Have you ever wondered if you can succeed in business without being a crook? Yes, a crook. Or call them what you will, a cheat, a fraudster, a wheeler-dealer, a hustler, even a blackmailer or whatever name that fits a person who games the system and bribes his way to real big bucks. Why do we ask? Because the Nirav Modi raid on PNB yet again brings to mind that an honest businessman, okay, make it a successful businessman may well be an oxymoron.
Do not get us wrong. We mean no offence to honest businessmen and who, we believe, are still in a vast majority. But the ones who do scale the slippery slope of success are those who end up becoming billionaires without no particular achievement to their names other than that they had the cleverness to co-opt the ruling class in their enterprise as accomplices, paid agents or simply as naive well-wishers. The point: There are no Henry Fords, Bill Gates, Mark Zukerbergs amidst us. Without naming names, we can say that our billionaires’ club is dominated by those who had enjoyed easy proximity to the ruling establishment. In other words, they are crony capitalists who relied on the venality of the politicians to line their pockets with filthy lucre.
The socialist era was particularly good for them. You managed to get cheap land, water, electricity, and a license to produce shoddy goods in a protected market and under strict production controls. In an economy of shortages, you ended up selling indifferent quality goods at exorbitant prices. Eventually, when the good sense dawned and Narasimha Rao opened up the economy, the enterprising ones managed to wangle the licenses for the new industries while the cash-rich foreigners provided the technology and the capital to set up the actual businesses. The arrangement suited both, the foreigners now had a huge new market to exploit, and the Indian partners by dint of the licenses procured rode piggyback on foreign funds to become multi-billionaires in double quick time.
Scan the list of billionaires and you will find that it is now dominated by the post-liberalisation entrepreneurs who were fortunate to take advantage of the slow but certain march of new technology into the lives of the aam aadmi. Information Technology billionaires have beaten the old- money hollow. That seems to be the case in the US, the original home of capitalism, but at least their regulatory and legal frameworks do not gloss over fraud and chicanery which rules the roast in our business world.
In this context, what is most disheartening is that even when there exists a good scope for success without resorting to underhand practices, our industrialists are so inured to abuse the ethics and legal codes they willy-nilly break them. The case in point is the mounting woes of the Singh brothers, Malvinder and Shivinder. Last week, they lost their last-ditch legal battle not to pay for the fraudulent sale of the well-known pharmaceutical company, Ranbaxy Laboratories Ltd, to the Japanese drug-maker, Daichi-Sankyo, without revealing that the company had fudged research data and was penalised for the same by the US Food and Drugs Administration.
The US was a huge market for Ranbaxy’s generic drugs. The FDA penalty of $500 million due to false data and unsafe production processes followed by Ranbaxy had to be paid by Daichi, which soon quit India, selling Ranbaxy to Sun Pharmaceutical Ltd., at a loss. The Japanese company sued the Singh brothers who had pocketed $2.4 billion for the controlling share in Ranbaxy. Typically, the Singh brothers used every stratagem to evade the award given by the Singapore arbitrator. Then they tied up Daichi in various Indian courts. But after years of expensive litigation, last week the apex court, happily for the future of Indian business and its global reputation, ordered them to pay RS 3,500 crore arbitration award with interest.
Meanwhile, the Singh brothers had systematically stripped off their assets in order to ward off the payment. Hopefully, they will not be allowed to get away, pleading ‘no-funds’. The sanctity of business contracts and agreements is of utmost importance if foreign capital is not to shy away from partnering Indians in India for business growth. But for foreign companies to partner locals, the latter will have to imbibe good business practices and follow legal and ethical codes. The record of Indian business, unfortunately, does not inspire confidence. Look at Nirav Modi. Or at Malvinder and Shivinder Singh. They inherited a great company but their greed destroyed the company and their own reputation.