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IF YOU trace the history of many great business empires you will discover that the origins of their wealth are murky. The founding fathers were crooks who were not acceptable in polite society. Social respectability came only after the second or third generation. Controversial hotelier Sant Singh Chatwal, however, has successfully bridged the divide in his own lifetime. He has networked his way into respectability. The most striking symbol of his social acceptability is the Indian government awarding him the Padma Bhushan this year.
Chatwal was for years a wanted man in India. The CBI filed cases against him for conspiracy, fraud and cheating. The cases were filed on the basis of a complaint of the Chief Vigilance Officer of the Bank of India that Chatwal had in 1994 fraudulently obtained a loan of $9 million from the State Bank of India, New York without the required collateral by conspiring with officials of the bank. Two other Indian banks were also party to the complaints. To get around his financial problems Chatwal filed for bankruptcy in 1995.
Prior to this Chatwal's financial dealings had come under scrutiny in the US. The IRS pursued him for approximately $4 million in unpaid business taxes. While New York state placed a lien seeking more than $5 million in taxes. He forfeited a building to New York City on which he was delinquent on property taxes and was sued by federal regulators seeking to recoup millions of dollars in loans from a failed bank where he served as a director.
In 1997, the Federal Deposit Insurance Corporation sued Chatwal over his role as a director and a guarantor of unpaid loans at the failed First New York Bank for Business. The government alleged that his loans had "resulted in losses to the bank in excess of $12 million", and it questioned his claims that he could not repay the debts. The regulators were sceptical of the fact that Chatwal continued to rent a spacious penthouse apartment in New York in the midst of his financial turmoil. "The debtor has managed to continue living in luxurious style in the same penthouse apartment he resided in at a time he claimed a net worth of tens of millions of dollars without adequate explanation of how his family's limited income is able to support such a lifestyle," the government said in a filing.