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Corporate Apr 25, 2013

Saradha’s Sudipta Sen: India’s stupidest businessman

By Venky Vembu

The things that go on at the shadowy intersection of business and politics aren't edifying to either business or politics. Politicians with greasy palms look to milk moneybags for everything they can get away with, and even if businessmen resent being gouged thus - and there isn't any evidence of that - they perhaps see it as the price of doing business in India, and pass on the corruption costs to their customers. It's a cosy ecosystem in which crony capitalism thrives.

You didn't need Sudipta Sen's melodramatic "dying declaration" in the form of a letter to the CBI, following the spectacular crash-bang of his chit fund business based in Kolkata, to know all this. The long line of industrial groups and barons in India who have benefited from political and bureaucratic largesse - and in turn returned the favour - stretches all the way from Kingfisher to Sahara.

And then, of course, every once in a while, along comes someone who, even when not quite a politician himself, leverages his political connections enough to become a real-estate land shark who makes supernormal returns on the strength of his connections alone. Robert Vadra is the prime exhibit of that, although the list of politicians (or their kin) who enrich themselves unjustly stretches across the political spectrum.

But in all this, there is one cardinal rule of doing business. As a banker explains it in an episode of the BBC television drama Yes, Prime Minister, "If you're incompetent, you have to be honest, and if you're crooked you have to be clever."

We've had business barons in India who have smuggled in entire factories, and who have made thousands of crores of rupees with just the tweak of a sub-clause in a legislative proposal. So you see, you can get away with a lot if you have your wits about you.

Yet, for all of Sen's efforts, in his letter to the CBI, to portray himself as the aggrieved party - the honest man whose business was pecked to death by political and commercial vultures - and for all the pathos he evokes, he merely comes across as a man who erred on both counts: he was as incompetent as he was crooked.

"I have always given and every time tried to give people more than they expect," Sen writes, in the manner of someone who was running a philanthropic organization, not a business. But "people have taken undue advantage of my goodness."

In fact, Sen is on track to go down as arguably India's stupidest businessman. He is someone who, having successfully built a rags-to-riches empire and done middling well, ventured too far away from his circle of competence, waded into money market operations on the strength of the persuasive spiel from someone who (when it came right down to it, by his own account) was his drivers'acquaintance , allowed people whom he barely knew to play fast and loose with his hard-earned reputation (and other people's money), and lost total control over the operations. Or so he claims.

"I am feeling helpless," Sen writes, because "unscrupulous persons and cheats" had collected money in his name, which he would not be able to refund. Nor, he adds, can he bear to hear being branded a cheat and a fraud, as he is today.

Doing business in India is dirty work, of course,  but the least that you need to do is to protect your interests - and learn to cut your losses before they take you down.

Doing business in India is dirty work, of course, but the least that you need to do is to protect your interests - and learn to cut your losses before they take you down.

All of these in themselves would make for a blunder colossal enough to bring down any house of cards, but Sen compounded all this by yielding to blackmail from media and political affiliates - by seeking to buy up a television channel - and buy out his blackmailer, so to speak.

With the blas attitude of someone who has money to throw around, Sen recounts that when the Pratidin media house started campaigning against his Saradha business group, he felt "helpless to combat the media attack. I thought I must enter in the media business." That, he acknowledges in hindsight, "is the point where I started the mistakes."

The television channel evidently bled money, but already Sen was in too deep to cut his losses: Trinamool Congress MP Kunal Ghosh was appointed CEO at a salary of Rs 15 lakh a month, and actor Mithun Chakraborty was enlisted as its brand ambassador at Rs 20 lakh a month - for which he did precious little, Sen adds.

But that wasn't the worst of it. Sen says he thought the deal would secure for him "political protection" from Trinamool Congress leaders to Central leaders. But he claims he lost the television channel (which he had bought for Rs 24 crore and on which he had spent an additional Rs 50 crore) for a paltry Rs 55 lakh when Kunal Ghosh "along with his few miscreants came to my office.... and forced me to sign some documents and letters, which I signed without going through the contents..."

But even after such setbacks, Sen didn't step off the treadmill. His interest in a motorbike manufacturing company caused him to lose another couple of hundred crores of rupees - simply because he failed to do the due diligence before signing the documents.

Sen also chronicles another deal that went sour - with Matang Sinh and Manoranjana Sinh, who in turn led him, he claims, to Nalini Chidambaram, the lawyer-wife of then Home Minister P Chidambaram. Perhaps there's something about him that marks him as a soft touch, for, he says, Nalini Chidambaram asked him to fund her own television venture in north-eastern India. He had been assured by Manoranjana Sinh that it would enhance his political clout to have a family member of Chidambaram on his side. On another occasion, he attempts to "fix" a problem he has with the stock exchange regulator Sebi, by paying off some intermediaries - who drop Pranab Mukherjee's name tantalisingly - but who in turn walk away with the money.

Sen's business empire, about which he offers yet more graphic details in his mail, comes across as one colossal mess. What more need one say other than that he claims that much of the land and property he claims that the Sarada group bought haven't even be transferred to its name.

Of course, Sen vainly sought to extricate himself from all this by securing "political protection". But in the end, when the chips fell, it didn't buy him the insurance he sought he had.

None of this means, of course, that the political and commercial vultures who he says preyed on him are worthy of exoneration. But it takes an extraordinary sucker to buy the fanciful tales that he was sold - and to throw good money after bad in venture after failed venture and in trying to secure political protection to cover his tracks and failing spectacularly even in that enterprise.

In the end, Sen's claim, which sounds plausible even though it will likely be discredited as the wild allegations of an accused scamster, is a cautionary tale for businessmen: to get away with big-bucks crookery, you have to at least be clever. There's no point blowing the whistle on your fell0w-scamsters and political patrons when the game is up, particularly since they have circles of deniability within which to hide. Doing business in India is dirty work, of course, but the least that you need to do is to protect your interests - and learn to cut your losses before they take you down.

by Venky Vembu

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