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By:

Rahul Kulkarni

30 March 2025 at 3:32:54 pm

Psychological Safety, The Prerequisite for Modernisation

If people can’t tell you the truth, your dashboards will lie for them. So now you finally have what most leaders think they need: a system. And yet… the system still doesn’t show the truth. Numbers look “clean”. Reports look “reasonable”. Problems show up late. Bad news arrives only when it becomes a fire. This is where many leaders get fooled. They look at the dashboard and think, “Great, we’re improving.” And then reality punches them. A shipment fails. A customer escalates. A vendor...

Psychological Safety, The Prerequisite for Modernisation

If people can’t tell you the truth, your dashboards will lie for them. So now you finally have what most leaders think they need: a system. And yet… the system still doesn’t show the truth. Numbers look “clean”. Reports look “reasonable”. Problems show up late. Bad news arrives only when it becomes a fire. This is where many leaders get fooled. They look at the dashboard and think, “Great, we’re improving.” And then reality punches them. A shipment fails. A customer escalates. A vendor refuses. Cash gets stuck. Quality blows up. The issue is not your tool. The issue is fear. Which Seat? Inherited seat: people fear disappointing you, so they hide issues until they’re unavoidable. Hired seat: people fear you’ll judge them, so they show you what looks good. Promoted seat: people fear the relationship has changed, so they become careful and political. Different seats. Same outcome: silence. Doctor-Patient Problem Think about a doctor. The doctor can be brilliant. The hospital can be world-class. The tests can be advanced. But if the patient hides symptoms, the diagnosis will be wrong. Not because the doctor is bad. Because the input is false. That’s what modernisation looks like without psychological safety. You can buy software. You can design processes. You can set up dashboards. But if people can’t tell you the truth, your “data” will become polite fiction. And you’ll make confident decisions on top of fiction. What Is Safety? People hear “psychological safety” and imagine a soft HR concept. It’s not soft. It’s operational. Amy Edmondson, who researched this deeply, describes it simply: a climate where people feel safe to speak up, admit mistakes, ask questions, and raise bad news without being punished or humiliated. In MSME language, it means: “If I report a problem, I won’t be insulted.” “If I admit a mistake, I won’t be made a permanent example.” “If I raise a risk early, I won’t be told I’m negative.” “If I tell the truth, I won’t lose my standing.” If those beliefs don’t exist, people will still “cooperate” but it will be theatre. Hidden Blocker Low-data firms don’t naturally produce truth. They produce stories. Why? Because stories protect people. A late dispatch becomes: “customer changed plan”A defect becomes: “labour issue”A missed purchase becomes: “vendor problem”A cash delay becomes: “accounts is slow” Each story may contain some truth. But the function of the story is usually protection. So when you introduce digitisation, something changes: Now the story has to match a number. And if the number can expose someone, the system will do the only thing it knows: It will manage the number. That’s how dashboards become lies. Not because people are dishonest by nature.Because honesty has become unsafe. The Signs Bad news comes late, always. Meetings are full of explanations, not facts. “No issues” is the most common update. Problems are discovered by customers, not internally. People speak more in corridors than in review meetings. Everyone looks busy, but nothing is owned. If you see these signs, your modernisation effort is at risk. Because the system will look healthy until it breaks. Most leaders don’t wake up and say, “Let me create fear.” They kill safety through small habits: Sarcasm in meetings Public scolding Reacting emotionally to bad news Asking “who did this?” before asking “why did this happen?” Using pilot data for appraisal Praising only “good numbers” and punishing messy truths One harsh moment teaches the room a long lesson. After that, people stop volunteering reality. They start managing perception. Field Test Pick one recent failure. Not the biggest scandal. A real, medium-sized problem. Gather the involved people for 30–45 minutes. Then follow three rules: Start with the line: “This is not a blame meeting. This is a learning meeting.” And mean it. Ask only these questions: What happened, in sequence? Where did the handoff break? What made the wrong action feel reasonable at the time? What one change reduces the chance of repeat? No names, no insults, no ‘how can you’ If someone makes it personal, you bring it back to the process and the moment. Now the most important part: Track whether people volunteer issues unprompted in the next two weeks. That is the real signal. If people start bringing small problems early, safety is rising. If they stay silent and “all good”, your system is still running on fear. (The writer is a Chartered Accountant based in Thane. Views personal.)

India waits to lasso diamantaire Mehul Choksi

Mumbai: India rubbed its hands gleefully as the Belgium Police honoured its request to arrest the absconder diamantaire Mehul Chinubhai Choksi – more than seven years after he, along with his nephew Nirav Deepak Modi - allegedly duped the Punjab National Bank of nearly Rs. 13,800-crores.

 

The scam involving the ‘Mehul Mama-Nirav Bhanja’ erupted in Jan 2018, after the PNB lodged a complaint with the Central Bureau of Investigation (CBI).

 

By then the kin, along with many of their family members, winked and slipped out of the country, leaving a rattled India rubbing its palms in disappointment.

 

A political-cum-financial storm raged, embarrassing the Bharatiya Janata Party government of Prime Minister Narendra Modi a year before the Lok Sabha elections.

 

Multiple agencies launched a multi-pronged probe into what became the biggest banking scam in the past quarter century – and almost four times bigger than the stock market-cum-banking fraud the late Big Bull Harshad Mehta had inflicted on the Indian economy 33 years ago (in April 1992) – when it was just opening up.

 

In Belgium

According to official reports, Choksi was living with his Belgium citizen-wife Preeti in Antwerp, a global diamond hub, presumably for the past 18 months on a ‘residency permit’ acquired through questionable means, for medical reasons.

 

Earlier, he shot to the headers (June 2021) while being taken in a wheelchair to a court by the Dominican Republic's Police on charges of sneaking into the small country in the Caribbean Sea, North America.

 

Interestingly, as the Antigua & Barbuda government initiated the process to cancel his citizenship acquired through an investor visa, Choksi had suddenly gone ‘missing’ till he surfaced in the Dominican Republic.

 

The April 2025 action by Belgium followed a request by India’s CBI and the financial frauds specialist Enforcement Directorate (ED) to nab Choksi as the InterPol had revoked his Red Corner Notice in 2023.

 

Mama and Bhanja

‘Mama’ Choksi is the founder-owner of Gitanjali Group while ‘bhanja’ Nirav’s Firestar plus other companies – and the duo, with some PNB officials hand-in-glove – conspired to make a ‘mamu’ of not only PNB, but other banks, as it subsequently tumbled out.

 

After making a quiet exit, Choksi was detected living in the verdant Antigua & Barbuda Isles (West Indies), then attempted entry to the Dominican Republic, was sent back to Antigua & Barbuda and then went to Belgium where he was nabbed on Sunday.

 

Similarly, Modi was found sauntering on the streets of London and nabbed in March 2019. He remains in jail there since India's extradition is still pending.

 

However, India is keeping its fingers crossed that it may finally lay hands on Choksi, bring him to India and face trial in the PNB scam, though it may take time.

 

Born in Mumbai (1959) and educated in Gujarat, Choksi, 66, and wife Preeti have three children.

 

The Rs. 13,800-crore PNB scam

In the modus operandi revealed after India’s second-largest PSU bank PNB admitted it was scammed, Choksi and Modi used fraudulent Letters of Undertaking (LoU) to get overseas credits or loans from Indian banks.

 

The PNB first informed the Reserve Bank of India (RBI) of the fraud and then lodged a criminal complaint with the CBI in Jan. 2018, plus another CBI complaint in Feb, that led to a FIR against Modi and Choksi and their companies.

 

The ED entered the scene to probe the allegations of money-laundering through the LoUs – which they allegedly misused to avail short-term business finances from foreign branches of Indian banks.

 

The probe said that the duo were availing the LoUs from the PNB’s Brady House Branch from March 2011, and over the next six-seven years, managed to get a whopping 1,200-plus LoUs like a breeze with the help of some friendly bankers within.

 

Post-scam, the gold-diamond companies Gitanjali Group and Firestone Group with multiple operations in India and abroad have largely wound up, while some personal assets of the mama-bhanja have been auctioned to recover a part of the dues.

 

ED's plea to declare Choksi fugitive stuck for seven years

Even as absconding diamantaire Mehul Choksi, a key accused in the Punjab National Bank loan fraud case, has been arrested in Belgium, the ED's plea to declare him a fugitive economic offender has been pending before a court in Mumbai for nearly seven years.


Choksi, 65, and his nephew diamantaire Nirav Modi are the prime accused in the Rs 13,000 crore PNB bank loan fraud case. Choksi was arrested in Belgium following an extradition request by Indian probe agencies, official sources said on Monday.


The Enforcement Directorate had filed the application in July 2018, seeking to declare Choksi an FEO and confiscate his assets under provisions of the Fugitive Economic Offenders Act.


However, the matter has witnessed repeated delays owing to a barrage of applications filed by the accused in the PMLA court and the Bombay High Court alleging procedural lapses in the Enforcement Directorate's plea.


"The court is kept busy with frivolous applications, and hearing on our application to declare him (Choksi) an FEO has been adjourned for the past seven years,” an ED officer had said after the hearing was once again deferred this February.


"The court should have continued the hearing and taken a decision on the future course of action once the application was moved," the officer had said.

He had urged the court to take note of the repeated filing of similar applications and to not entertain them.


Choksi's lawyer had informed the court that the accused was undergoing treatment for suspected cancer in Belgium and intended to file an application in connection with his health.


Under the FEO Act, an individual can be declared a Fugitive Economic Offender if a warrant has been issued against him for an offence involving Rs 100 crore or more and he has left India while refusing to return. Once declared an FEO, the person's property can be confiscated by the investigating agency.


Choksi had challenged the ED's application in the Bombay High Court, alleging that the agency "had not followed proper procedure before filing the application and, hence, it stands vitiated".


However, in September 2023, the High Court dismissed his plea, ruling that the ED had adhered to the prescribed format under the FEO Act. It also vacated a stay on the special court's proceedings.


Despite this, the hearing on declaring Choksi FEO could not commence, with Choksi continuing to file applications before the special court through his lawyers.


While most of these pleas have been dismissed, a few remain pending. His latest attempt to stall proceedings through a plea to recall the notice issued on the ED's FEO application was rejected in December 2023.


According to ED officials, Choksi left India under suspicious circumstances in early January 2018.


Shifting stance

Choksi's counsel has argued that the ED kept shifting its stance on the material grounds for declaring him an FEO and that the suspension of his Indian passport made it impossible for him to return for investigation.

The court, however, rejected this argument, stating that the notice was issued based on accurate information and not based on "wrong facts or mistaken assumptions".


ED claimed the accused left the country under suspicious circumstances in the first week of January 2018.


Nirav Modi has already been declared as an FEO by the special court. He has been lodged in jail in London since 2019.

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