for over 20 lakh worth of customers. NFS incurred an illegitimate expense of 40,000 and in the process probably saved a write off of 20 lakh.’
‘So what are we saying? Who is screwing us – our own staff or the collection agencies?’
‘Both. Aditya, on a small scale this can be occasionally done by collection agencies on their own to meet higher performance benchmarks, but a large scale bastardisation of this cannot be done without the local management of NFS being involved. As you know, a higher credit loss gets noticed and hundreds of questions are asked by people at all levels, but a higher cost often gets ignored and is also easy to justify. This process which we call as funding in our collections world, cannot be going on without the explicit concurrence of the local management of NFS.
‘How can you be so sure?’
‘Aditya. I checked the bills of the collections agencies for the last three months. Normal bills are raised by collections executives and signed off by Raman Bhaskar. Only the bills for Shoba Debt Recovery Services have been raised by Raman Bhaskar and approved by Nirmal. Why? Raman Bhaskar has a signing authority of Rs 30,00,000. Why has he followed a different process for bills that are within his limit, but include the “Professional Services Rendered” line and got them approved by Nirmal? There can be only one explanation. He did not want many people to know about this arrangement. Between him and Nirmal they stuck a deal and executed the entire funding plan.’
‘OKAY.’
‘Our collections costs in Hyderabad also prove this Aditya. They are rising day-by-day. We are paying more for collecting the same amount of money from the customers. Even the telecalling that the central team has now done, throws up a large concentration of customers in Hyderabad, who have said that they haven’t paid their dues, despite our systems reflecting their instalments having been received. If the customers didn’t pay them, where did they come from? Who paid them? Clearly in most cases the agency paid for it and has billed us. Or the collections agent paid it under the faith that he will be able to collect it later from the customer. In the later instance, he makes his incentives and over the next thirty days keeps the pressure on the customer and collects the money from him.’
‘Didn’t our month-end audit catch this malpractice?’
‘That’s the screw up Aditya. I spoke with both Nirmal and Raman Bhaskar. Nirmal conducted the audits and Raman helped him with the audits. Have you met them Aditya?’
‘I know Nirmal very well. Have I met Raman? The name does ring a bell.’
‘Raman was a star branch manager. He even made it to your annual high performer convention.’
‘What’s he doing in collections?’
‘That’s the question I had too. Long back this guy used to be in collections in Raipur. We had detected an issue with repossessed cars. At that time, we sacked the branch manager, but gave Raman the benefit of doubt, because he was too junior. Gowri had vehemently argued his case and agreed to take him into the NFS branch world. Raman owes his job today to Gowri. At various times since then, Gowri had been pushing for his move back to collections. When I was in India, I had resisted taking him in collections because I was not convinced of the guy’s integrity. I had even spoken about this to Gowri. Looks like after I left and before Amit firmly took over, in the cusp period, they pushed him in. Amit would surely not have taken him. But by the time he came in, the deed was done.’
‘He is Gowri’s guy? In collections? How much better could it get?’
‘Oh yes. Raman is Gowri’s guy. As if you don’t know Aditya! Gowri has a habit of ensuring that he has his guy in every team. This way he ensures that he gets to know what’s going on and is able to act well in time. This also ensures that his political agendas are pushed through. Amit would not have hired him. I am sure. Specifically knowing that he was Gowri’s guy?’
Aditya opened his right eye, looked at Manish and gave him a wry smile. ‘I know. They hate each other, don’t they?’
‘Yes they do. However, coming back to Nirmal and Bhaskar, when confronted with this data, they have confessed that they were indulging in managing books through funding of delinquent accounts.’
‘What the fuck? Why didn’t you sack them immediately?’ Aditya suddenly became agitated. Staff frauds were something he couldn’t stand. Integrity issues had to be dealt with firmly.
‘I will come to it. There is more to the story. In any case I have their signed confessions and they might put in their papers tomorrow. They know that they have been exposed.’
‘You are scaring me now.’
‘If I was you, I would be scared too. Before I elaborate, let me come to Sunder.’
‘Who is Sunder? Haven’t heard this name earlier.’
‘Sunder is the collection agent, who
was following up with Tulsiram for the payment. He claims that Tulsiram made his payment every month and that he promptly deposited the payment with NFS month after month. I checked the receipt book . . . and that’s where the problem is. The receipts supposedly issued to Tulsiram for the payments collected in cash for the months of September, October and November, do not have his signature. Forget Tulsiram’s signature . . . the receipts for November and October are blank . . . and even the customer’s copy was in the receipt book itself. It was never given to Tulsiram.’
‘OKAY, what does that prove? Don’t go around in circles, come to the point.’
‘Aditya, when I saw that none of the receipts had Tulsiram’s signature and the receipts for November and October were blank, I dug deeper. I stumbled upon the fact that there is an ongoing contest for the collection agents, the tagline of which was – Money Lao Dollar Pao. The incentives paid out in this contest are in cash and are significant. A guy like Sunder, stands to make over 12,000 a month, just on achieving hundred percent of the stretch contest goals.’
Aditya nodded.
‘Surprisingly, Sunder has exactly achieved hundred precent of his target in all the three months. In every month, he has achieved his target on the last day of the month and has exceeded his set target by one payment, i.e. he has collected one payment more from customers, than what his contest target was. Quite an eerie coincidence, isn’t it?’
‘Indeed,’ Aditya agreed.
‘On 30 September he got in four payments from customers. In the last days of October and November, he brought in four and three payments respectively – payments which helped him reach his target. Tulsiram is one of those guys whose payments came in on the last day of each of the preceding three months. I myself called the ones whose payments Sunder had brought in on the last day of November. Well, two of them, except Tulsiram. And both said that they did not pay any instalment to Sunder or any other agent of NFS. I did these calls myself and so I can speak with a fair bit of credibility.’
Devil in Pinstripes Page 24