The tumultuous saga of former billionaires Malvinder and Shivinder Singh seems to be entering a decisive stage.
Scions of one of the nation's most prominent business families, the Singh brothers were arrested Thursday and brought into a trial court in Delhi on Friday to face charges of fraudulently diverting nearly $337 million from a lender they controlled. The arrests send a signal that even the nation's elite won't be spared as India gets increasingly vigorous in its crackdown on delinquent borrowers.
The scene marked a new low in the precipitous fall of a multi-billion dollar business empire that included India's top drug maker and second-largest hospital chain. The accused will be held in police custody till they are produced before the trial court on October 15. During this time the accused can move the higher court for release from custody.
"At the end of the day, karma will catch up," said Shriram Subramanian, founder of Bangalore-based shareholder advisory firm InGovern. "Businessmen need to think that economic offenses are no longer pardonable. I think that sends a strong signal."
From money routed to a powerful spiritual leader to a fraud case playing out across three countries and an alleged physical altercation, the arrest of the Singh brothers comes amid a drive to weed out suspected corruption and fraud by Prime Minister Narendra Modi-led government.
As banks in the country look to clean up what's become the world's worst soured-loan mess among major economies, government agencies are also cracking down on defaulting borrowers or those accused of malfeasance.
The detainment of the Singh brothers marks the a new low point in their long fall from grace. Over the past few years, they lost all of their major businesses to mounting debt and allegedly fraudulent business practices. They have also bickered with each other, with Malvinder in the past accusing Shivinder and the pair's spiritual guru of defrauding the family holding company. Shivinder and the guru have denied these allegations.
"They don't go after that person to whose doorstep the money leads because he's heading some great religious organization," Malvinder's lawyer Manu Sharma said in the courtroom Friday, alleging that the guru was a beneficiary of the transactions at the heart of the allegations against his client.
Shivinder, who chose not to engage a lawyer and represent himself, said: "I want to take this opportunity to cooperate with the investigation. I will follow whatever order the court gives."
The arrests this week came in response to a police complaint filed in 2018 by the financial services company the Singhs had founded but is now under new ownership, Religare Enterprises Ltd.
Descended from refugees who fled Pakistan during partition, the Singh brothers gained international renown when they sold the generic drug company Ranbaxy Laboratories Ltd., which their grandfather founded, and their father built into India's largest, for $4.6 billion in 2008.
Over the following decade they used the approximately $2 billion they got from the sale to build new businesses, including, Fortis Healthcare Ltd., the country's second largest hospital chain, and financial services conglomerate Religare.
All the while their debt was mounting.
A Bloomberg investigation last year documented how the Singhs were also financing a property business under the names of relatives of their spiritual guru, Gurinder Singh Dhillon, who heads the Radha Soami Satsang Beas, one of the most powerful sects in North India. Some of that money came from their listed hospital and financial services businesses in the form of loans to front companies.
Combined with other investments gone bad, these outlays created a debt spiral that eventually saw the Singhs lose both their public companies after shares they'd put up as collateral were seized by lenders.
Adding to their legal liabilities, a Singapore tribunal asked the Singhs in 2016 to pay Daiichi Sankyo Co. 35 billion rupees after finding that the brothers concealed critical information during the sale of their drug maker Ranbaxy to the Japanese firm in 2008. Daiichi is still pursuing this award in courts and the Singhs are contesting it.
An investigation by the country's market regulator found last year that the brothers had defrauded their hospital company of about $56 million and asked them pay it back.
"Greed got the better of them," said InGovern's Subramanian, referring to the Singhs. "These allegations have been there for a while and these brothers have been out in the open. I think at the end of the day justice will prevail."