T HE NEW YORK TIMES INTERNATIONAL EDITION FRIDAY, AUGUST 2, 2019 | 3

World

V.G. Siddhartha, a tycoon who beat Star-

bucks to dominate India’s retail coffee

industry but faced financial troubles,

has been found dead, the police said.

The police had carried out an exhaus-

tive search for Mr. Siddhartha, founder

of the popular chain Cafe Coffee Day,

who was last seen Monday evening on a

waterfront bridge outside the coastal

city of Mangaluru, in southern India.

Fishermen spotted his body floating

near the shoreline on Wednesday morn-

ing.

The police were still investigating the

cause of death, said Hanumantharaya, a

senior police official who goes by one

name.

Mr. Siddhartha, whose family has

been in the coffee business for 130 years,

became one of the world’s biggest

traders after opening Cafe Coffee Day in

1996, earning him the nickname “the

coffee king of India.” The company and

its subsidiaries, which recently ex-

panded in Asia and Europe, employ

more than 30,000 people.

But Cafe Coffee Day and its parent or-

ganization, Coffee Day Enterprises,

were thrown into turmoil in 2017, when

the Indian tax authorities raided com-

pany offices.

They said they had found undisclosed

transactions and illegal income, which

Mr. Siddhartha denied.

This year, the company’s stock took

another hit as Mr. Siddhartha struggled

to pay various lenders, leading to a li-

quidity crunch.

Mr. Siddhartha, his wife, Malavika

Hegde, and companies affiliated with

them held over 50 percent of the equity

in Coffee Day Enterprises.

On Tuesday, the company released a

copy of a letter, purportedly written by

Mr. Siddhartha, that was addressed to

the board of directors. The letter, which

was evidently written on Mr. Sid-

dhartha’s letterhead and bears what ap-

pears to be his signature, said that he

was facing “a lot of harassment” from

the tax authorities, and that he took re-

sponsibility for “all mistakes.”

“The law should hold me and only me

accountable,” the letter says. “My inten-

tion was never to cheat or mislead any-

body. I have failed as an entrepreneur.”

Business owners in India have long

had a tense relationship with the tax au-

thorities. High-profile cases of corrup-

tion and fraud by tycoons have engen-

dered public distrust toward en-

trepreneurs. But critics say that in the

name of getting tough on cheats, the au-

thorities sometimes resort to har-

assment to collect on tax demands, in-

cluding from honest citizens.

The result is frustration on all sides.

The government struggles to collect the

tax revenue it needs to fund social pro-

grams and build roads and power lines.

Businesses struggle to comply with

vague tax rules and burdensome en-

forcement practices. And multinational

companies shy away from investing in

India, fearful of becoming embroiled in

lengthy disputes.

The country’s prime minister, Naren-

dra Modi, has for years promised to un-

tangle the knot. Campaigning in 2014 be-

fore his first term in office, Mr. Modi’s

party inveighed against the “tax terror-

ism” that it said had hurt India’s image

in the eyes of big foreign companies.

Since taking power, the Modi govern-

ment has enacted a national value-add-

ed tax that was meant to ease the com-

pliance burden for businesses. Mr.

Modi’s surprise decision in 2016 to can-

cel high-denomination currency notes

was intended to force tax dodgers to

turn over the cash they had squirreled

away to avoid taxes.

But many of the root problems re-

main, even as institutions such as the

World Bank have acknowledged the

steps India has taken to make it easier to

do business.

The police said that Mr. Siddhartha,

who was in his late 50s or early 60s, had

told his family that he was going to a hol-

iday resort on Monday. But he then

asked his driver to take him to Man-

galuru, about 200 miles from the compa-

ny’s headquarters in Bangalore.

As evening set in, Mr. Siddhartha

asked the driver to stop near the Netra-

vati River bridge outside the city, saying

he wanted to walk.

According to local news reports, Mr.

Siddhartha asked the driver to meet him

on the other side of the bridge and then

got on a call. When Mr. Siddhartha did

not show up or answer his phone, the

driver filed a police report.

After Mr. Siddhartha’s body was re-

covered, shares in Coffee Day Enter-

prises fell nearly 20 percent. Calls to the

company’s headquarters were not an-

swered on Wednesday, and its stores

were closed for the day.

In a statement released on Tuesday,

Sadananda Poojary, the company secre-

tary and compliance officer, said that

Coffee Day Enterprises was cooperat-

ing with the Indian authorities and that

the company was “professionally man-

aged and led by competent leadership.”

Kai Schultz reported from New Delhi,

Raymond Zhong from Shanghai, and

Ayesha Venkataraman from Mumbai,

India.

Left, emergency response crews carry the body of V.G. Siddhartha, the founder of a major Indian coffee shop chain. Right, Mr. Siddhartha at one of his shops in 2015. His companies have had financial troubles in recent years, including a tax evasion inquiry.

AGENCE FRANCE-PRESSE — GETTY IMAGES SAM PANTHAKY/AGENCE FRANCE-PRESSE — GETTY IMAGES

Tax issues raised as ‘coffee king’ found dead

NEW DELHI

BY KAI SCHULTZ, RAYMOND ZHONG

AND AYESHA VENKATARAMAN

After the flames were extinguished and

guards regained a semblance of control

over the prison in northern Brazil where

a gang fight left 58 dead, officials en-

countered a macabre scene.

The severed heads of 16 inmates lay

on the concrete floor, surrounded by cig-

arette butts and puddles of blood.

Nearby were an additional 42 bodies of

prisoners who died of smoke inhalation.

The clash between rival gangs at the

detention facility in Altamira, in the

state of Pará, on Monday was the deadli-

est outbreak of violence behind bars in

Brazil in nearly three decades.

But it came as little surprise to ex-

perts who have watched the country’s

inmate population explode, allowing

powerful gangs to assert ever more con-

trol over the teeming detention facili-

ties.

“Altamira was a tragedy foretold,”

said Anna Isabel Santos, a public de-

fender in Pará. “It was a packed prison

that hadn’t been upgraded in a decade

where two rival gangs were being held

side by side.”

Brazil has more than 811,000 inmates

— a population that has grown sharply

over the past decade, overburdening the

federal and local corrections systems.

As of 2017, jails and prisons in Brazil

were operating so over capacity that, on

average, a space designed to hold 10

prisoners was holding 17, according to

data from the Justice Ministry.

The situation in the state of Pará was

particularly acute, according to govern-

ment statistics. From 1995 to 2018, the

inmate population ballooned from 1,

to 16,505. While the penitentiary system

has added bed space, as of last year it

was equipped to hold only 7,950 in-

mates. As a growing number of people

have been funneled into already satu-

rated prisons across the country,

Brazil’s powerful drug cartels and their

regional offshoots have taken advan-

tage of the mayhem, according to offi-

cials and experts.

Prisons have become recruiting cen-

ters and operational hubs for drug

gangs that control profitable cocaine

routes originating in Colombia, Peru

and Bolivia. Brazil is one of the world’s

largest cocaine markets and an impor-

tant way station for shipments that end

up in Europe and Africa.

“They’ve essentially become trans-

national corporations with terrific logis-

tics,” Augusto Heleno Ribeiro, a former

army general who oversees security

policy in Brazil, said in an interview ear-

lier this year. “There is much they con-

trol today from inside prisons.”

Brazil’s largest drug gangs, the Red

Command and the First Capital Com-

mand, were formed behind bars dec-

ades ago with roots in Rio de Janeiro and

São Paulo, respectively.

Over the past few decades, the groups

morphed into behemoths with regional

offshoots and affiliates abroad. The Bra-

zilian government has responded

mainly by locking up more people,

which experts say has worsened the vio-

lence.

“Mass incarceration swells the ranks

of prison gangs by filling up prisons with

potential new recruits who find them-

selves in terribly overcrowded and dan-

gerous prisons, in need of protection,”

said Benjamin Lessing, a political sci-

ence professor at the University of Chi-

cago who studies the drug trade in Latin

America.

Mr. Lessing said prison officials in

Brazil have often been conflicted about

segregating prisoners according to

gang affiliation. The practice, which has

become routine in much of the country,

often strengthens gangs and can ex-

acerbate overcrowding in some areas.

In Pará, gang segregation has become

so routine it is directly handled by crimi-

nal judges, said Ms. Santos, the public

defender. “When you go to a hearing, the

judge asks what gang the inmate be-

longs to in order to know where to send

them,” she said. “Those who do not be-

long to a gang will end up getting affiliat-

ed based on what the judge decides.”

Monday’s clash began when mem-

bers of Comando Classe A, a regional af-

filiate of the First Capital Command, set

fire to the cell of inmates from the Red

Command, according to officials. Two

guards were held hostage during part of

the confrontation, but they were re-

leased unharmed.

Ronivia Teixeira Pontes, a teacher in

Altamira whose brother was among

those killed, said corrections personnel

could have stopped the bloodletting.

“Everybody knew this was bound to

happen,” she said in an interview on

Tuesday. “They go into prison armed

with large and small knives. How can of-

ficials say to relatives that they are

blameless?”

In response to the massacre, the fed-

eral government said it would transfer

leaders of the gangs involved in the

clash to more secure facilities.

Asked about the violence, President

Jair Bolsonaro, who has endorsed

tough-on-crime policies, had little to say

on Tuesday. “Ask the victims of those

who were killed in there what they

think,” he told journalists.

Outside the prison, relatives gathered

on Tuesday to take custody of the bodies

of their loved ones. The decapitated

heads were placed together in a large

black plastic bag, along with a couple of

arms that had also been severed. The

scene and the smell in the air were so re-

volting that some family members vom-

ited.

“I have never seen so much barbarity

in my life,” Ms. Teixeira said.

‘Tragedy foretold’ at prison

RIO DE JANEIRO

Overcrowding and control

by gangs created conditions

for a massacre, experts say

BY ERNESTO LONDOÑO

AND LETÍCIA CASADO

Ernesto Londoño reported from Rio de

Janeiro, and Letícia Casado from Wash-

ington. Lis Moriconi contributed report-

ing from Rio de Janeiro.

The prison in Altamira, Brazil, where a riot between two rival drug gangs left 58 inmates

dead; 16 severed heads were found. The country’s inmate population has grown sharply.

BRUNO SANTOS/AGENCE FRANCE-PRESSE — GETTY IMAGES

“Mass incarceration swells

the ranks of prison gangs

by filling up prisons with

potential new recruits.”

DIVER

300M

BR03-92DiverBlueAutomatic

42mm

300mwater-resistantbellross.com

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