Connect with us

Emerging Markets

How Chinese banks are chasing Anil Ambani through the UK courts



Few tycoons appear in London to declare poverty, but last month Anil Ambani did.

Once one of the world’s richest men with a fortune estimated at more than $40bn by Forbes, the Indian businessman is being pursued through the UK courts by creditors, led by Industrial and Commercial Bank of China, after last year’s collapse of his telecoms company Reliance Communications.

In a bruising battle that began in 2019, a trio of Chinese banks are seeking to enforce an order made in May by the High Court in London instructing Mr Ambani to repay $717m in loans made in 2012 to RCom, the centrepiece of a group that spanned telecoms, finance and entertainment.

The legal spectacle has been overshadowed by the business empire Anil’s brother Mukesh, now Asia’s wealthiest person, is building.

But analysts say the pursuit of Mr Ambani is shaping up as a landmark challenge to an assumption long at the heart of corporate India: that the country’s business magnates will remain beyond the reach of creditors even when their failed companies leave unpaid debts.

“It’s a test case” for creditors, said Amit Tandon, head of Institutional Investor Advisory Services in Mumbai. “This is one of the earliest high-profile cases.”

Anil Ambani with his wife Tina. Mr Ambani has been a figure of envy, living a seemingly gilded life © AP

As the scion of one of India’s leading business dynasties, Mr Ambani has been a figure of envy, living a seemingly gilded life of soirées with Bollywood stars and helicopter trips.

But on the last Friday in September, Mr Ambani, appearing from an office in Mumbai at the High Court hearing held by video link, painted a very different picture.

“I lead a very disciplined life. I am a marathon runner, and a believer in God and family and I live with my mother,” he told the court, adding that he did not drink, smoke or gamble. “My needs are not vast.”

The 61-year-old was cross-examined for a day by lawyers for the Chinese banks who were given permission by the judge to question Mr Ambani as they decide how to enforce the court’s order.

He sought to downplay his lifestyle as he was cross-examined about art, jewellery, loans, a helicopter, fast cars and credit card spending that his creditors argue undermine his claims of penury. Earlier this year, Mr Ambani told the court that his net worth had fallen to zero.

When Bankim Thanki, a barrister representing the trio of Chinese banks, suggested that a yacht was yet another adornment of the Indian businessman’s still lavish lifestyle, Mr Ambani shot back.

Not only is the yacht the property of a corporate entity and not a personal possession, he had only been on it once because he suffers from seasickness.

Anil Ambani, centre, taking part in the Mumbai marathon in 2013 © AP

At the heart of the dispute is the contention of creditors that Mr Ambani personally guaranteed the loans, claims he strenuously denies, though the High Court ruled in the banks’ favour in May. Popular among India’s personality-driven conglomerates during India’s boom years a decade ago, personal guarantees offered entrepreneurs a route to easy credit but were seldom enforced.

“Personal guarantees as a convention were always given as additional support. It was never meant to be a hard measure,” said Abizer Diwanji, head of financial services for EY India. “The leap between getting a court order and getting the money is huge.”

While Anil and Mukesh split their father’s empire after falling out in 2005, Anil’s investments in sectors such as power and infrastructure suffered as India’s heady economic growth slowed. RCom imploded after a price war sparked by the launch of Mukesh’s own mobile operator Jio in 2016.

State Bank of India, the country’s largest lender, earlier this year initiated separate domestic proceedings against Mr Ambani under new rules set out last year for the country’s insolvency code. The rules strengthened creditors’ rights by allowing them to pursue the founders of bankrupt companies.

Mr Ambani is seeking to include the Chinese banks in his legal challenge to the SBI’s proceedings in India.

If reform of India’s bankruptcy laws has made the country’s domestic lenders more assertive, the outcome of the case brought by ICBC and China Development Bank and Export-Import Bank of China, will do much to determine whether the English legal system becomes a new front on which creditors can do battle with Indian business magnates.

London’s courts are already a well-established centre for disputes between banks and wealthy oligarchs over loans or guarantees struck using English law, often involving litigants from Russia or the former Soviet Union.

But in recent years there has been a modest uptick in cases involving leading Indian business figures. Vijay Mallya, who is fighting extradition from London over money laundering and fraud allegations, is facing civil action in the High Court from Indian state banks seeking to enforce a £720m foreign judgment debt made in India. He denies any wrongdoing.

The Chinese banks have said they will pursue “all available legal avenues” to protect their rights and recover what they claim Mr Ambani owes. The parallel SBI proceedings mean there is a moratorium on claims against him in India.

In practice, any action is therefore likely to mean tracking down assets outside India or obtaining freezing orders against Mr Ambani. The English courts can impose further measures on defendants who fail to disclose assets, including jail terms for contempt of court.

Anil Ambani’s telecoms group Reliance Communications collapsed last year © Reuters

Mukhtar Ablyazov, the former chairman of Kazakhstan’s BTA Bank, was given a 22-month jail term in 2012 after the lender alleged he breached a court order freezing his assets and failed to disclose assets in connection with fraud allegations.

And any enforcement of the UK order against Mr Ambani is likely to be a complex and fraught undertaking. Mr Ambani told the court last month that “the suggestion of a lavish lifestyle past, present and future, is completely speculative, a creation of the media”.

The entrepreneur added that he had sold all his jewellery to pay legal bills, owned just one piece of art, that it was his mother who had racked up shopping expenses in luxury shops such as Dolce & Gabbana, Harrods and Harvey Nichols and that he had no beneficial interests in any trusts.

A spokesperson for Mr Ambani declined to elaborate on last month’s cross-examination and had no further comment on the case.

Whatever success ICBC has in recovering its loans, some believe the decision to pursue Mr Ambani in London — and the parallel action from the SBI in India — will reverberate across corporate India.

“We’ll continue to move in this direction where the promoters [controlling shareholders] themselves personally, their shareholdings of their businesses, are all up for grabs,” Mr Tandon said. “None of them are safe.”

Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Emerging Markets

Israel conflict rattles rapprochement with Arab countries




When the United Arab Emirates shocked the Arab world by normalising relations with Israel it said the move would help ease the protracted Arab-Israeli conflict. But nine months later, the wealthy Gulf state finds itself in a difficult position as its newest ally bombards the impoverished Palestinian territory of Gaza.

Israeli war planes and artillery have been pounding Gaza while Hamas, the group that controls the territory, has fired rockets into Israel. On Sunday morning, death toll in Gaza stood at 181, including 83 women and children, local health officials said.

Ten people have died inside Israel, including two children, local medics have said.

While almost a third of Arab countries now have relations with Israel, this week’s bloodshed shows that diplomatic ties ushered in by last year’s so-called Abraham Accords have given them little leverage and done nothing to ease the root cause of the protracted crisis — the Jewish state’s conflict with the Palestinians.

“They [the UAE] are clearly in a very difficult position. On one hand, the UAE’s interests with Israel are long term and strategic, so ideally their relations should be resilient to shocks,” said Cinzia Bianco, a visiting fellow at the European Council on Foreign Relations. “At the same time, the UAE obviously claimed that the Abraham Accords would give them leverage to also support the Palestinians and rein in Israel’s aggressions against them.”

So far, Israel has rejected all international efforts pushing for a ceasefire. But Bianco said Abu Dhabi could still deploy diplomatic leverage to pressure the Jewish state to limit the scale of its retaliation. Such intervention, however, could jeopardise progress on joint projects of strategic value to the UAE, she added. 

Recent collaborations include plans for Emirati and Israeli defence manufacturers to develop a system to counter drones.

The normalisation of relations between Israel and the UAE under the Abraham Accords was quickly followed by similar moves from Bahrain, Sudan and Morocco, that marked a radical departure from the established Arab stance towards the Jewish state.

The Arab position before the accords was that they would recognise Israel only if there was a just settlement with the Palestinians that led to the creation of a viable Palestinian state. The transactional deals brokered by the Trump administration, which pursued an overtly pro-Israel stance, left the Palestinians feeling isolated and betrayed. Critics said Arab states had given up a bargaining tool and gained little in return, warning the moves would be exploited by more militant Palestinian factions.

Like other members of the Arab League, the UAE endorsed an appeal on Tuesday to the International Criminal Court to “investigate war crimes and crimes against humanity” committed by Israel against the Palestinians.

“The UAE stands with the rights of Palestinians, for the end of the Israeli occupation and with a two-state solution with an independent Palestinian state with East Jerusalem as its capital,” said Anwar Gargash, diplomatic adviser to the UAE president, this week. “This is a historic and principled position that does not budge.”

The UAE foreign ministry was last month quick to condemn Israeli plans to evict Palestinians from their homes on land claimed by Israeli settlers. And when clashes broke out between armed Israeli police and rock-throwing Palestinian youths, the UAE urged Israeli authorities to reduce tensions.

The UAE’s clear public stance has given cover for Emiratis and residents in the autocratic state to condemn Israeli actions and express support for the Palestinians, after any local anger at the earlier decision to normalise relations was suppressed at the time. Apart from a fringe of Emirati online activists who have sided with Israel, most social media reaction — even from some ministers — has been pro-Palestinian.

“Normalisation [of relations] is irreversible but it is very difficult to defend and even talk about in these circumstances,” said Abdulkhaleq Abdulla, a Dubai-based political science professor.

After the UAE signed its accord, there was speculation about whether Saudi Arabia, Israel’s main prize, would follow suit. Like Abu Dhabi, Riyadh has been covertly co-operating with Israel on intelligence and security matters as they share the goal of countering Iran.

But this week’s Israeli assault on Gaza makes that appear ever more remote. Saudi foreign minister Prince Faisal bin Farhan on Sunday said the kingdom “categorically rejects the Israeli violations against Palestinians”, while calling for an immediate ceasefire. 

In Morocco, which established relations with the Jewish state in October in return for US recognition of Moroccan sovereignty over the disputed territory of Western Sahara, the foreign ministry said it was watching events “with deep concern”.

In 2014, during the last major war between Israel and Hamas, thousands of protesters, including government ministers, took to the streets across Rabat, the capital. This time Moroccan police dispersed a small pro-Palestinian protest in the city this week. The newly formed Morocco-Israel Business Council was also reported to have postponed a virtual meeting aimed at encouraging Moroccan investment in Israel.

Public sentiment in the Arab world remained strongly pro-Palestinian, said HA Hellyer, senior associate fellow at the Carnegie Endowment for International Peace. “The absence of protests isn’t an absence of the desire to protest but an absence of permission to protest.”

Restrictions on freedom of speech across the region made it harder to gauge the extent of public anger, Hellyer said, but social media and the extensive coverage on mainstream television showed the “Palestinian question” was still close to Arabs’ hearts.

“Almost half of the messages I received on Thursday for the religious festival marking the end of Ramadan, show pictures of the Dome of the Rock in Jerusalem,” he added.

Source link

Continue Reading

Emerging Markets

Chilean voters prepare to elect country’s constitutional legislators




Chile will this weekend vote in the legislators who will draw up its new constitution, with the country’s centre-right government facing a battle to maintain its grip on power ahead of a presidential election in November.

Gubernatorial, mayoral and municipal polls that were postponed because of the pandemic will also take place on Saturday and Sunday, alongside the election to populate the constitutional assembly.

Chile has not been spared the coronavirus second wave that has hit Latin America despite it having the highest vaccination rates in the region. Confirmed infections reached their highest ever level last month, although numbers have since declined.

“Chile is doing several historic and unprecedented things at the same time . . . in the middle of the economic and health crisis brought on by Covid-19,” said Robert Funk, a political scientist.

The most important vote will select members of the constituent assembly charged with rewriting the constitution drawn up during the 1973-90 dictatorship of General Augusto Pinochet — which most Chileans regard as illegitimate.

Nearly four-fifths of voters opted in favour of reforming the constitution in a referendum in November.

“These elections will probably define Chile’s institutional course over the coming decades,” said Gloria de la Fuente of Chile’s transparency council. “The vote will have a profound effect on Chile’s political system and civil society . . . electing the authorities to bring the country’s agenda forward.”

Yet turnover is predicted to be lower than the referendum. Some 58 per cent of Chileans who took part in a recent Ipsos poll said they were less likely to vote due to the pandemic, while less than half knew they would be voting for four different positions.

Chile has in recent decades become one of Latin America’s wealthiest nations, even if the deep inequality that sparked widespread social unrest in 2019 is far from resolved.

The low approval ratings for President Sebastián Piñera since those demonstrations have been exacerbated by defeats for his government in Congress, notably over pensions reform.

While the leftwing coalition that dominated Chile for most of the past 30 years has disintegrated since Piñera returned to power in 2018, his unpopularity could allow the left and centre-left to secure the two-thirds majority in the constituent assembly required to pass each article of the new document.

“If the right gets more than 30 per cent [in the assembly], it will be a tremendous victory,” said Lucia Dammert, a sociologist at the University of Santiago.

Despite the relative success of its vaccine rollout, Chile has been hard hit by the coronavirus crisis. Last summer’s peak of a weekly average of 352 daily cases per million was surpassed last month, reaching 383. Cases have since fallen back to about 280 cases per million.

However, Piñera’s government has been able to offer more generous Covid-related subsidies than most other countries in the region.

A feature of this weekend’s polls has been the emergence of independent candidates, Dammert said. Yet although the traditional parties had been badly wounded by the political turmoil, it would be “an uphill battle” for the independents to gain recognition, she said.

There are also wild cards such as Pablo Maltes — husband of Pamela Jiles, a populist presidential hopeful — who is running for governor of the metropolitan region of the capital Santiago.

“If Maltes wins, then there’s definitely something going on with Jiles,” said Funk, as it would suggest she was a strong contender for the presidency.

Jiles, who has championed measures to withdraw funds from Chile’s vaunted private pension system, is one of a number of presidential hopefuls, with no single candidate on the right or left enjoying a clear lead.

Electoral reform under the previous leftwing government of Michelle Bachelet that increased proportional representation means Chileans will for the first time also elect regional governors in a country where power has traditionally resided firmly in Santiago. The elections will also renew nearly a third of local authorities.

Source link

Continue Reading

Emerging Markets

China lands spacecraft on Mars




China has landed a spacecraft containing a rover on Mars, according to state media, in a further sign of its bold ambitions in the sphere.

The rover was part of the Tianwen-1 unmanned mission launched in July last year. Tianwen means “questions to heaven” and was named after a poem by Chinese poet Qu Yuan.

The mission, which was described by Chinese media as a “new major milestone” and the “first step in China’s planetary exploration of the solar system”, was intended to match the US by successfully landing on the red planet.

The Global Times reported that the lander and the rover from the Tianwen-1 probe reached a plain on Mars called Utopia Planitia on early Saturday morning local time, citing information from the China National Space Administration.

The Tianwen-1 probe’s lander and rover separated with the orbiter at about 4am, after which it had a three hour flight before entering Mars’ atmosphere, according to the newspaper.

The spacecraft then “spent around nine minutes decelerating, hovering for obstacle avoidance and cushioning, before its soft landing”. The rover is named Zhurong after a Chinese god of fire, and is 1.85m and weighs 240kg. It is expected to transverse the planet for about 92 days.

The probe was launched into space on July 23 by the Long March 5 rocket from the Wenchang launch pad in Hainan province, in the south of the country.

The achievement of the Mars landing is part of a wider expansion of China’s space programme. The country’s engineers launched the first part of its permanent space station into the Earth’s orbit late last month.

In 2018, China for the first time launched more vessels into orbit than any other nation.

The US views China’s efforts in space in strategic terms. “Beijing is working to match or exceed US capabilities in space to gain the military, economic and prestige benefits that Washington has accrued from space leadership,” according to the annual threat assessment published by the office of the US director of national intelligence.

Source link

Continue Reading