Understanding the Importance of Ethical Partnerships: A Lesson for Founders in Selecting the Right Advisors
As professionals, we often encounter situations that challenge our principles and priorities. Recently, I experienced a situation that reinforced the critical importance of trust, integrity, and professionalism when building relationships with clients and their advisors.
Background
In my capacity as a financial consultant running my own advisory firm, I was approached to assist a manufacturing company with a turnover exceeding ₹100 crore. The company sought a ₹40 crore equity investment. Despite some red flags—such as a modest net profit margin of just 1%, a ₹25 crore cash credit (CC) limit that was fully utilized, and no fixed assets—my network enabled me to source multiple hybrid funding options, including fixed-interest loans ranging from 18-22%. However, the company’s owner exhibited a challenging attitude and dismissed these proposals.
The complication arose when the owner, who had already finalized and paid an advance to purchase land for a new factory, requested a top-up of ₹15 crore through a balance transfer of his existing credit card limit. My role involved coordinating with various parties, including the company’s accountant, bank officials, and legal teams, to facilitate this process.
Challenges Faced
Throughout the process, I sensed a recurring undercurrent of greed and self-interest from the accountant. Despite not overtly stating intentions, his tone and actions suggested he was more interested in personal gain—likely seeking a commission or kickback—rather than authentic client service. I proceeded to move the file to Bank of Baroda (BoB), completing the necessary due diligence, valuation, and legal formalities.
However, just as the sanction was nearing approval, communication abruptly ceased. The accountant stopped responding, the owner was abroad and unresponsive to messages, and a month passed without progress. BoB eventually expired the case, citing delays.
The Unexpected Turn
A few days later, I received a call from BoB’s Credit Manager, raising an unexpected question: “Sir, why is your client logging the same file with IndusInd Bank?” It turned out the accountant had secretly coordinated with a Relationship Manager at IndusInd Bank, moving the deal there for a supposed kickback. He falsely informed the owner that BoB had rejected the file and that I was unresponsive.
Subsequently, I confirmed that IndusInd had rejected the application due to low profit margins and insufficient collateral—a common rejection for such high-value, low-margin deals. It became evident that the accountant was attempting to manipulate the process for personal gain, regardless of the impact on the client.
Reflections and Decision
When I confronted the accountant with the recorded messages and evidence, he attempted to shift blame onto the owner. Within hours, the owner contacted me, genuinely surprised to learn of the deceit while abroad. Both parties then beseeched me to restart the process with BoB, citing urgent funding needs for the factory land.
Nevertheless, I made the difficult decision to decline further involvement. The core reasons were clear:
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Broken Trust: If a client trusts an unqualified or dishonest advisor over a responsible consultant, the relationship is compromised beyond repair.
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Payment Risks: Dishonest behaviors during the deal process indicate potential challenges in fee realization and ongoing professionalism.
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Professional Integrity: My time and effort are valuable; engaging with unethical partners jeopardizes the standards I uphold.
Final Thoughts
This experience serves as a reminder to founders: careful discernment in choosing your advisors can prevent future crises. The integrity and professionalism of your trusted partners directly influence the success and stability of your endeavors. Prioritize transparent, honest relationships over shortcuts, and safeguard your business against unseen risks posed by unethical actors lurking within your network.
In conclusion, authenticity and trust are the foundations of sustainable growth. Protect them diligently.
One Comment
This post underscores a crucial aspect often overlooked in entrepreneurship: the importance of building a network rooted in integrity. The dynamic between trust, professionalism, and ethical conduct cannot be overstated, especially in high-stakes transactions like large-scale funding.
From a broader perspective, this situation highlights the need for founders to establish rigorous due diligence processes—not just with clients but with every partner and advisor involved. Ensuring that everyone operates transparently and ethically minimizes the risk of such manipulations. Implementing checks like third-party audits, verifying references, and fostering a culture that prioritizes integrity often act as critical safeguards.
Additionally, investing in relationship-building with trusted, reputable institutions can serve as a buffer against the influence of unreliable actors. Cultivating a network of advisors with aligned values not only enhances credibility but also sustains long-term growth, safeguarding against sudden setbacks driven by unethical conduct.
Ultimately, this story is a powerful reminder: while financial gains are tempting, uncompromising ethical standards form the backbone of enduring success. Founders who prioritize integrity not only protect their reputation but also build resilient organizations capable of navigating complex challenges.