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Bollywood: Pillar of Corruption

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New York Times

February 11, 2001

Underworld Tales From India's Tarnished Screen
OMBAY, India - Bollywood's biggest financier of films - an immensely
diamond merchant named Bharat Shah - is living for now in a small,
jail cell, far from the glamorous parties where he loved to mingle.

The police have accused Mr. Shah, perhaps the most powerful mogul in the

world's most prolific film industry, of helping gangsters extort money
others in Bollywood - Bombay's version of Hollywood. In fact they say
have Mr. Shah on tape talking about it with a mobster now a fugitive in
Karachi, Pakistan.

Mr. Shah, who has been in police custody since his arrest on Jan. 8,
through his lawyers that the voice on the tape is his and that he has
links with organized crime. But D. Sivanandhan, a joint commissioner in
Bombay Police Department who is leading the investigation, said he had
on the politically connected tycoon because of "absolutely good evidence

without which I wouldn't be risking my job."

Underworld infiltration of Bombay's film industry, which has hundreds of

millions of fans in South Asia and across the world, has been
rumored. Extortion appeared to culminate last year in the attempted
assassination of a top producer, Rakesh Roshan, who is also the father
Hrithik, Bollywood's current heartthrob.

While the Shah case may encourage a renewed effort by Bollywood's own to

clean up India's film industry, it comes at a particularly inopportune
for the government, which has been encouraging banks and corporations to

invest in an industry that experts say has long been awash in

The tremors caused by Mr. Shah's arrest have reached Hollywood, where
executives have been considering investments in India's lucrative film

One Hollywood executive, who refused to be named for fear of mob attacks
company representatives in Bombay, said the Indian government needed to
assure investors that "you won't have to be dealing with Don Corleone."

Just last month, the police arrested Nazim Rizvi, the producer of a
financed by Mr. Shah called "Chori, Chori, Chupke, Chupke" ("Stealing,
Stealing, Quietly, Quietly"). The police have accused Mr. Rizvi of
with a gangster named Chhota Shakeel to get the movie made faster and
cheaper - and agreeing to share profits.

After Mr. Rizvi's arrest, Mr. Shakeel told India Today, a news weekly,
in an
interview that he barely knew Mr. Rizvi and that Mr. Shah, not he, had
financed the movie. But he also said that his gang had moved from simple

extortion of movie stars and producers to financing film deals.

"We must have made 20 to 25 films and earned profits, too," he boasted.
more are on the floor today. Instead of extorting money from film
personalities, we thought we'd do business with them."

It was a tape of what the police say was a conversation between Mr.
and Mr. Shah that led to the arrest of the diamond merchant. The police
the Shah case will enable them to prove what they have long alleged:
leading Bollywood figures are not just victims being squeezed by the
for money, but are active collaborators.

"Our fear is that the whole film industry will be taken over by the
gangsters," said Mr. Sivanandhan. "And it's a very important medium
which the minds of the people can be shaped."

Mr. Shah is a stalwart of the Jain community of Gujaratis who dominate
diamond trade, and many still find it hard to believe that such a
man would have gotten mixed up with the mob. Some suggest that perhaps
Shah paid off an extortion demand, then found himself in the clutches of

For years, he was India's largest exporter of diamonds. And during the
decade, he has exported more than $1 billion worth, according to the Gem
Jewelry Export Promotion Council in Bombay. He was also, by far,
single biggest financier, capable of bankrolling 10 star-laden movies at

once, producers and industry officials say.

And in a city where ostentatious display is often admired, Mr. Shah was
legendary for being the host of sumptuous weddings. At one, so many
thousands of guests were invited he had to rent a stadium to accommodate

them and had a lavish set of a Rajasthani palace built on the cricket

"He's the single most powerful person in the industry," said Komal
editor of Film Information, a trade magazine. "You have to have seen the

marriages of his sons, daughter and nephew to believe it. I've been to
Every top film star, producer and director was there. Ministers,
politicians, diamond traders - it was a Who's Who of India."

The disbelief about Mr. Shah's links to the underworld was so great
two days after his arrest, diamond traders in Bombay went on a daylong
strike to protest.

But people have also been trying to stay a tactful distance from him,
especially since the taint of dirty money, as well as the peculiar
of India's film industry, are making it difficult to entice corporate

Last year, the government put the film industry on the approved list of
businesses to which public-sector banks can lend. But Prithvi Haldea,
managing director of Prime Data Base, a New Delhi-based company that
corporate fund-raising, said investors and managers of public-sector
will be wary of risking money on ventures that may wind up in a criminal


"Bollywood has essentially been financed all these 50 to 60 years with
money - money that has not been disclosed to income tax authorities," he

said. "It's mysterious where the money comes from and who's paid what.
you have no clue as to what are the revenues."

But Kunal Dasgupta, chief executive officer of Sony Entertainment
the Indian arm of Sony Pictures, believes Mr. Shah's case may be a
to global entertainment companies. A guilty verdict for Mr. Shah could
create pressure to clean up the industry, he said.

And the lure of profits is great. The Indian film industry releases 800
900 movies a year in many languages, but the Bollywood movies in Hindi -

about 150 to 200 a year - generate the greatest revenues.

Though 9 out of 10 flop, a big hit can earn 15 times as much as it cost
make, Mr. Dasgupta said. "There's a lot of money to be made," he said.

The Sony executive has an intriguing theory about why Mr. Shah might
found himself linked to the underworld. In Bollywood, a top actor often
juggles roles in several different movies being filmed at once - and has

contracts for many more movies than he can do at once.

A producer's ability to complete a film and a financier's ability to
money on it depend heavily on a star's willingness to commit to an early

filming date and to show up. And there is no insurance to cover losses
if a
film is never finished.

Mr. Dasgupta said this creates a big temptation for some financiers to
mobster muscle as a kind of substitute insurance. The gangsters threaten
star. The star goes to work on time.

"If it can be proved conclusively that Bharat Shah used the underworld
speed his films, it opens an opportunity for people like us to finance
films," Mr. Dasgupta said. "I just met with the finance minister two
ago. He indicated the government is keen to clean up the seamy side of
business. They want corporations and banks to get into the act."

Mr. Shah has assembled a high- priced legal defense team - including a
former attorney general of India - who are trying to get him out on
bail, so
far without success.

In the meantime, Mr. Shah sits in jail. He dines on home-cooked food
in by his family. And since complaining of chest pains after his arrest,
has been regularly checked by doctors.

"He's in the pink of health," said Mr. Sivanandhan, the police official.

"And he eats very well! Very well!"

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