If businessmen in India don't take on govt, there is a reason - the govt can get back at you in myriad ways
T N Ninan / New Delhi Aug 01, 2009, 00:42 IST
Businessmen are careful people; ask them to comment on the Budget and they will give the finance minister nine marks out of 10, if not all 10. Ask bankers to comment on credit policy, and it is only the heads of foreign banks who will give you an inkling of their real thoughts; the state-owned banks’ chairmen in particular will border on obsequiousness. Go to a meeting of Ficci or CII, and watch the ingratiating tone with which ministers are addressed. Don’t blame the businessmen, they have learnt the hard way that it does not pay to speak your mind with those in power, and that discretion is very much the better part of valour. It is the rare soul who, out of frustration or bravado, speaks up and calls a spade a spade. Keshub Mahindra did it two or three decades ago, when he rebelled against the government policy that controlled directors’ salaries and quit as a company director. HP Nanda did it even earlier, when he told the then industry minister, TA Pai, that he intended to produce more than his licensed capacity of (Escorts) tractors and Mr Pai could penalise him if he wished.
It is the very rarity of these occurrences that makes Anil Ambani’s riveting performance at Monday’s annual meeting of Reliance Natural Resources quite extraordinary. For he not only called a spade a spade, he did what journalists are accused of doing; he called it a bloody shovel. I cannot recall another instance when a businessman publicly targeted a Cabinet minister in the way that Mr Ambani went at Murli Deora, the petroleum minister whose silence so far has been a deafening response.
Mr Ambani may have been brave in speaking his mind, but has he been wise? If businessmen in India don’t take on the government, there is a reason—the government can get back at you in myriad ways…a tax raid, denial of licences, a sudden reluctance by banks to give credit. Over the years, various businessmen have suffered all of these (and still not complained in public!). Mr Ambani has tried to forestall this by targeting one minister, not the entire government. We will know soon enough if the gambit has worked.
But there is another danger in getting onto a podium, thumping the lectern and pointing fingers, because you have to make sure then that the fingers don’t point back at you. Mr Ambani took on his older brother Mukesh, accusing his company of “corporate greed” and violating “trust”. Fair enough, you might say, but what about the younger brother’s record? He runs two companies that distribute electricity in Delhi. When they applied to the electricity regulator for a tariff hike, what did the regulator find? That the companies had bought assets (electricity meters, I think) from their parent company, the group firm Reliance Energy, at (hold your breath) a 68 per cent profit margin to Reliance Energy. The regulator held that this had inflated the capital cost by Rs 535 crore.
Bear in mind that the initial equity investment by Reliance Energy in the two distribution companies was Rs 576 crore; in effect, it was getting back virtually all of that equity through related-party transactions! On top of which, because of the 14 per cent return on equity guaranteed to the distribution companies, the two firms (if they had got away with it) would have made Delhi residents pay for the profit on that investment too, through higher electricity bills. Mr Ambani needs to explain whether this wasn’t a case of corporate greed, and a betrayal of citizens’ trust.
anil talks about greed--is he not greedy--what is his company's performance in distributing power in delhi--did his company--reliance power not misled the gullible investor/s during the public issue---i request govt to ask CLB AND other regulatory authorities to enquire into his companies---he is not to be trusted---his friends include amar singh---
Excellent piece. I think the out bust was straight from a Bollywood script. I believe before pointing fingers he should have also looked at his relations with Raja & Shinde and how they helped him blatantly by issuing GSM letter late at night never heard in government before and Shinde giving him free coal at Sasan. Unfortunately his opponents in these sectors were not as powerful as his brother. I guess so he not required to make any dramatic speech.
Nice Article.
You have provided two sides of arguments against Business men and government. Have you shielded the third dimension ?- Mainstream media keeping a deafening silence to violations of ministers and businessmen (I cant still understand the lack of follow up to your article on Telecom licence corruption). Some Media have businessman and possible ministers as stake holders. We need a Conflict of interest commission like Competetive commission to clean up things.
Nice article, Sir!
I guess Anil would have been right in just saying that Mukesh was not honouring contracts and thereby, violating contract law...rather than bring in emotions into it!
But I empathise with Anil here...it looks very much like the elder brother is utilizing his contacts with the Congress fully.
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