When I first read of the
controversy at ICICI Bank – the Chief Executive accused, on social media, with
more than anecdotal evidence, of a conflict of interest, her husband having
been a direct beneficiary – I could only think of the giant of a man who had
occupied her post for much of the late 1980s and 1990s. His name is Narayanan Vaghul and this is an
unashamedly flattering tribute to a legend.
In contrast to his stature and ethical standards, the current incumbent
(and the flamboyant, cowboy before her) is a pale, almost lame shadow.
I did not work at ICICI (as it
was then known), but then, neither did I not work in it. That sounds funny, so let me explain. For about five and a half years, I worked at
a subsidiary – TDICI - that later became ICICI Ventures: Vaghul was the
Chairman of our little enterprise.
Indeed, it was his baby and I got the marvellous opportunity, as a fresh
grad out of business school, to learn from every interaction that he
chaired.
At IIM, the best and brightest of
my classmates were vying to get into ICICI, and, when the final list was
released, it was clear that the interviewers had chosen well: Hawa, Bhushan,
Dahiya, Kannan, KG, Vinod - these were the crème de la crème, who joined a
quasi-Government enterprise offering an average salary, in the rather quotidian
business of granting loans. The reasons
were clear: the freedom the enterprise provided young grads, the level of
engagement with finance, the opportunity to meet senior leadership in corporate
India.….and the quality of ethics and leadership that Mr. Vaghul set. The cultural transformation of ICICI was led
by him, for, in the senior leadership team, he seemed to tower over everyone
else. Among India’s financial
institutions, ICICI stood out, not just for its team capability, but also for
its style of working and values; IFCI and IDBI were considered to be ethically
dodgy and bureaucratic, while the Indian banks were, simply, incapable and
could not offer adequate project finance.
I did not even make it to the
shortlist on campus, but a few months later joined TDICI, its subsidiary, which
had a similar culture, possibly even more daring under KSN, the President of
the company. Meetings led by Vaghul
were, if you were only an attendee and not a presenter, most enriching and
fun. A big-made man, with heavy
spectacles, a predilection for curd-rice
and a visible dislike for exercise (he had had a couple of bypasses in
his 50s), he would walk in to a meeting and take things over effortlessly, his
razor-sharp mind cutting to the root of an issue or the core of the discussion. There were liberal doses of humour (he would
laugh in a open, engaging way, engendering a little twitter around the room), occasional
references to the Bhagavad Gita and the Thirukkural, loads of stories about
Indian businessmen – some very spicy ones – whom he had met in the course of his work,
bits from conversations with the glitterati amongst US Univ academics,
particularly the Indian-American ones with whom he hobnobbed quite a bit (the CK Prahlad types) and from their books,
and little gems of wisdom (of which one example shall be provided later).
His vision encompassed ICICI and
its subsidiaries, yet, in operations, there was loads of freedom. He had strong opinions on issues and on
people (which were backed by experiences and an uncanny gut), but he would
listen to contrarian views and debate them firmly at times, letting go on
occasion. Above all, there was a consistent
focus on the ethical aspect of decision making.
This had two aspects: firstly, ensuring that the organisation’s team
stayed ‘clean’ and above board and, secondly, that their decisions were not
influenced by power influencers. An
example of the second: early in my career at TDICI, we got a proposal to invest
in a large, commercial mango plantation, many hundreds of acres of it, in
partnership with local farmers. I did
not think this was good investment material, wrote a note and rejected it. The promoters of the venture knew an
irascible, mercurial, hugely influential character whom I shall call R. He headed the newly-formed SEBI and had
apparently earned the epithet Mad Dog R, for being rather vicious. He sent a letter – a terse one – to Vaghul,
asking why this highly noteworthy venture had been rejected and seeking a
re-opening of the issue. Learning of it,
a senior colleague of mine asked me to expect Trouble, for Mad Dog R was known
for it, and got me most nervous indeed.
But my colleague didn’t quite
know his super-boss. I was not asked to
re-open the issue or indeed justify this to the Chairman. The only thing I was asked to do was to
prepare a reply that he could sign off; he trusted my decision and wanted to
stick with it. This, I will emphasise, was
not just a signature – the key message was that he backed his team - and got
him loyalty amongst his juniors (despite the usual cribs about salary, in-company
politics and so on).
On another memorable occasion, I
learnt one piece of wisdom I have never forgotten: we often speak of the
‘first-mover-advantage’, the poster-example of this, often quoted, being
Microsoft. Vaghul believed this to be a
myth and the more you examine the successful businesses of today, you more you
agree with his assessment, for starting later enables you to learn from the
pioneers’ mistakes. You didn’t need to
be First, he argued, but you needed to the Best (adding the word Big to this
later).
Yet, Vaghul had his biases and
flaws - one investment decision was made by him after meeting someone in a lift
and he liked Gum India’s Narayanan much more than necessary - but who
doesn’t? He could be acutely
manipulative (the old Amar Chitra Katha comics speak of ‘the wily Brahmin’, a
phrase that fits the description to a V), possibly as a result of the
experience of negotiating Government bureaucracy, and was touchy about certain
topics. A colleague once made a case for
a hike in salary for all of us and what followed for the next few minutes was
trademark theatre: the Chairman was appalled and offended that we, people he
regarded as his own, worked for money and benchmarked our pay against other
less-notable companies. He did not expect
this from us and hoped we would correct our myopia as soon as possible….and so
on. If we wanted to leave, he thundered
with emotion, we were free to do so. And
then he left the room, with about a dozen of us shaken (and stirred). But the big leadership flaw he had was an intolerance
to ideas on organisational growth and direction not consistent with his own. He preferred Yes-Men (and notably Yes-Women)
to take up key positions. I saw one such
example at a meeting in 1995: he was convinced that our organisation needed to
be Big and that we needed to do it quickly and when the President did not show
entire agreement (the disagreement was only a short, quick, laugh actually), he
was replaced by someone who agreed, but, clearly, was otherwise a poor replacement. It’s a flaw the best of leaders possess, and
Vaghul was no exception.
His successor was a hard-nosed,
deal-making sort of fellow who, while he was superbly knowledgeable on
Finance, did not attend Moral Science
class in school, a rather yawning gap in an otherwise impeccable
education. He was initially a Yes-Man of
sorts too (till he got the top job), but without the same ethical leaning that
the Grand Old Man had, willing to tread grey zones in gum boots and with an
end-justifies-the-means approach.
..and that seems to have begun
the slide. In the last two decades, when
ICICI Bank has been in the news, much of it has been unsavoury: the quality of
loans provided (asset quality, as it is termed), the deals done by a branch
abroad, the utterly shoddy treatment of retail customers and depositors, the dressing up (and ever-greening with
abandon) of non-performing assets to mislead investors and the Reserve Bank,
and even a short run-on-the-bank that occurred some years ago. At its root – the root cause, as it were –
isn’t misplaced yields-to-maturity or poor financial acumen: those, rather, are
the symptoms. The root cause is the insane
urge to grow at the cost of everything else, excluding in that vision a system
of values that should have necessarily been enshrined as non-negotiable but
which were forgotten, as were the other lessons the Charismatic Chairman had
taught.
