Carmichael coal mine magnate - from school dropout to $12 billion empire

Published by MAC on 2017-11-21
Source: The age

Carmichael coal mine magnate Gautam Adani: from school dropout to $12bn empire

Adani’s push to build a mega coal mine in Queensland has polarised opinions nationwide. It should come as no surprise: the billionaire behind the project has long been a focus of controversy in his native India.

Tim Elliot

The Age

1& November 2017

One morning in June, a 26-year-old Indian rice farmer named Ramlal Kariyam got a phone call from a friend with some very bad news. Along with two other farmers, Balsay Korram and Jaynandan Porte, Kariyam had been named in a legal complaint filed by Adani Mining, which operates a large open-cut coal mine near their village of Hariharpur. The complaint alleged that the men had staged a protest against the mine, during which Adani's trucks were stopped for six hours, resulting in unspecified "financial losses".

Kariyam knew that if the police decided to pursue the complaint, he and the other men could end up going to jail. "This is what I am most afraid of," Kariyam says when I visit him in Hariharpur. "I know more about our rights than anyone in the village. If I go to jail, there will be no one to stand up for us."

'Adani is destroying everything'

Pollution and environmental destruction by Adani's operations are threatening the livelihoods of nearby rural Indian villagers.

Set among the low, misty hills of central India, Hariharpur is remote and slow-moving, insulated from the outside world by thick stands of sal and teak trees. There are some chickens, several stray buffalo and the yellow, plate-sized flowers from pumpkin vines that grow rogue up walls and roofs. Many people here cook on open fires, often on the floor of their homes, which are made of cow dung and timber.

Though the government classifies them as Hindu, most of the locals are Gonds, a forest-dwelling tribe that worships trees, which, they believe, are inhabited by different spirits. (It's thought that Gonds were the models for the villagers in Rudyard Kipling's The Jungle Book.) People eat fish and rice, forage for mushrooms, and drink a liquor distilled from the flower of the mahua tree, which tastes and acts much like diluted avgas. Fortunately or unfortunately, depending on who you talk to, they also happen to live atop a mineral-rich deposit that contains an estimated 5.4 billion tonnes of coal.
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In 2007, the Indian government designated 27.11 square kilometres of this land for coal mining. The project, known as Parsa East and Kanta Basan (PEKB), would be just 500 metres from Hariharpur, and operated by Adani Mining, one of the many companies owned by the billionaire industrialist Gautam Adani. According to Indian law, however, mining could only start with the consent of the gram sabha, or village assembly. "Adani came to us to discuss the proposal," Kariyam tells me. "And so we negotiated with them."

Kariyam is short and slightly built. The day we meet, he's barefoot, but wearing a snappy pinstripe business shirt and dusty black trousers. Kariyam says the locals eventually gave Adani the go-ahead for the mine, but only under certain conditions regarding financial compensation and environmental protections. The conditions weren't legally binding, but the gram sabha believed that Adani was negotiating in good faith. The mine began in 2012, and was soon producing 10 million tonnes of coal a year. Gautam Adani described it as "milestone event" and a boon for India's energy security.

But not all the villagers are so sure. According to Kariyam, Adani Mining paid only a fraction of what it promised for the land. It also disregarded many of the environmental conditions, including those covering air pollution, coal storage and the treatment of wastewater. In 2015, a small mountain of reject coal caught fire. Coal dust from uncovered trucks began coating nearby houses. In the rainy season, the waste dump bled a thick black slurry into the creeks and fields. A railway line the company said it would build to transport coal out of the area never materialised; instead, a constant procession of high-capacity trucks, laden to the axle, go in and out of the mine, chewing the roads to pieces and creating a standing cloud of carbon monoxide and coal dust.

So, in 2015, together with the local advocacy group, Chhattisgarh Bachao Andolan (CBA), Kariyam, Korram and Porte began fighting the mine. The company has since met some of their demands: wastewater is no longer discharged into the rivers, and coal trucks now cover their loads. At the same time, according to Kariyam, the company has attempted to buy off the villagers with money, liquor and food. "They came to me and said they'd look after me and my family if I stopped opposing the mine," he tells me.

Locals now believe the company has co-opted local magistrates, the police and even the media. Reports of injuries caused by the trucks are seldom reported. In an attempt to avert protests, police have invoked Section 144 of the criminal code, a colonial-era statute that prohibits six or more people from gathering. Some time ago, a complaint purportedly lodged by locals against Korram was found to have used forged signatures. (The villagers whose signatures were forged complained to authorities, but no action has been taken.)

The village is now gripped by a collective paranoia. Strangers are a source of instant suspicion. Kariyam warns me not to stand on the road, lest I be spotted by an Adani worker, one or two of whom putter by on motorbikes, dressed in hi-vis vests. Some people tell me the company even uses drones to spy on them. Indeed, at one point, we are standing in the courtyard of Korram's home when a drone appears overhead, hovering above the house. Everyone looks up, shading their eyes and squinting. "It's the company!" someone yells, before hurrying us all inside.

It's difficult to know how Gautam Adani feels about villages like Hariharpur, because he rarely grants interviews. (He declined Good Weekend's requests to meet and did not respond to questions.) His time seems mostly taken up with cutting deals and making money, both of which he is extraordinarily good at.

According to the Bloomberg Billionaire Index, the 55-year-old has a net worth of $US9.9 billion ($12.9 billion), placing him among the 10 richest people in India. As chairman of Adani Group, which he founded three decades ago, he presides over an empire with interests in mining, ports, power plants, real estate, renewable energy, food, and even defence. (In September, the company announced a tie-up with Swedish firm Saab to make fighter jets for the Indian Air Force.) He also imports apples, lentils and onions, and was, until a few years ago, India's single biggest aggregator of cut and polished diamonds and gold jewellery.

To Australians, however, he is best known for his proposed $16.5 billion Carmichael coal mine, to be built in central Queensland's Galilee Basin. Construction was scheduled to start in October, but has been delayed due to political and financing issues. Should the mine proceed, it will be one of the largest in the world – roughly five times the size of Sydney Harbour – and produce up to 60 million tonnes of coal per year for anywhere between 50 and 60 years, all of which will be exported, the bulk of it to India. Adani claims the mine will create 10,000 jobs, a tantalising prospect for cities like Townsville and Rockhampton, which have been hard hit by the resources downturn.

Like many mining projects, Carmichael has highlighted the divide between "regional Queensland" (which, by and large, loves the mine) and Australia's "inner-city elites" (who don't). It's a fight Gautam Adani is more than happy to buy into: "We have been challenged by activists in the courts, in inner city streets, and even outside banks that have not even been approached to finance the project," he wrote on the Adani Group's website. "To those activists who sit in creature comfort and criticise us, I ask a simple question: what are you doing for those people?"

Gautam Adani is an improbable mogul. He is short and portly, with a round, jolly-looking face and a bushy, black moustache. Friends describe him as soft-spoken, unpretentious and almost entirely lacking in charisma. Notwithstanding a small fleet of BMWs, three private jets and a helicopter or two, his pleasures are, by the standards of Indian billionaires, relatively modest. He is a devoted family man: until his mother died, in 2010, he didn't go on a holiday without her. He is a strict vegetarian, and loves Bollywood movies, particularly Kaala Patthar, about a famous coal mine accident that took place in northern India, in 1975, which he is said to have watched so many times he's lost count. He is Jain by birth, a member of an ancient Indian sect that is an offshoot of Hinduism. Jains believe in the sacredness of all life: some wear face masks to avoid breathing in and killing tiny insects. As his mining projects would attest, Adani isn't that pious. And yet his office, in Ahmedabad, the commercial capital of his home state of Gujarat, is occupied by statues of various Hindu deities, which he reportedly prays to daily.

A coastal state at the junction of Asia and the Middle East, Gujarat, in western India, has for thousands of years been a hub of trade and commerce. "Many of the country's most successful business houses come from Gujarat," says Sheba Nandkeolyar, national chair of the Australia India Business Council. "Doing business is in their blood."

Even so, Adani's rise has been virtually unmatched. From 2002 to 2014, his group's turnover rose 20-fold; today it has $US12 billion in combined revenues, which have, for the past five years, had an annual compound growth rate of 25 per cent, much of it built on debt. He is known to borrow huge amounts of money to fund one project, which he uses to borrow more money to fund the next project, and so on.

The proposed Carmichael mine is no exception. According to Tim Buckley, director of the Sydney-based Institute for Energy Economics and Financial Analysis (IEEFA), which has criticised the mine, Adani has borrowed 100 per cent of its $3.5 billion investment to date, most of it from Indian banks. The group's total debt now stands at a staggering $19.4 billion. Some analysts question Adani's ability to service its borrowings; others have referred to his empire as "a house of cards". Not that this has curbed his appetite for risk.

"Gautam is the boldest businessman I've ever met," Ravi Sharma, a Delhi-based businessman and former CEO of Adani Power, tells me. "He once said to me, 'I'm not afraid of making a bad decision, only of making a late decision.' He figures that if he makes a decision early enough, even if it's a bad one, he'll be able to correct it and learn from it."

Adani has also been willing to operate at the very limits of India's notoriously murky business world. His companies have been implicated in multiple instances of alleged corruption, including tax evasion, bribery, money laundering and large-scale illegal exports. In 2007, India's Directorate of Revenue Intelligence began investigating companies in the Adani Group for evading taxes and laundering money while trading in diamonds and gold jewellery. (In 2015, following a complex and protracted case, the Supreme Court found partly in Adani's favour, whilst conceding that the company had engaged in a "notorious misuse" of the government's diamond export scheme.)

Companies in the Adani Group are being prosecuted in Delhi's High Court for allegedly inflating the price of capital equipment imports, allowing the company to charge electricity consumers higher prices while diverting profits into tax havens in the Cayman Islands and Mauritius. (Adani denies any wrongdoing.)

"Adani should have been prosecuted for so many offences," says Prashant Bhushan, a Delhi-based public interest lawyer who co-filed the High Court case. "There's cheating the public and electricity consumers and shareholders; there are violations of the Foreign Exchange Management Act. There are probably corruption cases involving the banks."

And yet investigations into Adani's companies have a habit of being shelved indefinitely, being resolved in his favour or simply disappearing. "Mr Adani has a lot of influence in high places," Bhushan tells me. "It is obvious, for instance, that he is very good friends with [the Indian Prime Minister] Narendra Modi."

Adani downplays his relationship with Modi in public. ("It is a not a close relationship," he told The Australian last year.) In private it's a different matter. In 2015, Adani visited Bhushan in his Delhi office, a cramped, boxy space, just big enough for his legal library, an ancient photocopier, and a portrait of Mahatma Gandhi, in wire-rimmed glasses and robes, that stares down from the wall opposite his desk. Bhushan was at the time representing a small non-government organisation (NGO) called the Energy Watchdog, in a case where one of Adani's power companies was said to have received preferential treatment from the electricity regulator. Adani sometimes travels with a bodyguard – he was kidnapped in 1997, and released after 18 hours for a reported $3 million. But on this day he arrived alone, "with no heirs, and quite humble", as Bhushan put it, in order to argue his case.

He told Bhushan that he was operating a business, and that Bhushan's work was making it harder for him to do that. Bhushan replied that it wasn't his job to help Adani make a profit, whereupon Adani changed tack. "He said, 'Look, Bhushan, I would have liked you to handle all of my cases.' It was an attempt to get me on his side. I said I am a public interest lawyer, and do not do cases for large corporate houses." The conversation came to a close and Adani made to leave, but not before adding: "In case you want anything done by Narendrabhai [Narendra Modi], then please let me know."

Adani is not a details guy, and he dislikes jargon. "If someone is talking in a very complicated way, I never like that," he told the Financial Times in 2013. He is said to have a short attention span and a zero tolerance for paperwork. "He has everything in his head," one Adani senior executive tells me. "When you go into his office, there are no papers on his desk."

He is also a bit of a homebody. According to the Indian media, he is most comfortable lounging about at home, in Ahmedabad, in T-shirts and sneakers, with his wife, Priti, by his side. (A trained dentist, Priti is now the head of the Adani Foundation, the group's charity arm: she is sometimes referred to as the company's "conscience-keeper".) Together they have two sons: Karan, who heads up Adani Ports, and Jeet, who studies engineering at the University of Pennsylvania.

During his interview with the Financial Times, Adani described himself as "an introvert … I am not a social person who wants to go to parties." When you're one of India's richest men, however, the parties come to you. When in 2013 Karan married Paridhi Shroff, daughter of Cyril Schroff, the founder of India's largest law firm, more than 22,000 people were invited, including Prime Minister Modi, with festivities lasting three days. (In Goa, where the party started, a traffic jam of private jets almost shut down the airport.)

The Adanis also entertain at their house, which one visitor describes to me as "modern, palatial, with fountains, and lots of marble". There are sprawling lawns, and "people who meet you at the door and show you around". They are lavish events, with Bollywood singers and performers on multiple stages; guests include diplomats, businessmen and politicians, among them the then premier of NSW, Mike Baird, and then federal trade and investment minister, Andrew Robb, in 2015. "But the parties are more of an obligation than a pleasure," the visitor says. "[Adani] probably doesn't enjoy it, but he wants to get to the right business leaders and politicians, and get his message across. With Gautam, it's all about the business."

Born in 1962, Adani grew up the fourth of five brothers in Ratanpole, a clothes trading district of Ahmedabad, where his father, Shantilal, sold textiles and commodities. In interviews, Adani has described Shantilal as a huge influence: he says that, as a boy, he often watched his father making "forward trades", oral commitments based on trust between buyer and seller. Though he respected his father's instinctual approach, he believed that textiles had "no future". And so, at 16, he dropped out of school and moved to Mumbai, where he stayed with his cousin, and attempted to break into the diamond trade.

After two years sorting diamonds at Mahendra Brothers, he set up his own brokerage. His first sale, to a Japanese buyer, earned him 10,000 rupees ($200). He has described the deal as the most important of his life, because "it gave me the confidence that I could do business on my own".

In 1982 he returned to Ahmedabad, to help his oldest brother establish a plastics factory. Some years later he set out on his own, using the equivalent of $9800 in capital to found Adani Enterprises, an import-export company specialising in polymers. Adani's English was patchy, so he had a childhood friend, Malay Mahadevia, who was then studying dentistry, accompany him to meetings with government officials, the two of them zipping around Ahmedabad on a Bajaj Super Scooter. (Mahadevia is now one of Adani Group's senior directors and Adani's right-hand man.) The company operated out of Kandla port, in Gujarat's Kutch region, an area of steamy, low-lying wetlands that fronts onto the Arabian Sea.

In 1994, the US commodities company Cargill approached Adani with a proposal to establish a salt works in the area. The project would require land from which to harvest the salt, and a jetty to ship it out. Adani secured permission for the jetty, and bought huge tracts of coastal land in nearby Mundra. The deal with Cargill fell through, leaving Adani with the land plus the development permissions. When the Gujarat Government announced its intention to open up the coast to development, in 1995, Adani was perfectly placed.

Though Adani frequently cites determination and integrity as his main assets, his powers of persuasion have proved far more valuable. Despite never having built anything, he managed to convince the Industrial Finance Corporation of India to part-fund not just a jetty but an entire port. According to Adani, when he took his plans to the IFCI in Ahmedabad, the chairman and managing director, K.D.Agarwal, waved them away: "Mr Adani, I don't know anything about all these papers ... I am just trusting you."

One day in February, 2002, a train carrying Hindu pilgrims was set alight at Godhra, in east Gujarat. Fifty-nine people died, many of them women and children. As news of the killings spread, Hindu mobs began roaming the streets of Ahmedabad and other cities in Gujarat, armed with bicycle chains and petrol bombs, looking for Muslims. The ensuing riots, which raged for weeks, resulted in the deaths of more than 1000 people.

Narendra Modi, who was then Gujarat chief minister and known as a hardline Hindu, made little effort to intervene, and was soon seen as having abetted, and even condoned, the violence. Accused of genocide and violations of religious freedom, he was subsequently banned from travelling to the UK, the US and parts of Europe. (The UK lifted the ban in 2012, after an Indian Supreme Court inquiry cleared Modi of complicity in the violence. The US allowed him into the country for the first time in 2014.)

Spooked by the prospect of communal violence, some of the state's most prominent industrialists abandoned Modi; some even publicly reprimanded him. Adani, however, came out in his corner, lobbying for him both at home and abroad, and in 2003 established a business group, called the Resurgent Group of Gujarat, which he used to champion Modi's aggressively pro-industry agenda.

"Adani came to centre stage when he bailed Modi out," says Kingshuk Nag, author of a biography on Modi called The NaMo Story. "It's quite possible that Modi also saw in Adani a young industrialist who could do wonders. From here onwards Modi and Adani became close, and the proximity was cemented over the years."

Adani often says that his support of Modi conferred no special advantages, and that Modi's pro-business agenda helped other business leaders, which is true. But none benefited quite like Adani. Under Modi's leadership of Gujarat, clearances for some Adani projects were fast-tracked, the tender process for an Indian Premier League cricket franchise was reportedly rigged in his favour, and a contract for a multimillion-dollar coal development, which had been awarded to a competitor, was overturned and handed to Adani. According to India's Comptroller and Auditor General, between 2006and2009 the Gujarat State Petroleum Corporation sold natural gas it had bought on the open market to Adani at a discount, resulting in an "undue benefit" to the company of $14 million. Adani was even given the rights to manage a hospital that had been destroyed by an earthquake and rebuilt with public money.

But by far the biggest windfall was on the coast at Mundra, where between 2005 and 2009, Adani won 30-year renewable leases over 7350 hectares for as little as US1c per square metre. According to Forbes Asia, he then sublet this land to other companies, including Indian Oil Inc, for as much as $US11 per square metre. (Adani denies getting discounted land.)

In 2009, this entire area was declared a Special Economic Zone, exempting it from all taxes, levies and trade duties. It was here that Adani expanded his port operations – it is now the largest private port in India – and built his 4620-megawatt, coal-fired power plant. "Mundra is where Adani really made his money," energy expert Tim Buckley says. "It's the lynchpin of his empire. It's where he became a billionaire. Unfortunately, it also came off the back of enormous social inequality."

The Mundra port encompasses 24 berths, together with an airstrip, kilometres of smooth roads and landscaped grounds. But the most visible element is the power plant, with its giant sooted-stained skein of ramps, conveyors and turbines; seen from afar, its colossal chimneys shimmer in the heat like the trunks of long-dead trees. Adani's operation has devastated the surrounding land, which couldn't be more cratered and desolate had it been showered with meteorites. Creeks have been blocked, sand dunes bulldozed and mangroves annihilated. (Three separate inquiries have found Adani guilty of destroying mangroves – one recommended a $39 million fine – but no action has been taken.)

Then there's the plant itself, which works like a giant squid, hoovering up vast amounts of seawater, fish and all, which it uses for cooling, before pumping it back into the ocean, often at temperatures that all but cook the surrounding sea life. Some locals claim the temperature of the sea here has risen; when I visit, the water is so warm it's like wading through soup.

Adani has said that the coast around his port was always a "wasteland", which would come as a surprise to people like Budha Ismael, who has been fishing here for most of his life. Ismael, 58, who has silvery stubble and skin as brown as a coffee bean, is head of the fishing settlement at Tragadi Bandar, three kilometres from Adani's power plant. During the dry season, several hundred people live here, sleeping on the coarse white sand in shacks made of hessian and driftwood. (They spend the wet season in their village in the hinterland.) It's evilly hot the day I visit, with an oven-blast of briny wind barrelling in off the Arabian Ocean. But Ismael seems unfussed, sitting out the front of his tent with his son, mending nets.

Ten years ago, we were fishing there," he tells me, pointing down the coast, toward the port. "Then some people from the company and a notary from the fishing department came to me and said, 'You have to leave.' " They offered Ismael and his family a one-off payment of 20,000 rupees ($400) to move, "which was ridiculous, because back then 20,000 rupees was about two days fishing." Ismael didn't take up the offer: "It was bad money. It would have been morally wrong to take it." Instead, he moved here, where they could still fish, albeit less profitably. He tells me the tankers that go past here destroy their nets and have disturbed their fishing grounds. "We used to go two kilometres out to sea to get the fish – now we have to go 10."

Adani has, he concedes, built a few toilet blocks. "It was part of their CSR [Corporate Social Responsibility]." Bizarrely, despite living next to India's biggest power plant, his people rely on solar power, with mobile panels perched on their shacks. According to Ismael, Adani's main strategy is to divide and conquer. "They pay people here to spy on each other," he tells me. "The spies tell the company who is coming and going, who the troublemakers are, if there have been lawyers or NGOs here." I ask if he would ever consider leaving, doing something else. He says he has 31 people in his extended family, all of whom make a living by fishing. So no, he isn't going anywhere.

Australian Greens leader Richard Di Natale recently predicted that the Carmichael mine would not proceed, and said he would be willing to break the law to stop it. "If this mine were a country, it would be the seventh-largest polluter on earth," he told Sky News last month. He believes that opposition to it will become as big as the movement that stopped the Franklin Dam in Tasmania in the 1980s.

Such action would baffle many Indians, who are too busy trying to find their next meal to worry about carbon emissions or Indigenous land rights or threats to the southern black-throated finch. One day, toward the end of my time in India, I visit a man I'll call Ranjit, who served for 20 years as a senior bureaucrat in the Gujarat government, overseeing environmental regulations on large infrastructure projects.

I expect Ranjit to be critical of Adani's track record, but he soon sets me straight. "Why are you so curious about what Adani has done here in India?" he asks. "Your curiosity is irrelevant. Whether Adani can deliver [his project in Australia] is more important."

I tell him that many Australians would be concerned about what has happened to the people at Hariharpur, and Tragadi Bandar. "These are primitive people," Ranjit replies. "Anthropologists say, 'They are very happy living in their area'. They say, 'Leave them alone'. But people don't want to live in isolation! Once they see the benefits of mainstream life, they want them."

Ranjit appears to relish Adani's success, which he considers a source of national pride. "This is history," he says, with a smile. "For hundreds of years Europeans went out into the Third World and took their resources. Now it's the Third World taking resources from the First World."

Adani is a product of this culture; he has for a large part of his career thrived on corner-cutting and political patronage, which has afforded him extraordinary concessions, from cheap land to enormous tax breaks. Despite our vastly different heritage, the approach seems to be working equally well in Australia, where support for the mine from the major parties is based largely on the promise of jobs, and the chance that affords them of neutralising One Nation in Queensland's upcoming state election. The Federal Government, for its part, apparently regards the mine as something akin to a humanitarian obligation, claiming Australian coal will help lift hundreds of millions of Indians out of poverty.

As a result, says the energy consultant Tim Buckley, "Adani is getting exactly the same sort of treatment from Australian politicians to that which he is used to back in India. He has been offered a $1 billion subsidised loan from the Northern Australian Infrastructure Facility [NAIF], and a $600 million royalty holiday and free water from Queensland taxpayers. And as if that wasn't enough, we've now learnt that the Queensland Government has compulsorily acquired prime agricultural land to make way for the Adani railway. It's farcical."

In Australia, thousands of people continue to protest the mine. There have been marches, petitions, legal appeals. The project's politics get more complex by the day : in early November,Queensland Premier Annastacia Palaszczuk withdrew her support for the NAIF loan, after it became apparent her partner, Shaun Drabsch, had worked on Adani's loan application as part of his job at PwC, which acted for the Indian miner. (A spokesman for Adani has said the company is now looking to find ways to fund the mine without the loan.)

I mention all this to Ranjit: the political ructions, the court cases, the endless delays. Maybe the mine won't go ahead after all, I say. Maybe Adani will walk away from it. Ranjit shakes his head. "Come back to me in three years, and you will have changed your mind," he says. "Adani will overcome these obstacles. He will make his mine happen."