January 8, 2008

A Prince's Ransom

Sixty years ago the richest man in the world deposited £1m in a London account. It's been there ever since, and today it could be worth £80m. But no one can lay a finger on it.

The Nizam of Hyderabad, as he was known, cut a curious figure. A frail, tiny man, and a devout Muslim, known to be notorious for his meanness - he wore the same tattered fez for 35 years, dressed in rumpled cotton pyjamas, and ate all his meals off a tin plate, while sitting on a mat in his bedroom surrounded by overflowing wastepaper baskets. But he was, back then, the richest man on the planet. In 1948, he deposited £1m - in those days, a staggeringly large sum - with the Westminster Bank in London.

The Nazim's family had ruled Hyderabad since the early 18th century, and he was the only maharajah in British India who enjoyed the title Exalted Highness - a reward for his generous £25m contribution to the British exchequer during the first world war. When the Nizam deposited this £1m in London, he was in a tricky political situation. As the Muslim ruler of an Indian territory the size of England and Scotland, he was attracted by the idea of joining the new state of Pakistan. But he faced several obstacles. Most of his 20m subjects were Hindus and his huge landlocked kingdom was thousands of miles away from the new Muslim homeland in the Punjab.

Cultural Advisor to the Nizam Trust in Hyderabad - Saifulla said that while the Nizam dithered, the man to whom he had entrusted the £1m, his finance minister Moin Nawaz Jung, took matters into his own hands. He signed over the money to Pakistan's new high commissioner in London (who rejoiced in the name of Rahimatoola). Appalled, and under pressure from India, the Nizam cabled Westminster Bank and told officials to freeze the account. Soon afterwards, in September 1948, Indian troops marched into Hyderabad and brutally annexed his kingdom.

According to Saifulla - the story would be little more than one of the curious tales from the partition of India - were it not for the fact that, 53 years later, the money is still stuck in a NatWest account in Britain. And as of last week, depending on whom you talk to, the Nizam's missing fortune has grown to between £25m and £80m.Before his death in 1970, the dethroned seventh Nizam's son made attempts to get the money back. In 1957, after several rounds of litigation between the Nizam and the Pakistani government, the case reached the House of Lords. Lord Denning concluded that the account could only be unfrozen with the agreement of all the parties. The only way forward was "intergovernmental negotiations", he averred.

Few people then, however, would have imagined that the bitter adolescent rivalry that characterised the early years of India and Pakistan's relationship would continue well into the next century.The main beneficiary of this surreal dispute, of course, is NatWest, now part of the Royal Bank of Scotland group. The late Nizam's money was initially invested in war bonds, earning interest at 3%. In the 1960s the money was shifted into a fixed-rate deposit account.

Over time most of the partners who had dealt with the account retired.Until India and Pakistan and the Nizam agree, then, to cut a deal, it seems the money will remain lodged interminably inside NatWest's shiny London HQ at Bishopsgate EC2.

1 comment:

Anitha said...

This is really an amazing story.