Meet Larry Summersâ€™s Ex-Boss, a Billionaire with a Blood Feud
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The best way to understand Larry Summers, the man who’s shaping America’s economy from his director’s chair at the National Economic Council, is to meet the people he hangs out with. Once you get to know Larry Summers’ crowd, nothing he does–no matter how twisted (like Larry’s suggestion to move all First World toxic waste to Africa) or deranged (Larry’s theory that women can’t do math) -- will surprise you. Whereas the famous “Six Degrees Of Separation” gives the false impression that it’s a small world and we all pretty much know each other, this “One Degree of Separation” will prove how totally alien Larry Summers and his crowd really are from the rest of us.
I’d like to kick this series off with India’s top oligarch, Mukesh Ambani, the only foreign boss who paid Summers to work for him in 2008 -- and by “work,” I mean “you agree to be listed on my board of international advisors, which requires nothing from you, and in return I’ll give you $187,000.” Two years ago, Larry’s ex-boss Mukesh was the World’s Richest Man, worth $63.2 billion -- but since the meltdown, the Reliance Industry chief’s wealth has fallen to a mere $19.5 billion, dropping him to #7 of Forbes’ list.
What sets Mukesh apart from most of the world’s top billionaires isn’t the 60-story tall, $2 billion house he’s building for himself and his family on a swank Mumbai suburb, or the $60 million Airbus 319 -- complete with master bedroom suite, entertainment center, and barroom -- that Mukesh bought his wife for her birthday a few years ago. No, it’s the insane blood feud that Mukesh has going with his billionaire younger brother, Anil Ambani -- culminating in a helicopter sabotage act that’s right out of a Hawaii Five-0 episode.
You may have heard of Anil Ambani -- he’s the Indian billionaire who saved Hollywood by signing billion-dollar deals with Spielberg and Dreamworks to take a piece of future blockbuster film projects. Anil used to be almost even with Mukesh, ranking #6 on Forbes’ list last year when Mukesh was #5. The competition is as fierce as it is petty -- after Mukesh bought his wife the $60 million Airbus, younger brother Anil bought his wife an $80 million yacht. But last fall’s financial crash has been rougher on Anil -- his net-worth fell from $42 billion last year to just $10 billion this year, placing him at #34 on Forbes’ list. So you can see why a guy like Larry Summers would choose Mukesh -- the wealthier, fatter, older brother -- over Anil, the sleek marathon-running jetsetter with the Bollywood starlet wife.
Mukesh and Anil have been at each other’s throats ever since their father–who built Reliance up from scratch -- died in 2002 without leaving a will. The two brothers immediately went to war over who controlled the company, Reliance, forcing their mother to intervene and broker a deal in 2005 carving up the assets into two separate Reliance empires. Mukesh, the older brother, got control of the petrochemicals part of the business, Reliance Industries. Anil got control of the telecoms and power-generation part of daddy’s business–Reliance Communications and Reliance Power.
You’d think they’d be happy with what they had, but then you don’t know Larry Summers’ ex-boss very well: The two have been conspiring to destroy each other ever since their daddy died, and it just keeps getting worse. Three years ago, when Anil was about to close a $50 billion buyout of the largest telecom firm in Africa and make his Reliance Communications one of the world’s largest, older brother Mukesh stepped in, invoked a right-of-refusal clause from the agreement they’d cut with their mommie, and killed the deal. See, Mukesh claims he’s the one who really started Reliance’s telecom business, and the thought that Anil might turn it into the next AT&T was something Mukesh could not countenance. So Larry’s ex-boss killed the deal, and another Indian oligarch swooped in and bought it instead.
The mutually-assured destruction between the brothers hasn’t stopped there. Mukesh is being accused now of going back on a deal whereby the billions of untapped gas reserves he owns aren’t being sold to Anil’s power-generating business, because Mukesh wants a better price, and Anil refuses to pay that price. While India waits for Larry Summers’ ex-boss to stop fucking with his younger brother, India suffers power outages, and the country’s investment reputation is suffering.
But the most amazing twist to this feud took place a few months ago, when a helicopter mechanic working for Anil noticed during a pre-flight inspection that the gear box cap had been tampered with. The mechanic opened up the cap, and saw that someone had poured gravel and mud into the gear box. It was an obvious act of sabotage, and the most obvious suspect that everyone (but the police) looked to was none other than Larry Summers’ boss, Mukesh.
As the senior pilot in Anil’s company said, “Some persons, possible business rivals, were attempting to take away the life of Anil Ambani.” Calling it “clearly an attempt to murder” Anil’s pilot explained what would have happened if the sabotage hadn’t been discovered:
Shortly after taking off, the pebbles would have entered into the gearbox and would have caused midair loss of power,” which could have forced the grounding or crash of the copter, Mr. Joshi said.
Here’s where the story gets really creepy: an official police investigation was immediately opened, and the first thing that the notoriously corrupt Indian police did was rule out Mukesh as a suspect. Two days later, the mechanic who discovered the sabotage was hit by a train and killed.
Police claimed it was a suicide -- something the mechanic’s family has bitterly denied ever since. They noted that the mechanic was a longtime Army veteran and was “never depressed.” Moreover, in a note found in the mechanic’s pocket addressed to the police, the mechanic said had been visited by “three or four people from Reliance” but that “I didn’t tell them anything.”
Anil wisely stopped flying helicopters that day, and fired the helicopter maintenance firm. Good for Anil, but bad for older brother Mukesh, who can’t close his multi-billion-dollar gas deal at the price he wants, andbad for all of India, suffering power shortages, blackouts in New Delhi, and the loss of billions in foreign investment due to the fear of getting caught up in the brothers’ feud.
The crux of the problem over the billions of untapped gas reserves in the Sea of Bengal comes down to that 2005 agreement the two billionaire brothers signed with their mother. Now if you remember the AIG bonus scandal in March of this year, Larry Summers’ main argument was that contracts have to be respected. Too bad Larry’s ex-boss doesn’t feel that way -- the agreement signed between Mukesh and Anil in 2005, sealed with their mommie’s approval, mandated Mukesh sell his Indian gas to Anil. But Mukesh changed his mind over the price he was willing to sell it to Anil for -- Mukesh decided he wanted Anil to pay twice the agreed-upon price. And Larry’s ex-boss won’t sell the gas to Anil unless he gets that price. Period. Given that the World Bank ranked India 180th in the world in enforcing contracts–only Benin ranks lower–it’s not surprising that mere “rule of law” isn’t enough to resolve the dispute. Nope, it’s all down to sabotage versus Bollywood melodrama, as Anil recently squirted for the media in a “how could Mukesh do this to his own mother?” offensive earlier this month:
If you do not respect the very word given to your mother, then what is left in life?’’ [Anil] asked rhetorically.
At one stage of the conversation, Anil said the family dispute over gas was affecting his immediate family. “Tina (his wife) and Anmol (his elder son) were present during my speech (at the recent RNRL AGM). They so were so emotionally distraught they simply could not hold back their tears. When I reached home, my younger son Anshul was in tears when he saw me.’’
Asked about his accusations against oil minister Murli Deora, and why he would favour Mukesh when he was close to the entire family, Anil said, “I have known Murli uncle and Hema aunty (Deora’s wife) and their sons Mukul and Milind for several decades…almost my entire life. But more on his relationship with Mukeshbhai and with me perhaps some other time.’’
It’s quite a family. And Larry Summers, the man who in charge of America’s economy, is tight with Mukesh Ambani, the older and scarier of the two monster brothers. They’ve been Davosing together for years, and once Summers left Harvard, Mukesh offered him one of many sweet “board member” deals.
What we know is that last year, Mukesh paid Summers $187,000 to sit on the Reliance Industries Advisory Board–one of those joke committees companies set up as a way to advertise their Solid Connections -- and to win favors with powerful players. Why would Mukesh, a notoriously stingy billionaire, the object of a recent Daily Telegraph article, “Where Are India’s Great Philanthropists?” and criticism by no less than Sonia Ghandi -- why would a guy like that pay Summers nearly $200k for doing nothing?
Reliance offered up a few explanations to reporters this year when Summers’ deal was first disclosed: they said that Summers had sat on Mukesh’s advisory board for several years (raising further questions that have never been answered), and moreover, Summers also served on another Mukesh star-studded project last year, the Reliance Innovation Leadership Council. Which is interesting because the head of that council that Summers sat on, Dr. Raghunath Anant Mashelkar, had just been forced to resign in disgrace in 2007 from an Indian patents committee after being accused of plagiarism and, worse, of doing the bidding of multinational drug companies, ensuring they’d make huge profits in India at the expense of the country’s hundreds of millions of poor and struggling citizens. So in effect, Larry Summers was hired by billionaire oligarch Mukesh to serve under another of Mukesh’s paid economic saboteurs—a sleazy, disgraced tool of the health care industry.
As to why Mukesh chose to lavish Larry with so much money for so little work, the answer may come from a New York Times profile on Mukesh Ambani, published last summer:
Although rumors that it actively engages in bribery swirl around Reliance, Mr. Ambani says it has never paid a bribe or broken a rule. “These are all fables,” he says, dismissing the rumors.
But he concedes that there are indirect ways for Reliance to curry favor. Although he says Reliance “never” pays the tuitions of bureaucrats’ children, he also acknowledges that foundations controlled by or affiliated with Reliance sometimes have. [bold mine--M.A.]
Some foundation would have given some scholarship maybe, but that’s all out in the public domain,” he says.
In interviews, two former Reliance employees and other close associates of Mr. Ambani, all of whom requested anonymity because they were afraid of jeopardizing relationships with him, say the company also routinely engages in political lobbying and covert monitoring to gain a leg up on its rivals. [bold mine--M.A.]
Ah, now it’s starting to make a little more sense, from both sides. Mukesh has what Larry wants–money and power; and Larry has what Mukesh wants -- the connections in the world’s most powerful economy to “gain a leg up on his rivals.” And if you think that Larry isn’t the kinda guy who’d befriend sleazy Third World oligarchs involved in jaw-dropping murder mysteries, then folks, you better stick around for more of this series. After all, Summers is the guy who once described the architect of the Russian privatization scam as “my dear friend.”
Oh, and about the helicopter mechanic who was hit by a train, dragged 100 yards and died… the death was ultimately ruled an “accident” rather than suicide by the police, as they could find no evidence of a suicide. The mechanic’s family still insists he was murdered. They’d better stay away from railway platforms if they know what’s good for them.