How Essar Learnt "Environment Management" From Dhirubhai Ambani

I was told that Dhirubhai Ambani, the founder of Reliance Industries, was the “trendsetter” in “environment management,” and the Ruias an inferior “carbon copy” of him. Robert Nickelsberg / The LIFE Images Colection / Getty Images
17 June, 2016

Today, The Indian Express reported that, according to a complaint to the Prime Minister's Office by the Delhi-based lawyer Suren Uppal, between 2001 and 2006, the multinational conglomerate the Essar Group tapped and recorded telephone conversations between several politicians, bureaucrats and the business barons Mukesh and Anil Ambani, among others. Uppal represented Albasit Khan, reportedly the former security head at Essar who supervised the tapping operation. The lawyer alleged that Prashant and Ravikant Ruia, who head Essar, instructed Khan to conduct the operation. The people whose phones were tapped include the late cabinet minister Pramod Mahajan, the member of parliament Amar Singh, the current railway minister Suresh Prabhu, Mukesh and Anil Ambani, and Tina Ambani, the latter's wife.  The recorded conversations reportedly featured several heads of banks such as IDBI and ICICI, officials from the then prime minister Atal Bihari Vajpayee's office, the head of the Sahara group Subroto Roy and several politicians including the energy minister Piyush Goel and the BJP leader Kirit Somaiya.

In his August 2015 cover story, 'Doing the Needful,' Krishn Kaushik, a staff writer at The Caravan, reported on the industry of influence among politicians, bureaucrats and journalists that Essar has cultivated for itself. Among other things, Kaushik brought focus to emails that a whistle-blower had leaked to the lawyer Prashant Bhushan. In the following excerpt, Kaushik writes that these emails confirmed what many people he met told him: the Ruias were experts at lobbying with politicians and bureaucrats to secure favours for their companies. He recounts how the Ruias seemingly learnt this tactic from their rivals, the Ambanis.

All told, the emails substantiate what the chief executive of a bank that has lent to Essar in the past told me: that Essar is better at managing the government than managing its finances. “For a lot of large and mid corporates in India,” he said, “the business acumen may or may not be there, but their USP is environment management”—or what is colloquially known as lobbying.

A former senior official in the Atal Bihari Vajpayee-led National Democratic Alliance government, who is also a longstanding sympathiser of the ruling Bharatiya Janata Party, told me of an incident from Prime Minister Narendra Modi’s time as a general secretary of the party. Modi was sent to oversee the Madhya Pradesh elections in 1998, and allegedly asked the NDA official, “Can you tell somebody to help me a bit?” The former official claimed that he asked Ruia to call Modi. Later, Modi reportedly told this person, “Woh ho gayaUnhone kar diya.”—That is done, they did it. The person said he doesn’t know “the exact amount of money, but Modi was happy. They had given for the election fund.” Back then, he said, “Modi had no life beyond politics. If you gave him money, it would go in party fund.”

In 2001, Modi became the chief minister of Gujarat, a state key to the Ruias’ business. A person who worked with Essar in a leadership role told me, “I went one or two times to Gujarat when Mr Modi was the chief minister.” He remembered Modi calling state bureaucrats to instruct them to help the company, categorically declaring that Shashi Ruia helped the party. The former Essar employee recalled Modi’s approach being, “‘Here’s a bureaucrat, here’s Shashi’s thing, now you talk among each other.’ I think that’s a very clear way of doing things. That also sends a message to the bureaucrat: Don’t overstep.”—that is to say, don’t overstep Essar.

In spite of what the emails reveal, the Ruias are not exactly India’s pioneering force in environment management. They learned the craft from Dhirubhai Ambani, the founder of Reliance Industries. Several people connected with both the Ruias and the Ambanis told me that the Ruia brothers consciously tried to model their company after Reliance.

The former NDA official said that, in some ways, the Ruias are even better at lobbying than the Ambanis. “Ambanis stamp on toes,” he told me. “Ruias don’t stamp on anybody’s toes.” They are “extremely docile and low-key,” while the Ambanis would come after you if you crossed them, he claimed. This had helped the Ruias “maintain excellent relationships with politicians of all sets.”

A person who worked closely with Ambani, and is also connected with the Ruias, had a different view. He told me that Dhirubhai Ambani was the “trendsetter” and the “real originator” of environment management, and the Ruias only “a poor carbon copy” of him. When this person decided to quit Reliance, Ambani first tried to convince him not to go, and then said he would let him leave “on one condition: don’t join Essar.” Ambani told this person that he had once walked alongside Shashi Ruia at Shastri Bhavan in Delhi, where the petroleum ministry’s offices are located. “While walking with me,” Dhirubhai allegedly told this person, Shashi Ruia “tried to overtake me, stomping on my toes.” The former Reliance man smiled. “I wouldn’t put it beyond Shashi Ruia,” he said.

In Mumbai’s financial circles, the Ambani–Ruia rivalry—which reached its height in the 1990s, when both their companies were racing to complete and commission oil refineries in Gujarat—is the stuff of folklore. But in spite of its appetite for competition, Essar has never quite managed to acquire the same sort of clout with the government or media that Dhirubhai Ambani once enjoyed. Reliance Industries Limited, currently led by Ambani’s eldest son, Mukesh, far outstrips its rival for now.

Everyone I spoke to who has researched or tracked Essar’s actions, both in India and abroad, told me that none of Essar’s problems are unique. Companies such as the Adani Group and Reliance Anil Dhirubhai Ambani Group, a breakaway corporation led by Mukesh’s younger brother, have acquired loans worth Rs 80,000 crore to over a lakh crore each. The story of how the Ruias manage their behemoth of a company today has parallels in most of the country’s large corporate groups. Still, several of my interviewees in Mumbai unconsciously echoed each other when they said, “These guys”—Essar—“have taken it to another level.”