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New books tell tales of India’s crony capitalism, defying crony warnings

John Elliott

Sahara book1 197x300 New books tell tales of India’s crony capitalism, defying crony warningsIn a society ridden with crony capitalism and crony politics, businessmen and politicians inevitably try to stop people writing books that reveal their goings-on. But there is a limit to how much disruption they can achieve.

This has been shown by the recent publication of three books, one of which uncovers many of the secrets of the showy but shadowy Sahara Group run by the idiosyncratic and reclusive Subrata Roy (now in jail) who owns the Grosvenor House Hotel in London.

The other two tell of the intrigues, spats and influencing by the Ambani brothers’ Reliance companies over natural gas pricing, and the fixes and fudges of Air India, especially when Praful Patel, a suave and wealthy Maharashtra politician, was aviation minister in the last government.

Roy took legal action that delayed publication of the book, by Jaico of Mumbai, about him and his Sahara company for several months, while the Ambanis have been complaining and threatening noisily but have not yet taken firm action to have the privately-published book about them and India’s “gas wars” banned. Patel got the Air India book withdrawn by Bloomsbury India, but the author is now publishing it himself.

Such disputes are good for sales – the Sahara book has gone into a reprint after an initial run of 15,000 copies, while Gas Wars has sold 4,000 hard and paperbacks. The (semi) joke doing the rounds is that the Ambanis are trying to obliterate the book by buying up all the copies, but it’s not possible to do that to e-books of which 1,000 have been sold.

Sahara’s mysteries

Subrata Roy, the founder of the secretive but publicity conscious Sahara India Parivar group took out a Rs200 crore ($32m) injunction last December that delayed publication of Sahara: The Untold Story by Tamal Bandyopadhyay, an editor of the Mint business newspaper.

Roy was jailed four months ago on an (unconnected) contempt of court case, and seems to have decided that he was fighting for his survival on too many fronts. He agreed last month that the book should be published, along with a curiously worded disclaimer, which appears on both the cover flap and the first two pages, saying that it “is based on a particular notion, wrong perceptions supported by limited and skewed information. Hence, it does not reflect the true and complete picture”.

Roy is an extraordinary character, apparently employing 600,000 agents to draw savings from millions of the poor for a myriad of financial schemes. He penalises them mercilessly when they fall short on payments and dodges regulators who try to investigate. He invests in massive real estate dreams (claiming a 36,000 acre land bank) and has created and sold a loss-making airline.

He has owned and lost a cricket team, was till recently the official sponsor of the Indian cricket team, and has a share in a Formula One racing team (he invested to help the financially ailing Vijay Mallya of Kingfisher fame).

He owns two hotels abroad, including the famous though faded Grosvenor House on London’s Park Lane, a couple of minutes walk from Mayfair’s Grosvenor Square and nearby streets favoured as fashionable addresses by India’s wealthy. He bought the hotel in 2010 for £470m mysteriously sourced funds

Roy lives and works in a closely-guarded gated compound called Sahara Shaher that contains replicas of world famous buildings and covers an incredible 270 acres in the centre of Lucknow, the capital city of Uttar Pradesh where his political power has been based. He mixes with film stars and powerful politicians of varying shades of respectability, many of whom, it is widely rumoured, invest their money anonymously in his schemes.

Yet oddly the rich and powerful, who ostentatiously partied with him for years, have not managed to rescue him from exasperated and humiliated Supreme Court judges and financial regulators who eventually trapped and jailed him over an alleged Rs24,000 crore ($4bn) bond scam

For years, regulators have been trying to tie down where his money really comes from – is he caring for the poor or cheating them, or is he mainly laundering money for the rich?

In his book, Bandyopadhyay writes: “Roy, the guardian angel of the group, whose feet are touched by everybody in the Parivar, is an entrepreneur who wants to reach out to a million lives, and who feels claustrophobic in regulations. So, the clash with the regulators is inevitable. But when one regulator slams the door, Roy opens another. This play has been on since 1978 when Sahara was set up”. Bandyopadhyay asks whether the “poor people actually keep their money with him or are they a front for others?”

At the Delhi book launch, he wondered whether “investors really do exist” since none had complained about their treatment, yet Roy had claimed he had repaid 147m investors, which if true amounted to an astonishing “one in nine of all Indians”.

The Ambanis’ Gas Wars

Gas Wars – Crony Capitalism and the Ambanis by Paranjoy Guha Thakurta (below), a prominent business and economics journalist, and two colleagues, was published privately by Thakurta in April and is now for sale on the internet as well as in bookshops. The launch event in Delhi became an occasion for wide-ranging attacks on crony capitalism.

Reliance Industries (RIL), run by Mukesh Ambani, India’s richest man knew about the book but, says Thakurta, had not tried to stop him publishing it. However it quickly threatened to sue for Rs100cr (about $16m), serving legal notices alleging defamation on the authors, the book distributors (including Amazon and Flipkart), plus some reviewers and, according to Thakurta, even a young woman who forwarded electronic invitations for the launch event.

Thakurta’s book explores RIL’s natural gas finds at the KG-D6 oil and gas field in India’s Krishna-Godavari Basin and a very public row over delivery prices to a power project run by Mukesh’s younger brother Anil’s separate company. It quotes how the India’s Comptroller and Auditor General (CAG) alleged the petroleum ministry “designed contracts and tailored rules” to favour RIL, which was thus able to recoup “excessive capital expenditure” and reduce payments to the government.

Reliance of course denies all the allegations and last week launched on the internet a 56-page presentation and promotional video – a Flame of Truth eBook titled “India Has Never Been Here Before – Facts You Didn’t Know About KG-D6”.

Praful Patel and Air India

The Descent of Air India, by Jitender Bhargava, a former executive director and pr chief of the airline, was published last October. Patel said it contained “baseless allegations” about him and in November his lawyers brought a criminal defamation case in the Mumbai courts against Bloomsbury India and Bhargava. In January, Bloomsbury apologised, withdrew the book from sale, and agreed to destroy its remaining stocks, though Bhargava is selling ebooks on the internet and plans to publish a hard copy himself soon.

Patel, who is presumably no longer wielding so much power at the centre of politics following the recent general election, does not seem to have tried to stop Bhargava’s sales.

Bhargava writes about what he describes euphemistically as Patel’s political interference “on acquisition or leasing of aircraft, purchase of merchandise, appointments, giving out free air tickets and upgrades, and on promotions, transfers, and postings of employees”. These decisions were taken, he says, “without any thought for the airline’s future”. For whatever reason, foreign airlines were given far greater access to India’s airports than was justified by customer demand, which damaged Air India’s ability to generate revenues.

People in these stories are accustomed to wielding power and patronage at the centre of government. But a new era has begun and none of them can be sure how things will develop with a prime minister whose general election mandate included cleaning up corruption.

A longer version of this article is on John Elliott’s Riding the Elephant blog at http://wp.me/pieST-28s

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