When it comes to getting the prime minister to intervene in a corporate battle, there is no better name than Ambani to do it. The stakes are rising for Mukesh and Anil Ambani, among the top 10 richest men in the world, and sensing the dangers of getting caught up in the corporate battlefield, the government is expected to intervene at the top level to work out a truce between the two feuding brothers.
The decision to step in comes on the backdrop of the two brothers taking their recently renewed rivalry over the MTN deal to a new level — national politics.
The development, which coincides with the new power play in the Capital, is symbolic of the government’s anxiety to insulate itself from the consequences of the fratricidal corporate war. There is acknowledgement in the government that a truce, at least a temporary one, was possible only if the top two of the ruling arrangement — Prime Minister Manmohan Singh or Sonia Gandhi — prepare the groundwork for negotiations between the two brothers.
The prime minister, who has been discussing the charges and counter-charges levelled by the two sides with oil minister Murli Deora during the past one week, is conscious that the minister does not have the wherewithal to bring about a truce. Anil feels the oil minister is closer to big brother Mukesh, while Mukesh is said to be wary of finance minister P Chidambaram’s alleged proximity to his younger brother. Both are, thus, effectively ruled out as negotiators.
The nitty-gritty can be worked out by leaders like SP’s Amar Singh and Congress president’s political secretary Ahmed Patel. But it can only happen after the big two enter the frame,” said a leader familiar with the patch-up efforts. He was confident that the issue will remain on the “must do” list of the prime minister till the two brothers reach the negotiating table. South Block is learnt to have already broached the issue with the brothers.
The government’s jitters over the on-going feud is understandable. Ever since Amar Singh proved that impossible is nothing by negotiating a deal with the Congress with whom his SP was daggers drawn, there have been whispers that the entry of the SP, with whom Anil has close relations, would trigger the escalation of the six-year-old feud within the family.
The rumours gathered momentum as the day after the SP announced its support to the UPA, Mukesh was served with a show-cause notice by the Customs department for under-invoicing the purchase of an Airbus, which he had bought as a gift for his wife Nita on her birthday last year. The impression of the government, getting mired in the sibling warfare, got credence when Amar Singh placed his charter of demands that looked inimical to Mukesh’s interests. Amar Singh refutes charges that he is acting at the behest of his friend, the younger Ambani, saying “my closeness with Anil does not prevent me from taking up matters of public interest.”
Anil Ambani, who was in the Capital earlier this week, had met external affairs minister Pranab Mukherjee on Tuesday. The meeting, sources claimed, was to brief him about his side of the MTN story.
The feud escalated last month after Anil stepped in with a $60-billion offer for South Africa’s MTN which would have then made the combined entity the world’s seventh-largest telecom operator. But the Mukesh group, which handed over RCOM to Anil on a truce worked out by their mother, claims that under the family settlement arrived at in 2005, if there is any sale of majority stake in any company (RCOM was formed after demerger of Reliance Industries), Mukesh Ambani group has the right of first refusal. In the MTN deal, RCOM is considering a reverse merger; i.e. MTN will buy RCOM in a particular ratio, though technically it is the sale of RCOM to MTN, but Anil Ambani will be the largest shareholder in combined company formed after the merger of MTN and RCOM.
It is this clause that pressed the alarm buttons in the Mukesh camp. But ADAG claims that there is no such clause in the family settlement, and before the demerger of RCOM, some board members of RCOM, who were on Mukesh’s side, had signed this agreement. ADAG claims that it was a forged settlement and Bombay High Court, in one case, had set aside this agreement under which Mukesh Ambani is claming the right of first refusal.
In another case, ADAG claims that under the family settlement, RIL was supposed to supply gas from KG basin at an agreed price of $1.65 to $2.25 mmbtu to RNRL and for the Dadri power project of Reliance Energy in Uttar Pradesh. But RIL now maintains that it will not supply gas at this price. It will supply either at $4.45 mmbtu (decided by a committee formed by the government) or at $6.65 mmbtu (current international price). Dadri project can be made financially viable only if gas is supplied at price less than $2 mmbtu. ADAG claims that under family settlement, gas has to be supplied first to his company and only the surplus can be supplied to the third party. Mukesh Ambani contests this claim and wants to sell it to third party at international prices.
With both sides remaining diffident, the government seems caught between a rock and a hard place. But with the stakes being what they are, the government is expected to trying its hands at bringing the curtains down on this long-running business soap opera.
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