Up until very recently, the UK chancellor Rishi Sunak was being widely touted as a possible next prime minister in Conservative circles, with many impressed by his smooth rise through the ranks of British politics and his handling of the economic fallout from the Covid-19 pandemic.
The 40-year-old’s success has stirred a wave of excitement in India as well, both for his own Indian heritage and because he is the son-in-law of one of India’s richest businessmen – Narayan Murthy, often hailed as the father of India’s IT boom.
But scrutiny of Sunak, who is seen as a possible Tory leader-in-waiting, has increased and he is now facing awkward questions about the huge wealth and multi-national business dealings of his super-rich in-laws.
But speaking to The Independent, Indian industry analysts said the reports of investments funnelled through Mauritius and an alleged lack of transparency in Sunak’s own declarations of interest stand in stark contrast to the larger-than-life public persona of Narayan Murthy in India.
'The Steve Jobs of India’
Narayan Murthy’s personal story tracks closely with India’s own path to becoming a successful global IT hub. His tale of starting out with his own company using capital of just $250 and a six-person team in Pune in 1981 is a favourite rags-to-riches story of middle class families across India.
As chief executive and chairman of Infosys, Murthy led the company from 1981 right up to 2014, and he has built a reputation among experts and market analysts as one of the country’s greatest entrepreneurs.
“What Steve Jobs is for US, Narayan Murthy is for India,” says Trip Chaudhary of Global Equity Research. “[IT firms like] Wipro, TCS and Infosys changed the image of India, from the land of snake charmers to a place that provides services. They have put India on the world map.”
Having built up Infosys, Murthy is known for putting an emphasis on business ethics and corporate governance, at a time when nepotism was rife across many of Infosys’s competitors. He decided to become chairman emeritus in 2014, and the company tried to appoint a new leadership entirely independent of its founders.
Shriram Subramaniam of InGovern says: “At that time Infosys was the only company in India where promoters (founders or major shareholders) took no board seats and went out completely to bring a professional CEO.
“But that was an experiment that failed,” he adds.
Every Indian remembers the extraordinary story of the Infosys crisis in 2017, when the executive appointed by Murthy sensationally stood down. Vishal Sikka resigned after citing a “drumbeat of distractions" and "false, baseless, malicious and increasingly personal attacks" as his reasons for leaving – the heavy implication being interference in the background from a Murthy unwilling to let go of the reins.
Subramaniam believes the incident should be seen as just a blip in the company’s history. “Narayan Murthy has his own set of weaknesses as well... [yes] he was a micromanager, but he had no active role in the company after 2014.”
Asked if the company always lived up to the ethical business practices which Murthy himself talks about from time to time, Chaudhary takes a pragmatic approach. “We must celebrate the success of a company, but nobody got success without breaking rules and status quo,” he says.
“If someone wants to glorify them [businessmen] like Harishchandra [a mythological character known for only speaking truth] then it’s their problem,” he says.
The 74-year-old Murthy is now retired and with his minority stake in Infosys has an estimated net worth of around $2.5bn, according to the Forbes 100 Richest Indians list.
Illegal or unethical?
The Murthy family is back in the news now because of calls upon the UK government’s ethics watchdog to investigate Sunak after a Guardian story suggested the chancellor did not declare his wife’s multi-million dollar business portfolio in the official register of ministerial interests.
The newspaper also reported that a series of investments were bought by Sunak’s wife Akshata Murty through a company called International Market Management (IMM), which manages a chain of restaurants and funnels investments through Mauritius to reduce taxes paid in India.
Other business interests of Akshata Murty also include Catamaran Ventures, which gains from Amazon Cloudtails. Through Catamaran, Murty also has direct holdings in at least six UK companies – Digme Fitness, Jamie’s Italian, Jamie’s Pizzeria, New & Lingwood, Soroco and Wendy’s.
Questions are being raised about Sunak’s failure to declare these interests – but for analysts, the way Akshata Murty has handled her business would be seen as regular practices by many.
Talking about Akshata Murty’s wealth, Mohandas Pai – a former director of Infosys – says: “Akshata Murthy is a UK resident, not a taxpayer in India. She is independently wealthy. She has been wealthy for a very long period of time.
“She had her shares in Infosys right from the time she was a child. And I am sure that she manages her tax affairs very well following the Western practices.”
According to the Guardian, Murty bought a 5 per cent share in International Market Management (IMM) for £500,000 in 2014.
Instead of investing directly in the two Indian subsidiaries that operate its restaurants, according to the report IMM funnelled the money raised from its shareholders through an intermediary company in Mauritius.
The move, which is not illegal, means the company ends up reducing payable taxes on profits in India. It neither has to pay the 20 per cent capital gains tax and its tax on dividends also goes down from 10 per cent to five per cent.
The holdings are unlikely to prove particularly problematic for the Murthy family, given the strength of its reputation in India built up over decades. But they may yet raise difficult questions for Sunak as he pursues his political ambitions in the UK. A spokesperson for the Murthy family declined to comment on the Guardian report when contacted by The Independent.