Someone sent me another story about the long-running Indian financial drama involving the Singh brothers and the Radha Soami Satsang Beas (RSSB) guru -- Gurinder Singh Dhillon, a relative of Shivinder and Malvinder Singh.
What's interesting about this Forbes story, "How To Lose a $2 Billion Family Inheritance: The Tale of the Singh Brothers of India," is that it is written by an American, Dennis Jaffe.
Download How To Lose A $2 Billion Family Inheritance: The Tale Of The Singh Brothers Of India
So Jaffe looks upon the tangled web of the Singh brothers' business dealings from a different perspective than the numerous stories on this subject that have appeared in Indian business publications. Plus, Jaffe specializes in "family enterprise consulting" that aims at helping families manage multi-generational businesses.
Before sharing some quotes from the story, and my own take on it, here's what the person who emailed me a link to the Forbes piece said about it. "Satsangis" means initiates of RSSB.
Yes, the $2B question has been covered numerous times already, but this one is my favorite. I could highlight so many observations made in this new coverage... points 1, 2, and 3 at the end of this article are excellent.
Another thing I really like is that this is an Editor’s pick from Forbes (about as credible and reputable as we’re going to get) focusing on the ethics of what transpired.
I really hope you’ll be able to share this in a post at some point on your blog. People need to see this from a Western business perspective. That alone shows how incredibly unethical this whole mess was.Seems that a lot of Satsangis and non-Satsangis are disputing facts when from an American perspective it’s beyond just individual facts—it’s a story of gross unethical conduct leading to the point of criminal investigations.Today’s “gurus” need to start adhering to the principals of transparency, especially if they’re going to be getting involved with other people’s money (unfortunately not likely to happen as most view themselves above the law).
Does Dhillon view himself as above the law since he’s “GIHF”? [GIHF means God In Human Form]
Sadly, a lot of his followers do. One of GSD’s favorite sayings is “it’s my way or the highway”. Wow. Glad I’m not on that road anymore.
Not enough has been said about how much damage has been done to the non Singh/Dhillon shareholders of the public companies in question. GSD’s lack of good business practices, secrecy and poor advice cheated many people invested in these companies. That should alarm everyone. The lack of transparency and the honor system among India’s gurus make them the perfect “offshore-banking-system-for-greed”, so to speak.
If you haven’t read this piece yet I think you’ll really appreciate it.
Yes, I did appreciate it. I invite you to read the entire story. Here's some excerpts regarding the RSSB guru and the notion of "honor cultures."
In just a few years since inheriting a fortune from a company founded by their grandfather, brothers Malvinder and Shivinder Singh have managed to lose almost everything — including control over two public companies. Their story seems to affirm the axiom of “shirtsleeves to shirtsleeves in three generations,” a curse that plagues too many inherited family businesses.
Reflecting on their recent history (and recognizing the lack of public information available), there are lessons to deduce on how to avoid this sad, but common, occurrence.
The Singh brothers were heirs to Ranbaxy Laboratories, which was then India’s foremost pharmaceutical company, founded by their grandfather Bhai Mohan Singh and stewarded by their father, Dr. Parvinder Singh, who died in 1999. The brothers, who each inherited one-third of the company, engineered its sale in 2008.
They also loaned vast amounts of money to companies owned by a family headed by a spiritual leader whom they followed and who was a relative of theirs — Gurinder Singh Dhillon. Dhillon was a businessman as well, and he and members of his sect were central to investments made with loans from the brothers, including investments in a wide-ranging real-estate portfolio.
...The story of their decline and their web of investments is very complex and very opaque. What seems clear is that the brothers made loans and commitments to many different entities. What is also clear is that their spiritual and personal relationships led them to make business decisions that in hindsight appear to be extremely ill advised.
...While many aspects of this story are uniquely Indian — such as the deep connection to a family spiritual leader, moving funds among family ventures, and opaque business structures — similar situations can be seen in many cultures when family enterprises pass to the third generation.
India is an example of a type of culture that has been called an “honor culture.” Such cultures, common in South Asia, South America, Africa and southern Europe, are characterized by a strong family hierarchy with a single family leader, intense loyalty within the family and to a close network of long-term allies, and little trust of anyone outside the family and its network.
These cultures are oriented around power, loyalty, secrecy and distrust of external powers. They take root in societies where there is little long-term stability and limited or developing rule of law.
...Honor cultures emphasize secrecy and reliance on a strong — and often unquestioned — leader. Today, this time-honored secrecy and lack of transparency is giving way to global agreements that emphasize transparency. Secret agreements with governments are being questioned, and businesses, even those owned and controlled by a single family, are becoming regulated.
But it seems that the Singh family businesses were caught midstream in this evolution. The Singh brothers’ trust of the Dhillon family that led to their no-interest loans with little accountability have little place in an arena of more open dealings with greater accountability. And while family members tend to be satisfied with secrecy when they receive predictable profits and wealth, when things go south, conflict erupts.
What's particularly interesting here is that the Singh brothers' family relationships were intimately mingled with their spiritual relationship with the RSSB guru, Gurinder Singh Dhillon. Dhillon, who is the Singh brothers cousin (I used to think he was their uncle, but I've been corrected about this).
Thus Malvinder and Shivinder Singh both respected Gurinder Singh's authority as a familial father figure, but also looked upon him in the guru's God In Human Form guise -- someone with divine wisdom and mystical powers. So it's no wonder they went along with questionable business decisions involving the Dhillon family and Sunil Godhwani, who reportedly was the guru's "right hand man."
Bottom line: question authority. Especially when the authority is a single person, or just a few people. As Jaffe points out in his Forbes piece, it is vitally important to have an independent board of directors overseeing the decisions of a CEO.
As a family enterprise passes across generations and becomes truly immense, its governance and oversight cannot be limited to the skills of a single leader, especially one who only trusts old alliances and does not seek new talent.
I can't resist pointing out that while Radha Soami Satsang Beas is a charitable spiritual organization, not a profit-making business, it's my understanding that RSSB is basically under the control of a single person, the guru, Gurinder Singh Dhillon. RSSB is secretive and mistrustful of outsiders, so it also operates much like an "honor culture."
Which is dangerous. Both for family businesses, and for spiritual groups.