Book Review: Yes Man - The Untold Story of Rana Kapoor
Yes Bank Limited is an Indian private sector bank headquartered in Mumbai, India and was founded by Rana Kapoor and Ashok Kapur in 2004. Rana Kapoor held 26% stake in Yes Bank, Ashok Kapur (Rana Kapoor’s co-brother-in-law) held 11%.
But when Ashok Kapur died in 2008 in Mumbai 26/11 attacks, the obituary was carried as an obscure mention in the company's audit reports published five months later. In January 2017, Bloomberg noted that with the rising share price of Yes Bank, Kapoor had become a billionaire. In September 2018, Yes Bank announced that they had ordered Kapoor to step down from his CEO position in January 2019.
On March 8, 2020, the Enforcement Directorate (ED) registered a case against Kapoor under the Prevention of Money Laundering Act (PMLA) and he was arrested. The Central Bureau of Investigation (CBI) also charged Kapoor and his family members in a bribery and money-laundering case linked to Yes Bank. Kapoor denies the charges.
Journalist Pavan C Lall @LallPavan, is a business journalist who has written this story of how Rana Kapur’s narcissism and greed created a perfect example of poor corporate governance. Pavan Lall also wrote Flawed: The Rise and Fall of India’s Diamond Mogul Nirav Modi. You may have seen him talk about Nirav Modi in the Netflix story Bad Boy Billionaires
According to the ED, Rana Kapoor, his family members, and others, got benefits worth Rs 4,300 crore through companies controlled by his family as kickbacks for sanctioning huge loans through Yes Bank. He is also accused of receiving bribes for going easy on loans given to a few big corporate groups that had turned into non-performing assets.
“Greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind.”
Failure of Corporate Governance
At one level the case of the likes of Rana Kapoor, Chanda Kochhar, Nirav Modi, Satyam, IL&FS etc is looked at as a case of weak corporate governance.
The Independent Directors are all expected to represent the voice of the shareholders and other stakeholders. The Big Four Accounting firms audit the corporations. But since their fee is paid by the client, there is every chance of getting cosy with the client. The Guardian said, “Accountancy used to be boring – and safe. But today it’s neither. Have the ‘big four’ firms become too cosy with the system they’re supposed to be keeping in check?”
Leadership, Talent and Culture
Yes Man paints the story of Rana Kapoor as a narcissistic megalomaniac whose greed was insatiable. Growth at all costs in case of a bank has come at the cost of high ratio of NPAs (Non Performing Assets). Rana Kapoor built a culture of surrounding himself with people who dare not question Rana for fear of falling out of favor. That would mean losing the courtiers would lose the whopping salaries and bonuses, the fancy houses the bank paid for and the numerous trips abroad. In July the Enforcement Directorate attached assets worth more than Rs 2200 crore, including property in New York, London and Mumbai.
One of the most poignant moments in Pavan Lall’s book is the plight of customers who were unable to recover their money. There were daily limits imposed on the customers. Pavan ironically was also an account holder in Yes Bank. He describes the haunting scene he witnessed.
“One manager, in tears, was apologizing profusely to a senior customer in his seventies who said, he needed more funds to pay for his wife’s cancer treatment.”
Rana Kapoor’s case is a great example of how his platinum Rolodex grew and fuelled his greed. He was trading favours every day with the rich and powerful. He was obliging industrialists and power brokers and entrepreneurs with easy loans. This is how crony capitalism thrives. Yes Man is a powerful read that tries to deconstruct how one person could use Yes Bank’s funds to build companies in the name of his wife and three daughters.
I read it like a thriller and finished it overnight. The scandal looks like a tangled spaghetti bowl that Pavan Lall has opened up strand by strand. I have not read Pavan’s book about Nirav Modi, but I must say I was impressed with the meticulousness with which he has unraveled the spaghetti of connections, bribery, siphoning, scandals and blatant flouting of norms by blind ambition.
My rating 4/5.
Also read: https://www.abhijitbhaduri.com/2011/08/21/corruption-in-india/
UPDATED ON 11 JUNE 2021
I spoke to author Pavan Lall about the Yes Bank crisis.