I am a crisis manager—the guy corporates call when things go wrong. And they go wrong all the time. Somewhere in India, on most working days, a commercial dispute is being converted into a criminal proceeding. A breach of contract becomes a “criminal breach of trust”. A delayed payment becomes “cheating”. A management disagreement becomes “criminal conspiracy”.
Here’s a typical incident. A German JV in India, with an Indian business family as a minority partner, had not been working smoothly for some time. In a partnership meeting, a senior German executive lost patience and threatened his Indian partners. The Indian family filed a police complaint alleging that fraudulent transactions had been put through the company’s books. On paper, the head of accounts controlled the books. So it was his name on the FIR.
The police tracked his IP address and located him within hours at a five-star hotel in Chandigarh, where he had been travelling for work. He was taken in custody from the hotel and spent the next 30 days in jail. The Germans’ lead representative was named as a co-accused in the same FIR. He was not arrested. But he was placed on daily reporting at the local police station and could not leave India without prior intimation.
I came in after the arrest, on a panic call from the Germans. Somewhere, during the course of multiple meetings with both sides, I told the family that filing the FIR had been a mistake. They looked at me in surprise.
Grim logic
Today, almost every commercial dispute is repackaged as a criminal case especially if there are settlements involved. Take that large pharma company who found its expat CXOs named in an FIR filed by a frustrated president of a local chemists’ association. There is a grim logic to this. A commercial dispute resolves in about 120 days in OECD countries. In India, it takes 1,445—almost four years. Civil suits are filed only when there is no need for a settlement, but only optics.
Extreme case
In the past, the issues Indian businesses faced were licences, allocations, exemptions. These were the things a CEO had to fix on behalf of the company. There were PR firms and well-placed advisors who could make most things go away. But today, I would say, it is this kind of issue—commercial disputes turning into criminal cases—that most Indian CEOs have to firefight alongside their balance sheets. The big Indian businesses have their lawyers to handle this. Large global businesses have a chief compliance or nodal officer in India, a single person who picks up the phone when the state calls. Then there are businesses like the German JV. Many of them reach out to someone like me to help them out.
While stories such as the German JV are my bread and butter, I do occasionally have to get into more dangerous territory. One day, two Korean executives walked in to see me, flanked by bodyguards. The bouncers were heavy-set men who looked better suited to guarding a night club than a CEO.
“Why the bodyguards?” I asked.
“There’s a threat to our lives,” the senior of the two whispered.
They represented one of the world’s largest auto-parts conglomerates, operating a forging plant in Haryana through a joint venture. They were losing roughly ₹40 lakh a month in scrap that vanished between their weighbridge (the heavy-duty scale used by such businesses to find the gross weight of their product) and the buyer.
“Why don’t you check the weighbridge yourself?” I asked.
“We can’t go near it,” the Korean said. “The mafia doesn’t let us.”
A local strongman had carved out the territory so thoroughly that senior plant managers would not approach it. One who had tried had his car windshield smashed. Another arrived home that night to find a note had been delivered to his wife in crude abuse, warning him to lay off.
I took the assignment. The next afternoon I walked into the plant with a retired senior cop and faced the thugs down. After two days of assessing the situation, we unscrewed the weighbridge’s control panel and found a small foreign chip soldered onto the circuit board, which let the mafia decide what weight got displayed through a remote device.
Is this warranted?
People doing business in India don’t just have to deal with extortions and spurious charges of fraud.
Sometimes the claims can be much more personal, which I experienced during my engagement with an FDI-backed real estate enterprise.
One morning, eight men walked into our office in Ghaziabad and asked for me by name. They claimed to be policemen and produced what they said was a warrant. I was, fortunately, not in the office that day.
An FIR had been filed in Kanpur—a city I had never visited — naming several of us, including me, as co-accused in an alleged abduction of an investor across 400 kilometres in an SUV, an attempted strangulation, and threats to rape his daughters and murder his wife. Section 307 was attached, which made the offence non-bailable. The trigger was a commercial dispute involving a minority partner in our project companies. The man on the other side had decided to escalate through unconventional means.
My first thought, reading it, was not about the police. It was about how I would explain this to my wife if she came across it before I did. For a brief moment, that thought drowned everything else—the investigation, the lawyers, the strategy.
Businesses, of course, suffer in such an environment. But there is a human fallout.
In India, the company office-bearers are usually made liable for any criminal dispute. We are not the only country to have such a provision, but in UK and US criminal liability is generally reserved for extreme cases where the director is personally involved in fraud rather than routine compliance issues. This is not the case here.
A few years ago, I was sitting across an incometax officer in Delhi when he leaned back in his chair and looked at me.
“Tell me,” he said. “What’s your salary?” The question threw me off for a moment, but I answered. A cautiously lowered number. It still managed to evoke surprise on his face. He repeated the number, as if it signified something.
“Do you know why you’re paid so much?” he said. “So that you can go to jail. When things go wrong, somebody has to.” It was the most honest description I have ever heard of what a senior corporate role in India actually pays for.
Take Patrick Casserly, the former COO of Cambata Aviation, who spent three months in Arthur Road jail because his employer had failed to pay around ₹18 crore in service tax. “How can I guarantee the repayment of service tax?” he later told an interviewer. “It’s not my money. I don’t have that money.”
This is probably the dirtiest secret of doing business in India. Most of them never make it to the press, because the executives involved go quiet, and the matters get settled out of view.
A former colleague and boss of mine, a British executive who ran our real-estate company through some of its hardest years, watched his close friend go to Arthur Road and decided it was time to leave India himself.
“We were doing everything right and by the book,” he told me later, “and we still had FIRs against us and trumped-up tax demands.”
He summed up his view of running a business in this country: I-N-D-I-A. I Never Do It Again.
Vineet Relia is the author of Relax, it’s Only a Raid.
Views are personal
