When billionaires fall out

November 18th, 20091:31 pm @


Mukesh Ambani at the World Economic Forum. Image courtesy of World Economic Forum on Flickr.

They do things big in India: big mountains, big buildings, big moustaches. They also do big family squabbles that, luckily, spill out into the public arena for all to enjoy.

Currently occupying India’s business media, as well as a large proportion of its legal profession, is the fraternal spat between two of the country’s top businessmen, the billionaire brothers Mukesh and Anil Ambani.

Put together the two practically are India. Mukesh – the elder – runs India’s largest company, Reliance Industries. At heart it’s an oil firm, but the conglomerate runs to selling everything from clothes to vegetables. For his part, Anil likes to dabble in a little bit of everything with his Reliance Anil Dhirubhai Ambani Group. You name it and Anil probably sells it to you – films, radio, insurance, telecommunications, energy.

It’s this last one that’s causing India’s legal eagles to lick their lips as the two brothers go toe to toe in the Supreme Court over a family agreement the two signed when they divvied up the spoils of their late father’s business empire.

Anil says the agreement promises one of his companies, Reliance Natural Resources, the right to buy gas from big bro’s gas field at a price that’s almost half the rate Mukesh can get elsewhere. Confronted with this by his little brother, Mukesh’s response was to (and I’m paraphrasing here) raise his hands and say: “Hey bro, the government sets the price I sell at, not me. I can’t do anything about it.”

Anil said: “I’ll see you in court.”

Since then the case has been grinding its way through the torturous Indian legal system. It’s already been heard by the Bombay High Court, which found that Mukesh really should be selling gas to his little brother at the agreed price.

Mukesh said: “I’ll see you in the Supreme Court.”

Proceedings there weren’t helped any when, a few weeks into the hearing, one of the judges put up his hand and asked to be excused because he’d just learned that his daughter’s law firm was an advisor to one of the parties. It seems no-one at her firm had twigged that (a) they did business with the country’s biggest company and that (b) one of their staff had a Supreme Court judge for a dad. A new judge was sworn in and the hearing started over.

During all this the Indian government must have been feeling like the redheaded stepchild at a wedding because it eventually decided enough was enough and it wasn’t going to let two of the country’s industrial heavyweights get all the media attention. It joined the case saying it owned the gas in the first place and wasn’t going to be ignored any longer.

A case that involves Ambani versus Ambani and Reliance versus Reliance can get a little confusing for even the sharpest minds. So it’s probably not surprising that the government’s lawyer forgot he was in India and thought he was in, say, China or Soviet Russia when he told the court recently that “private arrangements should be overwritten by government policy”.

That’s good to know.

Where the case will go is anyone’s guess. There was talk at one stage that the brothers had got together and sorted out a new arrangement, which isn’t beyond the realms of possibility. Their mother, Kokilaben, brokered the original deal and it would be fascinating to know what she thinks of the public saga.

However, even if the two brothers do reach a truce you can bet the case will still be in court if the government doesn’t like the outcome.

After all, private arrangements should be overwritten by government policy.

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