All business owners, meaning anyone who owns anything of value that will be passed on to the next generation have the potential to destroy their families through poorly planned and unclear succession and wealth transition process. And it is never enough to seal family harmony when you require your children to regularly troop to your home every Sunday for lunch or dinner together with their spouses, regale you with their stories, while you playfully amuse yourself listening to your grandchildren’s out of tune song and dance number.
Despite all these founder initiated gatherings to instill unity, no family is immune to the dangers that wealth can generate. As a family governance advisor doing the rounds in Asia, I still get a front row seat when the children slug it out after the passing of their parents with the added benefit of lawyers fanning the flames in disputes over poorly and hastily crafted succession arrangements left by the senior generation.
I want to share the unfortunate story of the Chadha brothers of India. An incident happened sometime in November 2012 pitting two brothers who were embroiled in a bitter property dispute after their father, Kulwant Chadha died without clarifying ownership and succession issues amongst the children.
Accompanied by their bodyguards, the siblings led by liquor baron, property magnate and eldest son Ponty was seen arguing with younger brother Hardeep over their inheritance. Both were obsessed about a particular farmhouse that their father had left to Hardeep.
Ponty had contributed hugely to the family business and believed he deserved the property. Hardeep felt that he had not only been bequeathed the farmhouse by his father, but that the overall deal on his father’s estate was unfairly distributed, giving him less than what he believed was his rightful share.
Highly-placed sources said that Hardeep had phoned a media baron earlier that morning and told him that “he was going to finally settle the dispute with Ponty today.” Cops claimed that both sides had “planned in advance to settle scores.’’
The confrontation ended with Ponty dying in a hail of bullets at the hands of his own brother Hardeep. This led to an exchange of gunfire between the two sides with Hardee subsequently killed by one of Ponty’s police escort.
For a family reported to have assets worth more than US$10Billion, it would be hard to imagine that Ponty and Hardeep’s father had ever dreamed that his sons would die in a gun battle over an irrelevant asset one day. More than the subject asset in dispute, the conflict clearly emanated from unclear distribution of ownership, poorly crafted transfer of power, sibling rivalry, past hurts, betrayal and perceived unfair treatment. It was apparent that the father failed to address and totally set aside the brewing issues of the children that led to the conflict.
The Chadha brothers’ senseless death could have been avoided if the father prepared a thorough succession and wealth transition plan 3 to 5 years earlier. There is no doubt that families of the warring Chadha branches and the relationships in the succeeding generations have been shattered.
Like most founders, owners have the tendency to focus on wealth generation over preservation and set aside subdued emotional issues of family members. This apathetic mindset by the father exacerbated the already volatile relationship amongst the Chadha siblings and his death effectively ignited the flames. Ominously, it was a disaster waiting to happen.
As one relative said, “Is it God’s Will? Both brothers had an amazing life but suddenly everything fell like a house of cards.”/WDJ