Chapter 11C: The role of Citi in the Indian judiciary is the kind of stuff international award-winning soap operas are built on. But to understand the full import of what was going on – one has to circle back to Ratan Tata, Pramit Jhaveri and Nira Radia.
1993 is not just the year HDFC bank was conceived from the mating of HdFC and Citibank (it was more brand prostitution to get a license but more of that later). It was also the year something less obvious happened.
JRD Tata passed on. Unknown to most, JRD Tata was a mentor and well wisher of HDFC. He shared a close personal bond with HH The Aga Khan and TN Nagendra, the founding CEO of HdFC. When HDFC ipo was about to devolve, Tata companies came on board to fill the gap. The Tatas held very little shareholding in their group companies. But group CFOs would cut cheques without asking any questions when instructed to do so by Bombay House.
JRD was a statesman like no other. And one can only hope and pray that Noel Tata will exceed his benchmark in times to come. Both JRD and HT Parekh were strongly against the prostitution of the HDFC Bank. They were in fact against getting into consumer banking. They wanted HDFC to focus on affordable housing.
The problem was that Citibank had something that no one should see. And this gave them a hold on two senior individuals who had no option but to do their bidding. And with JRD gone and HT retired, there was no one to oppose.
The new chief was an architect by education. He had great aesthetic sense and some horse sense – but no business sense. Coming from an old school of thought – he was concerned that the various chieftains of JRD like Ajit Kelkar at Taj or Rusi Mody at Tata Steel would not do his bidding. To be frank, they were refusing to take orders. Rusi over his breakfast of ten eggs at his Altamount Road residence once told Ratan in my presence that he really had no legal authority to dictate anything. I did agree with Russi and I haven’t had very many cordial meetings with Ratan after that.
Citibank became his main advisor. And then the Citicorp Finance playbook was replicated in an entity called Tata Finance. Citi was doing a bull run on some shares. They wanted a fellow bull. Ratan had put his best man Dilip Pendse on the job. A honest to god Brahmin, Pendse had proved his mettle in telecom (which is how I got to know him). Citi’s main strategy for Tata Finance was to essentially divert money from Tata Companies and then use that money to bolster shareholding of Tata Trusts in the Tata Companies.
A really street smart CA, Venkatram was put to do the job. Along with the now famous S Venkatachalam who subsequently became a board member of SBI. His wife Tara Rao was the Chief tax advisor. And Mr Kale, a good friend of Mr Pendse and probably the most eminent CA of our times was the statutory auditor from the firm AF Ferguson.
But managing RBI citi style is not easy. At least not for Tatas.
And everyone got caught with their pants down.
