A Shah Overthrown

After more than a decade battling rivals and regulators, the bull run of billionaire Jignesh Shah comes to a catastrophic end

At his peak, Jignesh Shah was the 1,014th richest person in the world, with a net worth of $1.1 billion. BCCL
01 November, 2014

ON 8 JULY 2003, Arun Shourie, then the minister in charge of privatising state-owned industries, made a remarkable speech in memory of Dhirubhai Ambani, who had died a year earlier. In a previous avatar as the editor of the Indian Express, Shourie had published a series of stories that characterised the Reliance founder as a buccaneering industrialist. That day, however, Shourie was looking through a different prism. “My acquaintance with Dhirubhai went through an almost 180-degree turn over the years,” he said. “I first learnt about him through the articles of my colleague S Gurumurthy. The point of most of those articles was that Reliance had done something in excess of what it had been permitted to do: that it had set up capacities in excess of what had been licensed, that it was producing in excess of those capacities.”

Shourie then described his turnaround, bolstering himself with laissez-faire logic: “Most would say today that those restrictions and conditions should not have been there in the first place, that they are what held the country back. And that the Dhirubhais are to be thanked, not once but twice over: they set up world-class companies and facilities in spite of those regulations, and thus laid the foundations for the growth all of us claim credit for today; second—and I am just paraphrasing Professor Hayek on how law evolves—by exceeding the limits in which those restrictions sought to impound them, they helped create the case for scrapping those regulations, they helped make the case for reforms.” In one short speech, Shourie had remoulded Ambani into an ideal to be emulated.

Four months later, Mukesh Ambani, the elder heir to the Reliance empire, put through a buy order for a gold futures contract, formally marking the beginning of trading at the Multi-commodity Exchange, or MCX, one of the country’s first electronic platforms for trading commodities such as metals and oil. The venture was created by Jignesh Shah, a 36-year-old entrepreneur from a middle-class Gujarati steel-trading family, who was already living Shourie’s message.

The Bombay cotton exchange, circa 1946. “Markets are an obsession,” Shah told the Financial Times. Their history fascinated him. Margaret Bourke-White / The LIFE Picture Colection / Gety Images