The fall of Lord Hardship: After fleeing to Britain as a refugee from Idi Amin, Nazmul Virani became a very rich man. But now he is in jail. Mihir Bose looks at a history of success that collapsed with BCCI

It would be tempting to see the story of Nazmul Virani as a simple if devastating one of Asian businessman makes good, Asian businessman turns crook. Four years ago he was the third richest Asian in Britain, with wealth estimated at pounds 110m. The talk in the Asian community was of whether, on getting his peerage, he would assume the title Lord Hardship - after his nickname for Lordship Lane, south London, where he had set up his first modest store. Last week at the Old Bailey he was jailed for two-and-a-half years for his part in the BCCI banking fraud.

Yet to see Virani in such simplistic terms would be wrong. Just as his rise from penniless Ugandan refugee to symbol of Asian business success was too easily seen as representative of the Asian business miracle, so his fall could be easily pictured as pervasive Asian corruption; he is the third Asian to be convicted of fraud in the BCCI scandal, and in the past there have been other Asian Ugandan refugees who have been forced to spend some time at Her Majesty's pleasure. More useful is to see the Virani story as an illustration of a profound cultural divide that separates the British from the Asian.

When Virani arrived here in 1972, one of many brutally kicked out of Uganda by Idi Amin, he knew little about this country - and this country had little or no idea of Asian entrepreneurial and business skill. The Virani of 1972 was very different from the one snapped last week at the Old Bailey. There, led away handcuffed to a policeman, he was thick-set and fleshy-jowled. In 1972 Virani, then 24, looked like any other refugee: skinny, with his wife, Yasmin, and 18-month-old baby daughter, Shaila, in tow. He had little formal education and Britain was an unknown country for him.

But Virani was no ordinary refugee. He had two things going for him. He was a member of the Muslim sect who call themselves Ismailis. Although Shias, they accept the Aga Khan as their spiritual leader and are a close-knit community, which provides a very useful network. Also, encouraged by the Aga Khan, they have educated themselves and are moderate, progressive Muslims, far removed from the world of the Shia militant. This was supplemented by the Asian family network.

Virani began in an almost classical Asian style, setting up a small, dingy store in Lordship Lane, Dulwich, hardly deepest Africa but he must have felt there were parallels with his Asian ancestors who had ventured into the African bush, often before the white man, to set up small shops. Virani, like other Ugandan refugees, displayed to the English what Asian enterprise could do. Working 18 hours a day, seven days a week, and drawing on the support of his brothers and father, Virani by the mid-Seventies had a portfolio of 19 shops.

Like many Asian businessmen, what mattered to him was volume, however low the margin of profit, and he hungered for deals. He would later call this his sickness. The initial deal was a chance one. A heart attack suffered by his father made Virani buy a hotel for him in the hope that running it would prove less taxing. Within a year his father had the hotel running smoothly and was bored. More hotels followed.

His first really big deal came in 1984. Virani bought and revitalised the ailing Belhaven brewery in Dunbar, Scotland. Two years later he sold it, two years later still he bought it back. By this time he had made the real breakthrough into the big league, having bought a company called Control Securities.

This deal enabled Virani to do what he enjoyed most, buying and selling properties. Control was a public company and gave him access to fund his deals - and he liked nothing more than issuing new shares to buy ever more properties. Using the network of his own community and that of the wider Asian one - at the Jamat Khana in Kensington, the Ismaili place of worship, he could do business after religious duties were over - Virani gathered his investors. At one stage 60 per cent of shareholders in Control were Asian and the share register listed 16 pages of Patels. He liked nothing more than to trade in what he called other people's rubbish, small packets of property, and soon he was mixing it with the big property dealers: Gerald Ronson of Heron and Tony Clegg of Mountleigh.

By the late Eighties more than three-quarters of Control's profits came from property. In 1990 the company was valued at pounds 650m, with 770 pubs and 23 hotels employing 3,500. And, although a Muslim, Virani was not ashamed to be photographed with a pint or a tumbler of whisky while a waitress stood next to him holding a tray bearing a decanter of the stuff. This was the picture printed in the 1990 Book of the Rich, where he featured in the section called the Very Rich, along with Lord Hanson, his pounds 80m being just pounds 15m behind the great Lord.

Virani was also courting and being courted by politicians. He was said to be close to Neil Kinnock and at one stage Paddy Ashdown got the impression Virani might jump on his bandwagon. Virani entertained both, but made generous contributions to neither. Much of his wining and dining was done in the private dining room of his headquarters in Victoria, where the mantelpiece featured photographs of Virani with the Prince of Wales. He organised a fundraising dinner at Kensington Palace on behalf of the Prince's Youth Business Trust. As if in recognition, Warwick University gave him an honorary degree.

Nothing, it seemed, could stop him. In 1990 he was voted the Asian Businessman of the Year and Virani added the touch of glamour to stories about him by saying, as he dropped off friends in his blue Rolls-Royce with its personalised numberplates: 'I want every Asian to have one.'

The story appeared to have reached its almost Hollywood-scripted climax when in 1991, at the invitation of President Yoweri Museveni of Uganda, Virani, accompanied by the High Commissioner of Uganda in London, went as part of a business delegation back to Kampala. He was met by virtually the entire Ugandan cabinet and taken in motorcade from Entebbe airport. Virani was overcome with emotion, not least when he spent some time searching an overgrown cemetery where he discovered the graves of his grandparents. But home was Britain, and his palatial house in Putney, where he lived with his wife and two public school educated sons and his daughter, although he could have scarcely guessed at the sorrows that awaited him as he took the flight to London from Entebbe.

Virani was deeply enmeshed in the Bank of Credit and Commerce and the world was about to find out. Between 1987 and 1991 he had signed false documents saying his own private companies owed a number of debts to BCCI, which affected the way the bank's auditors considered its true financial position. In return for such lies, Virani was given huge loans by BCCI. On one occasion, his chauffeur collected pounds 204,000 in cash in a suitcase from the bank's London office and took it to Virani waiting in a Rolls-Royce.

In October 1991 Virani's home and offices were raided by the Fraud Squad, who also visited the homes of two of his brothers. Control's shares, already in free-fall, were suspended, and within six months the Viranis were ousted.

Even without the BCCI fraud - admittedly small, his loans amounted to pounds 2.2m in a banking fraud that has seen pounds 12bn go missing - Virani might still have come unstuck. He was a great deal-maker, but a poor manager of a business. Control was a very disparate group and once the recession took hold and property values collapsed, it was struggling. In 1990 it had made record profits of pounds 23.7m; by 1991 it had losses of pounds 3m, and in 1992, pounds 196m.

But if this demonstrates that Virani could not manage a public company, his fall also reveals the dangers of the easy intimacy which Asian businessmen strike up with their bankers, drawing them into the family network. Virani will probably bounce back and deserves credit for facing up to justice, unlike some other Asian businessmen in his position.

His story illustrates how difficult it is for Asian businessmen to grasp the big difference between being a trader and an executive running a public company. The inheritance of Virani and businessmen like him is essentially that of buying and selling, where crossing the line between sharp practice and corrupt practice is no big deal. For them, the moral of Virani's story is that such a 19th-century attitude is incompatible with any properly run modern British business.

(Photograph omitted)