Billionaire breakups

When wealthy couples decide to part ways, disentangling their relationship requires much more than a regular divorce lawyer

After studying law I vectored towards journalism by accident and it's the only job I've done since. It's a job that has taken me on a private jet to Jaisalmer - where I wrote India's first feature on fractional ownership of business jets - to the badlands of west UP where India's sugar economy is inextricably now tied to politics. I'm a big fan of new business models and crafty entrepreneurs. Fortunately for me, there are plenty of those in Asia at the moment.

g_111691_billionairedivorces_900x600_280x210.jpg
Illustartion by Sameer Pawar

A decade ago, when he set up his firm specialising in white-collar crime, Zulfiquar Memon, son of noted criminal lawyer Majeed Memon, had never contemplated working on a divorce case. What kept him busy were cases related to economic offences, offshore banking accounts, hidden trusts and banking frauds. But as he won the faith (and repeat business) of his clients, they started confiding in him about their, at times, difficult personal lives as well.

For instance, they might want out from a marriage, but the settlement would be too costly and time-consuming. Neither are Indian family courts equipped to deal with these cases, nor do the clients have the time to keep appearing in court. “They’d come and ask me to strategise their divorce case in much the same way you’d strategise for a commercial legal case,” he says. While the clients needed someone they could trust, it was also imperative that someone understood business and what it took to unravel messy entanglements.

A couple of years ago, an out-of-the-blue phone call from a friend in New York got Memon entwined in a complicated proceeding that you’ve never read of. The scion of a wealthy Indian industrialist had decided to call off his wedding to an American artist. They’d been dating for over a decade before the young man’s father refused to assent to the marriage. While the man had moved on, the woman had lost an entire decade and was understandably aggrieved and wanted revenge. She decided to sue for rape and demanded compensation.

The shrewd businessman in Memon realised that handling cases such as these could be the next big opportunity, and has since rapidly gone about proving his mettle. He could foresee that, within the next decade, India would be in a position where multimillion dollar separation settlements would be negotiated, and he wanted a piece of that pie. While he declined to name clients, his experience of handling some of the biggest divorces in India gives an insight into the new world of uber rich in India. Gone are the days when the wealthy would slug it out in family courts for paltry settlements and decrees that would leave both parties sulking. Today’s rich, increasingly individualistic, are willing to fight for settlements that run into hundreds of crores of rupees; the highest that Memon has negotiated is ₹350 crore. (For the record, Memon says he is increasingly concerned about the breakdown of family values and the increasing use of ‘I’ instead of ‘us’ in a marriage.)

                                                                                                     *****

Unlike commoner divorces, where an amount is agreed upon and the parties go their own way, in the divorces involving the super-rich there are two ‘corporations’ that need to be separated. So, everything from trusts, directorships and offshore accounts, to agencies, lockers and family offices need to have their legal relationships severed. Not only does it need someone who has the patience to deal with people who often have large egos, but also someone who understands the legal nuances of each of these relationships and can get the paperwork in place. There is a lot of back and forth that goes on, and a lot of negotiations. For instance, to get someone to give up, say, a directorship, the person has to be compensated with something else, say access to a jointly owned farmhouse.

Memon often has to perform a careful balancing act during these negotiations. “While I obviously need to get the best deal for my client, an important part is to also keep expectations in check,” he says, before adding that, initially, the rich always ask for more, before settling on a lower amount. It’s not easy when everyone is giving advice and the client has a multitude of opinions to reconcile. So, there are late night calls with clients that turn into counselling sessions, and conferences with chartered accountants to explain the minutiae of what is on offer.

Often, out of spite, there have been instances of spouses complaining to law enforcement agencies about charges of money laundering and foreign exchange violations. These are done to gain leverage and are always dropped once the divorce settlement has been agreed upon. Memon says that under instructions from his clients, he’s had to write to these agencies only to informally request them not to pursue these cases.

Today’s rich are willing to fight for settlements that run into hundreds of crores, but they avoid going to court


Lastly, once financial and property settlements have been agreed upon, the matter is taken to the family court where the divorce decree is obtained. The wealthy have, for the most part, shown an aversion to dealing with formal legal processes, even if it is for a divorce with mutual consent, which are usually wrapped up in 18 to 24 months. Everything—from the settlement amount (undisclosed, obviously), to the custody of the children—is agreed upon in advance, placed in a sealed envelope, and the divorce decree obtained. “Our skill lies in getting the divorce by mutual consent agreed to in advance, and then getting that agreement ratified by the courts,” says Memon.

Legal experts believe that in addition to the time-consuming process, the rich also avoid courts as judges are unable to award high compensation amounts. There is no Indian jurisprudence on the basis of which these awards can be made (as opposed to, say, accident cases where legal tests for compensation amounts to be awarded have been laid down) and judges are, at best, willing to award maintenance of ₹2 lakh to ₹5 lakh a month.

In the case of the India industrialist’s son and the American artist, once Memon sent the legal notice, all hell broke loose (he had the young man’s father in his office and had to field several calls from politicians), and it would take them over a year to reach a settlement that amounted to not only several million dollars in a one-time payment, but also agreements that erased all traces of their relationship from hotel reservations and photographs, to bank accounts and IVF treatment records.

Separating can, at times, be as tricky as staying together.

(This story appears in the 07 December, 2018 issue of Forbes India. You can buy our tablet version from Magzter.com. To visit our Archives, click here.)

Show More
Post Your Comment
Required
Required, will not be published
All comments are moderated
Kolkata gets a new culture hub
Ten interesting things we read this week