Travel

Selling the Plaza Hotel, From an Indian Jail Cell


The Plaza Hotel, New York

Photograph by Barry Winiker

The Plaza Hotel, New York

Some people land in jail and have to sell off some prized assets in order to make bail. Then there’s Subrata Roy, who may have to part with the Plaza Hotel, not to mention some other prized properties in New York and London. The Indian businessman, owner of a conglomerate called the Sahara Group that has interests in everything from finance to TV stations to a Formula One team, has been at the Tihar prison in New Delhi since March. Indian regulators have accused Sahara of raising 240 billion rupees ($3.95 billion) by selling a convertible bond instrument without permission. Roy has argued that his company has complied with an order to refund the money raised from 30 million depositors.

To get out of Tihar, the largest prison in the country, Roy needs to pay $1.6 billion in bail. Even for someone who controls 120 companies and 14,600 hectares of land, that’s a hefty sum. Hence the “For Sale” sign at the landmark hotel at Fifth Avenue and Central Park South—and the unusual arrangements for Roy, 66, and his team at Tihar (Sahara bought the Plaza in 2012). On Aug. 1, a three-judge panel ruled the prison’s conference hall could double as a jail cell and an office, one equipped with videoconferencing and Internet facilities as well as several beds. The court also allowed Roy to have four staff members from 6 a.m. to 8 p.m. Explaining the need for the arrangement, Roy’s lawyers said in a court filing last month the company required a “congenial atmosphere” to negotiate the sale.

The offer of nice surroundings seems to have paid off for the court, which soon may get its big bail award. The Sahara Group is close to a deal with the Sultan of Brunei for the Plaza as well as the Dream Downtown Hotel in Manhattan and the Grosvenor Hotel in London, the Wall Street Journal reported yesterday, citing people familiar with the deal.

Nothing’s final yet, but already critics of the sultan and Brunei’s adoption of Islamic law are warning about him taking over a New York landmark. In April, the country adopted a penal code that includes death by stoning for rape, adultery, and sodomy. The United Nations High Commissioner for Human Rights, calling stoning torture, said the “application of the death penalty for such a broad range of offences contravenes international law.” Concerned that the government could use the penal code to attack gays and women in Brunei, celebrities such as Ellen DeGeneres and Jay Leno called for a boycott of the sultan’s Beverly Hills Hotel and Hotel Bel-Air.

Now the Human Rights Campaign, a group promoting equal rights for LGBT people, has started campaigning against the sultan taking over the Plaza. “The Sultan of Brunei could start executing women and LGBT people in Brunei as soon as next year,” Ty Cobb, HRC’s director of global engagement, said in a statement. “The American profit stream that flows from his hotels back to his regime needs to stop. We urge all New Yorkers to have one simple and straight-forward message for the Sultan: take your business elsewhere.”

The HRC and other critics of the sultan are on to something. In ordinary circumstances, they might not be strong enough to scupper the deal, but with the would-be seller’s boss stuck in jail, these are not ordinary times. If the critics succeed in at least slowing down a sale by loudly protesting, they might be able to get Sahara to consider another buyer. Time is not on Sahara’s side. After all, the longer these negotiations drag on, the longer Subrata Roy stays in Tihar prison.

Ghost_image
Einhorn is Asia regional editor in Bloomberg Businessweek’s Hong Kong bureau. Follow him on Twitter @BruceEinhorn.

The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus