For many observers of post-liberalisation India, the two images above epitomise the way business is done here. They show Mukesh and Anil Ambani arriving at (or leaving) meetings with top government officials in quiet sandstone offices in Lutyens’ Delhi. Such ‘courtesy calls’ signal the enormous hold the two multi-billion dollar industrialists have traditionally had on politics and government, on ‘managing the environment’ to grow their businesses.
But recently, the direct attacks on the Ambani brothers reflect the cracks that have appeared in this government-business relationship. Anti-corruption crusaders Arvind Kejriwal and Prashant Bhushan followed up a stinging attack on Mukesh Ambani’s role in Jaipal Reddy’s exit from the petroleum ministry with an expose on the Ambani brothers’ HSBC Swiss bank accounts. Though denied by both Mukesh and Anil, it is interesting that out of all the names Kejriwal mentioned relating to Swiss bank accounts, theirs have stolen the spotlight.
“In the sheer over-confidence in thinking they can handle nearly anything, Reliance miscalculates its situation a lot.”
Debashis Basu, Editor, Moneylife
Another name that stood out is that of Congress MP Anu Tandon (who was married to the late Satish Tandon, a senior Reliance official). Even before the Kejriwal-Bhushan press conference got over, Reliance PR officials were busy countering the story. More recently, the Central Information Commission has also directed SEBI to reveal information on the people involved in the 2007 Reliance Petroleum insider trading case.
All these allegations by themselves may not be surprising to most. Some would even argue that Reliance’s legendary ability to ‘manage the environment’ has diminished after Dhirubhai Ambani’s death and the subsequent split in the Ambani empire. But they would agree that like the recent attacks on Robert Vadra and the Gandhi family, civil society’s focus on the Ambanis is, willy-nilly, taking on some holy cows.
This open season on the Ambanis comes after both brothers have, in recent years, been identified as totem poles of crony capitalism, even conspicuous consumption. Take the brouhaha over Antilia, Mukesh Ambani’s billion-dollar home in Mumbai. Or the involvement of Anil Ambani’s officials in the 2G scam.
“Other business houses don’t regularly feature in controversies, though they’ve also discovered the power of lobbying.”
Arun Kejriwal, Director, KRIS
The changed mood is evident if one compares the heat and dust generated by Jaipal Reddy’s recent departure to how quietly Mani Shankar Aiyar’s exit was viewed just a few years ago. Or how there was no outcry when he was replaced in the petroleum ministry by Murli Deora, who was seen as openly close to both the brothers, a man they called “uncle”.
So, will this tack of open naming (and attempted shaming) of the Ambani brothers reduce their effectiveness in getting things done? Former petroleum secretary T.N.R. Rao isn’t optimistic. “They (Mukesh and Anil) may not do it so brazenly,” he says, while admitting that “the outcry has made political leaders, including petroleum minister Veerappa Moily, take the correct stand by stating that there will be no review of KG basin gas price till 2014.”
Contrast this with another popular perception. “Nothing will go wrong for them. The petroleum ministry is their property,” says a retired top bureaucrat who has seen the Ambanis at work over decades. Indeed, it’s no secret the Ambanis ‘reward’ compliant bureaucrats with plum assignments; those who resist are shunted around. This applies across different levels of government, and in diverse ministries.
“The biggest enemy of Reliance is Reliance itself. In the sheer over-confidence in thinking they can handle everything, they manage to miscalculate the situation they are in a lot. I think largely it will be the old momentum that will carry their businesses through,” adds Debashis Basu, editor, Moneylife.
Given the questions over the KG basin, there has been an erosion in the value of and faith in Reliance’s shares.
The practice in the corridors of power for the past few years has been to maintain a ‘balance’ between both brothers, without giving Mukesh an edge. Of late, the equation has swung in Mukesh’s favour. When it seemed that Anil will walk away with the lion’s share of KG basin gas, it helped Mukesh when it was established that only the government had the final say in the matter. “Today he (Mukesh) is caught in a web of his own making,” says a former petroleum secretary, referring to the controversy over declining KG basin output and demand for market-linked gas pricing.
Other factors are also at play, say observers. “The Ambanis have had an issue with how they manage controversy, as also figuring out when they should lie low,” says Arun Kejriwal, director of stockmarket firm KRIS. More firms have learnt the tricks of the trade. Adds Girish Kuber, chief editor of Loksatta: “The economy has changed direction. No one thought anyone could lobby against Reliance once, but now that has changed.”
Although investors still believe in Reliance’s stock, market experts say there has been considerable erosion in value and faith. Reliance Industries’ shares in 2007 traded at a high of around Rs 3,000; today it hovers around Rs 700. Weighed down by debt and controversy, Anil Ambani’s businesses aren’t in the pinkest of health either.
“Let’s face it, the Ambanis don’t care what people think of them. In terms of business, they have got ahead by being ruthless and that will continue,” says a senior executive in Reliance. Reliance’s long track-record in dealing with controversies makes some think the current storm will pass. “I wouldn’t even term it a storm in a tea cup; it is a storm in an empty cup,” argues Kumar Ketkar, chief editor of Dainik Divya Marathi, and a journalist for over 40 years.
So will the fusillade of allegations and the constant insinuations about their clout lower the Ambani brothers’ effectiveness (even if temporarily) in managing government? Well, for now, everyone is going to be a bit more careful. The cynical view is that little will change.
By Arti Sharma with Lola Nayar and Prachi Pinglay-Plumber