Skip to main content

"Economist" shocker: Mukesh Ambani's Reliance is rotten role model, secretive, national embarrassment

By Our Representative
The influential British weekly “The Economist”, in its latest issue dated August 2, has sought to trigger hornet’s nest by calling top tycoon Mukesh Ambani’s Reliance Industries Ltd (RIL) a “rotten role model for corporate India”, insisting, “When it comes to governance this secretive and politically powerful private empire is not a national champion but an embarrassment”. The title of the comment itself is enough to raise eye-brows: “An unloved billionaire: Why Mukesh Ambani, India’s richest man, needs to reform his empire.”
Saying that “Reliance is a patriarchy with a lightweight board”, the article insists, “Although a listed firm, it makes payments equivalent to a quarter of its pre-tax profits to related entities, mainly privately held by the Ambani family. Its ultimate ownership and beneficiaries are obscured by a mesh of holding vehicles that India’s securities regulator says it does not fully understand. The regulator accuses the firm of making illegal gains from trading derivatives linked to its own subsidiary’s shares (an accusation Reliance is contesting). Some foreign investors, put off by the lack of transparency, shy away.”
Coming to Reliance’s relationship with the government, the Economist calls it “even more troubling”, especially when “anti-corruption campaigners claim Ambani is the power behind the throne of India’s political leaders”. It adds, “Politicians, officials and regulators say Reliance has unusual clout. Reliance denies these claims. Meanwhile, the national auditor is investigating a telecoms-spectrum auction the firm won.”
The change the way Reliance was being run took place in 2010, believes the powerful weekly, when Ambani bid for Lyondell Basell, a global chemicals giant. “The deal would have both made Reliance a killing and forced it to modernise its governance, but it fell through. Since then the company’s culture has become even more personalised. In June Ambani’s wife joined the board. In July Reliance took control of a big broadcaster, which will provide Ambani with a platform for his views, should he choose to use it that way”, the article declares.
The Economist says, Ambani’s belief that Reliance “does not need to reform” is “wrong for two reasons”. The first reason is that “India’s economy is opening up, and the firms most exposed to global competition—tech giants, for instance—have the world-class governance and open cultures needed to command the trust of counterparties, investors and clients, to attract talent and to foster innovation. Asia’s best multinationals, such as Samsung and Lenovo, have had to make painful reforms to stay competitive.”
As for Reliance, it “operates in the more opaque parts of the economy, such as infrastructure, that are trapped in a time warp of barons and scandals”. But to revive India’s growth rate, “Narendra Modi, the new prime minister, will probably expose these sectors to a blast of competition and investment from abroad. The more open the economy, the more of a liability Reliance’s opacity and bad reputation will become”, the article underlines.
And the second reason is, Indian society is turning against its tycoons. “Independent institutions such as the Supreme Court, the national auditor and the central bank are on the warpath against crony capitalism. The electorate is incensed by corruption. Modi may be beholden to the businessmen who bankrolled him, but the voters want him to tackle cronyism. In this climate, Reliance’s power makes it vulnerable. Already, officials are raising awkward questions about its gasfields”, says the Economist.
Sharply contrasting Mukesh Ambani with Dhirubhai Ambani, his father and founder of RIL, the Economist says, “Whereas Dhirubhai Ambani was mobbed by adoring crowds, Mukesh, protected by gunmen, is criticised on Twitter. Pervasive mistrust is dangerous for any firm.” It gives examples to suggest what may happen: “In the early 20th century Americans demanded that big businesses such as Standard Oil be broken up; today, Mexico’s richest man, Carlos Slim, is under pressure to shrink his empire.”
Pointing towards how Dhirubhai built the RIL, the article says, in the liberalized atmosphere ushered in, in 1991, he “fought his way up from a menial job in Yemen through Mumbai’s heaving tenements to the top of Indian business. Socialist dogma and meddling officials were his foes, charm and cunning his tools. He managed to run rings around the country’s stifling rules. Dhirubhai’s tactics appalled India’s establishment. But he marshalled resources to create industrial facilities of the kind every economy needs, including one of the world’s biggest refineries in Gujarat, his birthplace.”
Advising Ambani “to reform his firm”, the Economist says, he should “simplify its ownership and appoint as directors global heavyweights with reputations to lose who can subject Reliance to scrutiny”, adding, “To avoid conflicts of interest Ambani could merge his private businesses into Reliance, on terms that are fair to minority shareholders.” It wants him to “publish details of Reliance executives’ meetings with politicians and officials”, adding, he should “sell its media assets”, and by doing this “he would lose something in personal and political power but gain more through the opportunity to build a more global and more admired business”.

Comments

ALSO READ

India failing to dictate diplomatic preferences of Nepal, Bhutan, is unfairly blaming Beijing: Chinese daily

By Our Representative
In a sharply-worded editorial, a top Chinese media outfit, described by BBC as state-run, has said, commenting on India's foreign relations with its neighbours, that "speculation and suspicion" is "certainly not diplomacy". Published in "China Daily", the largest circulating English Monday-to-Saturday newspaper with branches across the world, the editorial notes (September 20) that "several recent events" in Nepal and Bhutan, are "gnawing worrywarts in New Delhi".
The editorial -- which comes close on the heels of a sharp critique of India's foreign policy in a state-supported Russian media outfit, Sputnik International, calling India's anti-Pak diplomacy as having "gone awry" following Prime Minister Narendra Modi's "half-baked" push for anti-terror drill down "others' throat" -- says, the " worrywarts" include "Nepalese troops taking part in a joint…

Ahmedabad, GIFT, Adani city get 1.68 lakh acre ft Narmada water; Gujarat's rural areas just 4.27 AF: Letter to CM

Counterview Desk
Well-known farmer rights leader Sagar Rabari, in an open letter to Gujarat chief minister Vijay Rupani, has demanded a transparent account of Narmada water, saying, while he has received a "routine reply" from him to his earlier, the data emerging from his RTI application show huge quantity of water being directed to Ahmedabad, the 10 km stretch of Sabarmati for the Ahmedabad riverfront, and nearby elite urban areas, including the Adanis' Shantigram township and GIFT City.

Accused of being RSS plant, Modi man, Hyderabad Urdu varsity chancellor asks President to probe "irregularities"

Counterview Desk
Refused entry in the Maulana Azad National Urdu University (MANUU), the central university's newly appointed chancellor Firoz Bakht Ahmed, who claims to be grand nephew of Maulana Abul Kalam Azad, has, in a letter to the President of India, said that MANUU vice-chancellor (V-C) Dr Aslam Parvaiz has accused him of being an RSS plant and a Modi man, whose sole aim is to "interfere in the working of the university".

17 lakh Jharkhand elderly, widows, differently abled do not receive pension: Public hearing told, aadhaar is a hurdle

By Our Representative
Hundreds of elderly, widows, single women and differently-abled persons from different districts of Jharkhand gathered near the Raj Bhavan in Ranchi for a public hearing organized by the Jharkhand Right to Food Campaign and Pension Parishad demanding the right to universal social security pensions ahead of World Elderly Day on October 1.

Ethnocide in Caribbean island filmed following award winning docufilm on Jamaica's anti-colonial Indian roots

International awards winner for Best Feature Documentary Linda Aïnouche for “Dreadlocks Story” (2014), which shows how Indians are entangled in the Jamaican society, and how Hinduism was a source of inspiration for the Rastafari movement, is all set to release her new documentary, “Marooned in the Caribbean”, which aims at documenting the awful desolating living conditions that Raizal people, the native inhabitants of San Andres Archipelago, endure.
Sons of slaves, these islanders have fallen prey to what the Colombian government calls Colombianization. “It’s a process”, according to her, “which kills the Raizal culture; it’s the killing of the Raizal soul. Colombianization subjugates Afro-descendants of San Andres to an ethnocide.”

Explorer, director and producer, Linda Aïnouche writes exclusively for Counterview: ***
Nobody escapes from blood and thunder in Colombia, and definitely not in the archipelago of San Andres, situated closer to Managua and Kingston than Bogota. The Raizal p…

India to deport Rohingya refugees, as the world moves towards prosecuting Myanmar for genocide

By Tapan Bose*
Seven Rohingya Muslims refugees who were held at a detention centre in Assam since 2012 will be handed over to Myanmar. The Supreme Court of India has refused to stop their deportation. The new Chief Justice of India Ranjan Gagoi said, "We are not inclined to interfere on the decision taken".

An elite Kutir set up by Modi far from the "madding" crowd: This Gandhi museum is formal, unapproachable

By Rajiv Shah
Have you ever heard of a Gandhi museum, sough to be projected as the “largest” on the Mahatma, yet totally inaccessible, in sharp contrast to Ahmedabad’s humble, approachable and unassuming Gandhi Ashram on the banks of Sabarmati, set up by the Mahatma during the heydays of the freedom movement? It exists about 30 kilometres away, its idea was conceived by none other than a person who has today become even more inaccessible than he ever was: Narendra Modi, India's Prime Minister.

History less known: Kasturba's role as an independent woman and a freedom fighter in her own right

By Nandini Oza*
Even the most deserving of women do not find a place that equals their worth in history. Kasturba is one such woman whose contribution to India’s struggle for freedom has been exemplary, and yet, it has not received the recognition it deserves. Kastur Makhanji Kapadia was born in the year 1869, the same year and in the same town of Porbandar in Gujarat as Gandhiji. In fact she was older than Gandhiji by a few months.

Gujarat BJP MLAs, youth leader "incited" attack on North Indians: Cong releases video

Counterview Desk
Senior Gujarat Congress leader Shaktisinh Gohil, currently in charge of Bihar and national spokesperson, All-India Congress Committee, has sent a legal notice to chief minister Vijay Rupani threatening criminal case and civil defamation suit for accusing him with "baseless statement" that he was responsible for attacks on north Indians in Gujarat.

Poor response to tenders for Gujarat's bid for the world's tallest statue, no international firm shows interest

By Our Representative
The Gujarat government’s claim that its decision to build the world’s highest statue in the world, in the memory of Sardar Vallabhbhai Patel, would attract “tremendous” response top international construction companies, has gone phut. The state government floated international tenders in August to build the statue, which is slated to be 182-metres high. Despite the “international” character of the tenders and big claims, well-informed Sachivalaya sources close to Gujarat chief minister Narendra Modi say, “not one international firm has come up to offer to carry out the construction activity.”