Sucheta Dalal :The R16;AR17; to R16;ZR17; of a very bitter corporate war (19 August 2001)
Sucheta Dalal

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The ‘A’ to ‘Z’ of a very bitter corporate war (19 August 2001)  

The current stock scam has turned into a dogfight between two corporate giants ‘A’ and ‘Z’. Both are collecting data on each other’s crimes, and releasing them to friendly media and sundry politicians

IT started out as sub-plot to the current stock scam, but is growing so rapidly it threatens to submerge the main story. Simmering under the bull-bear tussle that is staple to every stock scam, is a corporate war that’s getting nastier everyday.

Ranged on either side are powerful adversaries. Both are first-generation entrepreneurs whose sky-high ambition brought them great success early in their life. One is the son of a poor school teacher who pursued his astounding dream of rivalling oil MNCs after school. His tremendous ambition, and careful manoeuvrings are part of corporate legend and unsurpassed in terms of achievements.

His younger rival also stopped studying after 12th grade to become a trader and exporter. His initial opportunism and careful manipulation helped him create a little nest-egg, which launched his other ambitions.

Both are wildly ambitious, big risk-takers and have business aims that are multiples of what fellow industrialists dare to dream of. Both ruthlessly cut corners and always tread on the borderline of legality. The end has always justified the means. Influencing and directing policy decisions forms part of both their core business strategies.

The difference is of size. One is a mega business house, the other has a much smaller networth. But the disparity hasn’t created a David-Goliath situation. Ranged alongside the younger businessman are a group of losers, has-been old-economy industrialists, politicians, lawyers and a canny strategist.So far it has been an evenly-matched guerilla effort waged through sections of the press, but it is only a matter of time before there will be blood on the street. Until then, we will stick to pseudonyms. Let us, for the sake of clarity call the older warrior ‘A’ and his younger rival ‘Z’.

‘A’ is a veteran of corporate wars and controversy while ‘Z’ was seen as a savvy entrepreneur until his dealings with a certain mega-bull whom we shall call ‘K’ and the investigations that followed which revealed financial manipulation, diversion of funds and personal enrichment of a shocking scale.

Both have a formidable line-up of supplicant politicians, editors and media-vehicles lined up on their side and have been using them to snipe at one another. ‘A’ has far more money, clout and experience, but ‘Z’ counter-balances this with a media network which has no qualms at all about selective reporting and doctoring news.

If ‘A’ outbids ‘Z’ to bag an entertainment complex, losing a crore in the process, then ‘Z’ accuses him of adulteration. Both instigate action against each other through their politician friends who demand investigation by regulators and investigative agencies.

At the moment, however, the action is centered around K’s stock price manipulation and its after-effects. Soon after the scam investigation began, ‘A’ quickly compiled a thick compendium of data against ‘Z’ which is being circulated to regulators, politicians, the media and investigative agencies. It traces ‘Z’s antecedents (his alleged export scams), details his media deals abroad, alleges foreign exchange violations, analyses his business empire, lists his innumerable foreign subsidiaries, talks about his alleged multiple passports and fake advertisers. It also lists a host of powerful bureaucrats who are supposed to have aided and manipulated policy or suppressed investigation on his behalf.

The pressure has begun to tell on ‘Z’ and he has been forced to sell chunks of his stake in his companies. But the war is unlikely to end here. The ‘Z’ camp is equally hard at work unearthing data on A’s own stock market operation. ‘A’, who has access to substantial money has been a big investor in the badla market. Some time after the NSE’s Advanced Lending and Borrowing Mechanism (ALBM) emerged as the better alternative to badla financing, the group shifted its operations here.

In fact, just before the budget, the sudden withdrawal of over Rs 1,000 crores from the ALBM destabilised the market in a big way. The ‘Z’ camp believes investigation into ALBM trades would link the ‘A’ group to the scam and the collapse of stock prices. They have launched a whisper campaign claiming all was not well with the ALBM mechanism itself. A spate of questions have been dashed off by JPC members demanding voluminous data about ALBM trades. The ‘Z’ camp intends to mine this data to trace links with ‘A’.

As ‘A’ and ‘Z’ slug it out, the first casualty is truth. Neither side cares who is hurt in the process or if their allegations and counter allegations cast suspicion on well-run institutions or regulators. The problem is that both are supported by a powerful set of bureaucrats-politicians. The biggest irony of it all is that‘A’ and ‘Z’ are not exactly that far apart in their methods or style. Between them, they represent the best and worst of corporate India: ambition, enterprise, market and media management and political connections.

-- Sucheta Dalal