HomeNewsGuidesReadsPodcastsTRANSFIN. EOD
  1. Reads
  2. Lite

Nirav Modi and India's White Collar Fugitives: Rule of Law vs. Rule of Wealth

Founder and CEO, Transfin.
Mar 9, 2018 1:40 PM 3 min read

What is the India of 2018? What kind of nation have we become after seventy-one years of being in-charge? An easy response sits within a treasure trove of statistics – GDP growth, private investment, foreign exchange reserves, billowing billionaires, unicorn start-ups, average rise in standards of living etc. All to rightly assuage the worldly notion of progress.


Observing any country’s development through a silo of macro and socio-economic indicators can be misleading. Recent events show we should resist the urge to constantly pat ourselves, and rather introspect on having created a system which brazenly reinforces inequities. That is the cost of our rise and if not checked, sooner or later, the nation would have to pay up.


Inequities originate from inequality. The data from the likes of Thomas Piketty, Oxfam and Credit Suisse is clear. Some experts may disagree with their methodology so consider this simpler framework instead. Forbes Magazine just released its annual list of World’s wealthiest billionaires. 119 Indians made the cut with their combined wealth (amounting to $440bn) equalling a whopping 19% of India’s GDP, second only to Russia! The concentration could not be clearer.


Forbes Billionaire Wealth As % of GDP - Richest Person in India vs. Other Countries
Source: Forbes and World Bank Data


Trouble is that wealth disparity does not end at mere differences in quality of living but skews the very functioning of institutions which are supposed to view individuals as almost equal if not equal – be it the government, its enforcement agencies, regulators, judiciary, or the media.


Before tagging me as cynical or alarmist, pause and ask yourselves a straight forward question.


When was the last time a man of wealth ending on the wrong side of the law faced the requisite consequences in our country?


By a man of wealth…mere “affluence” is not enough. I talk of the Big Fish. Someone who needs no introduction and often no context. I talk of the Forbes billionaire behind the earlier chart. The recurring winners of Indian Business Leader of the Year Award(s). Take a moment and think hard. You will struggle.


The Nirav Modi saga does not count. Yes, his business empire and brand may have fallen, but any retribution of individual consequence against the perpetrator of India’s largest white collar crime seems unlikely. With rabble-rousing around UPA vs. NDA vs. regulators vs. bankers already at play and a media ready to gobble all bits, implicit support to “move on” are evident. Newer tributaries of the original scam, real or imagined, are thrown in the narrative (read ICICI, Axis etc.). A loose bill to deter economic offenders from fleeing the country gets tabled two years too late. Whether prime accused Mr. Modi and Mr. Choksi will ever face an Indian court is anyone’s guess. Their legal counsels will surely advise them against returning. Mr. Mallya’s precedent stands robust.


This is hardly the exception. Be it wilful defaulters either corporate or HNWIs, unfair grant of contracts, irregular allocation of land and natural resources, breakdown of corporate governance – India clearly has differential standards of proprietary, morals, ethics, process, and judicial tolerance for the haves vs. the have-nots. After all the prime-time debate drama, the real delivery of justice against the former in most cases does not stand the test of time or efficacy.


Having an absolutist view on equality is naïve. Even the United States suffers from a massive concentration of wealth. US corporate sector has had its own journey. Common Americans were forced to bail-out failing banks during the crisis. Companies spend billions to lobby Congress to move one way or the other. But the country also has over 240 years of institutional history, which means its rule of law still does not spare if you’ve crossed a certain line, regardless of who you are. They have a Bernie Madoff who is in prison till he breathes his last, a Jeffrey Skilling (Former CEO, Enron) who is serving a 14-year sentence, and a Michael Milken who went to jail despite being the “Junk Bond King”. All accused for white collar crimes, all extremely wealthy.


Yes, we have progressed. And yes, we have done that as a functioning democracy. But our constitutional ideal of one man-one vote ends with the election. At all other times, we are governed by the wealthy.