Riches to Rags indian riches to rags list

Riches to Rags: 7 Wealthy Indians who lost their Fortune!

List of Wealthy Indians who went from Riches to Rags: Although it shouldn’t come as a surprise, we regularly see Billionaires who also can be horrible at managing their wealth. The answers as to why this happens are always in plain sight as most of these billionaires can be caught flaunting their wealth regularly. They can range from greed, obsession, etc.

Today we take a look at Seven Riches to Rags Indian billionaires who somehow managed to squander away their fortunes which otherwise would have taken lifetimes.

List of 7 Indians who went from Riches to Rags

1. Anil Ambani

Anil ambani Riches to Rags listAnil Ambani is the chairman of the Reliance Group. He was born into luxury, unlike his father who created his own wealth. After his fathers’ death and a property tussle with his brother Mukesh Anil came out on top. In the year 2008, Anil was named the Sixth richest in the world. The years that followed resulted in the one-time richest Indian somehow losing all his wealth.

He is currently fighting off multiple cases for dues owed. Anil currently claims that he is worth nothing and was recently avoided jail with the help of bail provided by his brother unlike other stories on this list.

2. Ramesh Chandra

Ramesh ChandraAn IIT alumni Ramesh Chandra set up Unitech a real estate company in 1971. Thanks to the real estate boom Unitech was now the second-largest real estate company worth $32 Billion.  He along with his sons had a net worth of 11 Billion in 2007  that was until the Recession of 2008 hit. It was due to the recession that the company began to stagnate.

Further, it was here when Chandra made another grave error of entering the telecom sector. Although Unitech was well received by the consumers’ news soon broke out of its involvement in the 2G scam which involved bribing government officials for spectrum licenses. The failing real estate its involvement in the scam led to his sons Sanjay and Ajay Chandra being arrested. 

3. Subrata Roy

Subrata RoySubrata Roy at the helm of Sahara was a larger than life figure. He even named among the top 10 most powerful people in India by India Today. Roy was instrumental in building one of the biggest business empires and India’s Second largest employer.

All his fame eroded when news broke of the Sahara Chit Fund Scam amounting to Rs. 24,000 crores. Subrata Roy convicted and lodged in Tihar Jail for 2 years. He was released on parole in 2017.

4. Ranbaxy Singh Brothers

Ranbaxy Singh Brothers

Ranbaxy Singh Brothers are the next name in our list of Riches to rags billionaires. Brothers Malvinder and Shivinder inherited a 33.5% stake in Ranbaxy a pharma company founded by their grandfather. They decided to sell their inheritance in 2008 for $2 Billion. Over the years that followed the brother made a series of bad investment decisions that eroded their wealth.

Their worst investment included a Rs. 3000 crore loan to spiritual guru Gurinder Singh dhillon. The duo today owe a combined due of 500 million. They are currently being sued for siphoning off billions from their financial company-Religare and healthcare company-Fortis.

5. Nirav Modi

Nirav ModiNirav Modi is a luxury diamond jeweler who was also featured on Forbes list billionaires in 2017 with a fortune of $1.8 billion. The Modi brand was one of the most famous in the world with his designs even being auctioned off at Sotheby’s.

In 2018 the news of a scam broke out when it was revealed that Modi had scammed PNB of 14,000 crores over the course of 7 years. Nirav Modi fled India after the news broke out and took refuge in London. His extradition proceedings are currently underway.

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Nirav Modi Scam – What Actually Happened in PNB Fraud?

6. Vijay Mallya

Vijay Mallya

Vijay Mallya, a former billionaire popularly known as the King of Good Times. He inherited his fathers’ liquor business at the age of 28 and went on to transform it into a multibillion-dollar business. Trouble started brewing for Mallya when he decided to venture into the airline sector with Kingfisher Airlines. Although the Airline took off well it soon faced trouble after the 2008 Recession.

In a desperate need for funds, Mallya duped banks for loans by placing weak collaterals. Once it was evident that Kingfisher had sunk despite his efforts, the news of the Rs. 9,000 crore scam broke out. Mallya fled the country and is currently seeking refuge in the UK. Proceedings to extradite him are underway.

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Vijay Mallya Scam Demystified | Vijay Mallya Case Study

7. Ramalinga Raju

Ramalinga Raju

Ramalinga Raju founded Satyam Computers Services Ltd in 1987. Raju went on to build it into the fourth largest IT software exporter in the country with the firm worth $2billion in 2008. In order to siphon off funds from the company, Raju began manipulating the financial records to give the impression that the company was growing well. In reality, funds were simply being taken out and being invested in real estate.

This was done in hopes of making a profit on the sales of property at higher prices but the recession of 2008 hit the real estate markets hard tarnishing Raju’s plan forcing him to come clean. Raju along with his brothers and 7 other was sentenced to prison.

Closing Thoughts

“It doesn’t matter how much money you can earn, what matters is how much you can keep.”

According to Forbes, India has 102 Billionaires as of 2020. Compared to the previous year 2019, the count of billionaires has dropped (106 in 2019). Obviously not all billionaires are able to keep their growth trajectory and status. Nevertheless, going from Billions to rags is a totally different story.

In this post, we tried to cover the list of Popular Wealthy Indians who went from Riches to Rags. In any case, if we missed any popular name, feel free to comment below. Have a great day and take care!

Nirav Modi Scam PNB fraud

Nirav Modi Scam – What Actually Happened in PNB Fraud?

Simplifying Nirav Modi Scam and PNB Fraud: If you search Nirav Modi on google, you can find a lot of his pictures with Glamorous Actress from both Bollywood and Hollywood. However, behind all those gorgeous pics, there is a big fraudster hidden. Nirav Modi Scam or The Punjab National Bank (PNB) scam of  ₹11,356.84 crores is being dubbed as the biggest fraud in India’s banking history.

Today, we take a look at the what acutally happened in PNB Fraud or Nirav Modi Scam, the man behind it and how the diamond mogul was able to siphon billions from the country.

Who is Nirav Modi?

Nirav Modi is a luxury diamond jeweler and designer who featured on listed containing the diamond kings of India. He was also ranked 57th in the Forbes list of billionaires for 2017. Nirav Modi was born into the diamond business in Gujurat but was bought up in Belgium.

Modi attended the Wharton School at the University of Pennsylvania but dropped out and accompanied his father to join his uncle Mehul Choksi’s business at the age of 19. Mehul Choksi was the head of the Gitanjali Group. The Group-owned 4000 retail jewelry stores across the country. 

who is nirav modi

Under him, Modi learned the tricks of the trade in the diamond industry and eventually went on to found ‘Firestar’ in 1999 a diamond sourcing and trading company. The success of the business soon saw Modi acquiring other jewelry businesses. These included the likes of Frederick Goldman in 2005, and Sandberg & Sikorski and A.Jaffe in 2007 in the USA.

In 2010 he launched a diamond store that bore his own name which eventually grew to 16 stored in locations like Delhi, Mumbai, New York, Hong Kong, London, and Macau. Modi’s popularity grew after he designed the  “Golconda Lotus Necklace” with an old, 12-carat, pear-shaped diamond in 2010 and the Riviere of Perfection, featuring 36 flawless white diamonds weighing a total of 88.88 carats, being sold at Sotheby’s auction.

Nirav Modi Scam PNB FraudHis store launch in New York included the likes of Donald Trump, actress Naomi Watts, and model Coco Rocha. The store sold luxury brands like Hermes, Chanel, Prada, and Gucci. Renting the store alone cost him $1.5 million for a year.

At the height of his successful business career, he was known as one of the Indian diamond kings and his jewelry was worn by Kate Winslet for the Oscars. All that was until the news of the scam broke out.

How did Nirav Modi pull off the Scam?

The scam which broke out in 2018 had begun way back in 2011. In order to pull off the scam, Nirav Modi made use of a banking instrument known as the LOU (Letters of Undertakings). An LoU acts as a bank guarantee where its customers can raise short term loans. These loans can be raised from Indian banks’ foreign branches established overseas.

As Nirav Modi imported diamonds from foreign countries it meant that he had to deal with foreign currencies. For this, he had to approach foreign branches of Indian banks for loans that were received at cheaper rates. But what collateral does he have here? This is where LOUs step in. Nirav Modi approached PNB for an LOU which was used as collateral for these short term loans.

These LOUs, however, are supposed to be given out only when the client has collateral in the domestic bank issuing the LOU. But PNB ignored these requirements and gave out the LOUs on Modi’s guarantee.

Nirav Modi in talks with Prince Charles

(Nirav Modi in talks with Prince Charles)

As these loans were for the short term on their due date Modi was asked to pay back the loan by the foreign branches. But this is where Modi extended the scam. He simply took another LOU from PNB of a higher amount. This was used to pay back the old loan and the additional amount was reinvested. Talk about a Ponzi scheme mechanism. By 2018 Nirav Modi had received 1,212 more such LOUs. 

His plan, however, was working! Modi had grown his business in a span of 5 years what would otherwise have taken 20 years. But how was he going to pay back all the debt? Modi had planned to eventually list his “successful” company, with securities being sold at a premium. These funds would then be used o pay off the billions in debt.

But unfortunately, in 2018 when the employees of his companies(Diamonds R Us, Solar Exports, and Stellar Diamonds) approached PNB once again for LOUs the bank employees demanded 100 percent cash margins. Nirav Modi’s firms contested this requirement. They claimed that they had availed LOUs without collateral before.

This led the PNB officials to finally take a closer look at their accounts after which they first found irregularities of Rs. 280.7 crores and immediately lodged an FIR with the CBI for fraudulent LOUs issued. As the officials dug deeper, by May 18, 2018, the scam had ballooned to over Rs 14,000 crore. 

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The fallout after the news of the scam broke out?

The fallout after the scam broke out was unprecedented. This is because citizens just could not cope with the fact that businessmen could simply squander billions. This came outpost the Vijay Mallya scandal.

But by the time the news broke out Nirav Modi, his wife, younger brother and Mehul Chowksi had already fled the country. The brunt of the scam fell on the Indian banking sector as although the loans were taken in other countries they were taken from Indian banks. Eventually, the government had to once again step in to save the banking sector.

Several PNB officials were arrested. Top PNB officials claimed that the scam took place as few PNB employees were involved. They also stated that the scam was possible due to the irregularities in the banks’ SWIFT systems. But these charades were impossible to buy as billions could not simply disappear from the bank without top bank officials being involved.

PNB Scam Whistleblower -Hari Prasad(PNB Scam Whistleblower –Hari Prasad)

The most interesting turnaround in the case occurred when news broke out of the whistleblowing attempts that took place. These attempts were made by jeweler Hari Prasad. He had sent detailed letters of the scam taking place to the PM’s office back in 2016, highlighting PNB and urging action. These letters were simply acknowledged by the PMO and transferred to the Registrar of Companies.

The RoC simply disposed off the case. This led to the scam taking a political turn. The Opposition blamed the Modi government for being an accomplice. The Modi government, on the other hand, blamed the congress as the initial LOUs were issued when they were in power.

Closing Thoughts

Needless to say that no matter who commits the scam or who’s involved in the scam, the common public is always the victim. The same is the case with the Nirav Modi scam or PNB fraud. After all, it’s the people’s money saved in PNB bank. Nirav Modi, though has been accused of scam, still is comfortably living life abroad. We can only wait and hope that PNB fraud comes to justice.