Tirthankar Roy teaches economic history at the London School of Economics Science. His book The Economic History of India 1857-1947, has changed the way Indian economic history is studied and taught worldwide. He is also the author of the The East India Company – The World’s Most Powerful Corporation (Penguin Allen Lane 2012). In this interview he speaks to Vivek Kaul on the way the East India Company operated in India and the impact it had on Indian business and economy.
How and when was the East India Company formed? What were its initial goals?
The English East India Company was formed in 1600, after a series of informal and formal meetings between ship captains, merchants, and bankers of the City of London, all of whom wanted to develop trade with Asia, in particular, to procure more black pepper from the Indonesian islands, which sold at an astronomical price in Europe.
Gurcharan Das in the introduction to your book writes “The modern corporation is, indeed, a child of the East India Company and there is much to learn from the mother’s failures and successes.” Could you elaborate on that?
Mr. Das is quite right; the Company was the first multinational, in that its London head office and its offices and warehouses in India were all parts of the same firm, thoughlocated thousands of miles apart in different countries. As in a modern multinational, the head office appointed the key officers who would run the operations in India. It was also a joint stock firm, that is, it pooled in the capital of many shareholders, which gave it much greater economies of scale and more capacity to absorb risks than a partnership or family firm of the time.
How similar or different is the East India Company from the modern multinational?
There was a difference between the Company and the modern multinational. In the case of the Company, the head office did not have full knowledge of what the branches were doing, and did not have complete command and control over the operations of the branches. This imperfect command problem arose partly because of physical distance which made travel and communication between the head and the braches very slow by modern standards.
Were there any other reasons for the problem?
Partly, the problem arose due to a social reason. The shareholders of the Company who controlled the London end of the operation and the rank and file in the branch offices came from different social classes. They did not completely trust each other. The shareholders were wealthy merchants and bankers, the rank and file came from poorer backgrounds and often joined the firm as sailors and soldiers. There was also a conflict of interest in the Indian side. The employees were paid small salaries, on the understanding that they would make some money by trading on the side. But then too much trade on the side hurt the Company’s own interest. How much is too much? There was constant tension over this question.
You mentioned initially that the Company initially started by trading pepper. It bought pepper in Indonesia and then sold it in Britain. You also write about the initial fleet of the East India Company coming back with pepper alone which was valued at a million pounds. How did the company decide on trading pepper? And why was pepper so much in demand?
Pepper was hugely valuable in Europe partly because it was thought to be the best ingredient available to hide the smell of slightly stale meat in cooked dishes, and partly because spices were demanded as a luxury article by the rich people. But alongside demand, there were supply side reasons as well for the high prices. Pepper and aromatic spices did not grow everywhere. They could not be easily cultivated either. They had to be procured from remote islands in the Indonesian archipelago or the mountains of Kerala in India, where climate and topography were favourable for growing spices. Not everyone had easy access to these sources. On top of that, the little pepper that came overland into Europe was solidly controlled by the merchants of Genoa and Venice, who were not friends of the English. That control also created monopoly prices.
In the second half of the 1500s, a leading explorer of the time, Ralph Fitch, travelled from London to Southeast Asia via India to explore the prospects of an English trade there. Fitch wrote a book on return, which was read, among others, by William Shakespeare. This book and some of the members of the tour were influential behind the start of the East India Company.
The Company eventually evolved a three cornered system of doing business. What was that? How did it help them?
The Company soon discovered that the means of payment for spices needed to be found within Asia itself, because not all peoples in Asia could be paid with European goods. Europeans could bring some woollen goods, but who will buy woollens in Indonesia or India? Therefore, it was looking for suitable Asian goods to exchange for spices. In particular, Indian textiles sold well in all of Southeast Asia, and both the Dutch and the English companies became interested in Indian cloth in order to use these to buy spices. Not only that; for some time, horses were purchased from Persia for sale to India, cotton textiles were purchased in exchange, and the textiles were exchanged for spices. Horses were in great demand in India, because the main armies consisted largely of cavalry, and there were no indigenous breed of warhorses. This was the three cornered system.
The company eventually built forts in Bombay (now Mumbai), Calcutta (now Kolkata) and Madras (now Chennai) and primarily operated out of these forts. Can you discuss this portion in some detail?
The Company initially negotiated trading rights with local states, like the Mughal province of Gujarat, the Emperor’s court in Delhi or Agra, or the provincial Governor of the Golconda state. They sought permission to trade from an established port that belonged to these powers. The three major ports were Surat, Masulipatnam, and Hooghly.But the need to defend themselves against the Dutch and the Portuguese, occasionally, threats from the Mughals and local rulers, and increasingly the need to run their own place by means of their own laws all led the Company to lease in or buy lands where it could create its own ports, docks, and naval stations. This is how Madras and Calcutta came up. Bombay’s origin was similar, except that it was initially received by the English King as a dowry in a royal marriage. Not knowing how he could use this place, the King handed it over to the Company. Because of the defence motive and the wish to create a government on a tiny scale, these towns always started with the construction of forts.
Would it be fare to compare these cities to special economic zones of today?
These three cities did share something in common with today’s SEZs, in that both tend to be export-oriented. But then, inside the SEZs, conditions of business depend on state policy. In these three port cities, there was no well-defined economic policy in existence.
How did opium come into the scheme of things for the East India Company?
Opium would grow in Bihar or Malwa (near Indore in central India), reach Calcutta or Bombay, was auctioned to overseas merchants, who would then take it abroad in special ships that were made to be defended against pirates of the China Sea. Once in China, the opium will be taken inland by the Hong merchants of Canton (Guangzhou/Guandong). It was an illegal substance in China, and the business in the interior could be done only by politically connected individuals. The Hong merchants fitted that role. They also had a lot of money. The opium was purchased with silver, which was then be used to buy Chinese tea. Tea, again, was sent back to England for resale to America. The tax on tea was a valuable income to the government. When these taxes were raised in 1773, the angry consumers staged the famous Boston Tea Party, where British tea chests arriving in Boston were thrown into the waters. That event again led to the American Revolution. In this way Asian trade changed world politics.
It is said that some of the biggest family owned businesses in India made their first fortunes in opium. It was that money which was used to expand into other businesses. What do you have to say about that?
This is true of some of the Parsee firms, especially the Tatas, even though the Tatas reduced their opium ties when the firm was actively moving into industry. Apart from individual firms, opium profits funded many banks, insurance, and shipping companies in Bombay and Calcutta.
Which were the communities that gained the most because of their association with the East India company?
The Parsees have been mentioned. They were mainly based in Surat and Bombay, and worked for the Company both as agents and contractors and also as shipwrights. In Calcutta, many prominent Bengali and North Indian merchants in the 1700s were friends of the Company. They actively helped the Company take over political power in 1757. This group included the largest firm of the time, the Jagatseths, who were a sort of banker to the court. In Madras, Telugu merchants were partners of the Company, and some of them acquired great wealth and power. Any direct link between gainers in the 1700s and successful firms today cannot be drawn, because Indian business world has diversified so much away from the old-style commodity trade.
You give credit to the East India Company for introducing the entire system of contracts in India. Why did India not have such a system earlier?
The idea of the contract, and probably some kind of law as well, did exist in India from before. But apart from loan transactions, in the matter of sale of goods, these rules were not very actively in use. Certainly there were no known state courts that settled merchant disputes over contracts. The Company needed to use contract heavily because it operated on a very large scale in a limited range of goods. It needed to buy cloth from hundreds of thousands of weavers made according to exact specification. It could not possibly do bulk purchases of cloth and maintain quality without some kind of advance agreements.
The problem, though, was that the Company was using contracts on a larger scale than any Indian firms without a proper commercial law. So, it exposed itself to numerous disputes over quality, quantity, delayed delivery of cloth, and clandestine deals between weavers and the Company’s rivals, the Dutch or the French.
You write towards the concluding part of your book that “the return of that process of skill-building is being reaped today in the form of net income that India receives by selling highly skilled services to the world”. Could you explain this portion in some detail?
In the 1800s, India exported a lot of commodities to Britain. The textile export trade had ended, but opium, indigo, tea, cotton, and later, wheat and rice, took its place. With the export surplus, India purchased skilled services from Britain. These payments were for the services of British military and administrative officers who ran the government, the services of scientists, engineers, doctors, and professors, again working for the government, as well as for foremen, engineers, and partners who were working in the private industries. These purchases were condemned by Indian nationalists as wasteful expenditure or a ‘drain’ of resources. But the drain theory is an exaggeration. Much of this payment went to hire a variety of skills that India did not have. These skilled people contributed to industrialization, big engineering works like irrigation canals and railways, and a university and a hospital system that were far ahead in the developing world of the 1800s in terms of quality.
And how did all this benefit India?
Today, India derives a lot of mileage in the world economy from the strengths built up a hundred or more years ago thanks to these purchase of British services. Its engineering schools, university education, scientific research, and the Indians’ head-start with English language, were all examples of the positive effects of what the nationalists called drain. The fact that Bombay, Calcutta, and Madras started modern factory industry already in the 1800s had much to do with the ability of India to buy knowhow and hire manpower from Britain in that time.
Does India suffer from the East India Company syndrome where we remain suspicious of foreign business?
The superstitious fear of the foreigner runs deep in the mind of the Indian populace and is constantly exploited by politicians and corporates today who do not want foreign competitors. They distort history in their favour, as many angry or fearful people often do. The uniformly negative light in which the Company is seen adds to this sentiment. Much of that sentiment formed in the 1920s and 1930s during India’s nationalist struggle. Important writers, including Jawaharlal Nehru, blamed the foreigners for the poverty of the Indians. This was a politically useful line then and a politically correct line even now. But it is bad history nonetheless.
Could you explain that in some detail?
It was then and it is now misinformed about the real story of the Company and its contributions to the making of modern India. When we think of the legacy of the Company, we should think of Mumbai, Kolkata, and Chennai. Without the East India Company, these places would in all likelihood have still remained the fishing villages that they were in the 1600s. Because of the Company they emerged not only as cities, but also huge cosmopolitan hubs of Indo-European business and the true symbols of globalization.
East India Company was the first MNC in the world. What can Indian corporations which are going global learn from it?
The Company’s business history tells us that doing business in another country always needs local partners and agents, and these partnerships are never easy relationships, because the partners can take advantage of the greater knowledge of the local scenario. Similarly, political tendencies in the country of operation are also a cause for concern to the MNC. Today’s MNCs are still subject to the same kind of uncertainty. Why do many joint ventures fail?
How do you compare the “crony capitalism” practiced during the times of the East India Company to the kind that is practiced in India now?
Business always needs to keep good relations with those who run governments, and governments also want friends in business. After all, a lot of tax comes from the corporates, and quite often, bureaucrats and politicians join private enterprise. This is a common factor between the world in the 1600s and the world in the 2000s. The difference is that in the earlier days, everything depended on informal negotiations. There was a big role for conspiracy and intrigue. Today, these relationships are, at least partly, based on legal principles.
The interview originally appeared in the Daily News and Analysis on October 22, 2012. http://www.dnaindia.com/money/interview_opium-profits-funded-many-banks-insurance-and-shipping-firms-in-bombay-and-calcutta_1754808
(Interviewer Kaul is a writer and he can be reached at [email protected])
Month: October 2012
Yash Chopra was much more than just the king of romance
Vivek Kaul
Yash Chopra launched his banner Yash Raj films in 1973. The second film produced under the banner was Kabhie Kabhie. It released in 1976 and had Amitabh Bachchan playing the role of a sensitive poet named Amit Malhotra. All the fantastic poetry that Amit recites in the movie was written by the poet Sahir Ludhianvi.
One of the couplets goes like this:
Kal koi mujhko yaad kare,
kyon koi mujhko yaad kare,
masroof zamana mere liye,
kyon waqt apna barbad kare.
main pal do pal ka shayar hoon…
(yaad = remember. masroof = busy. pal = moment. shayar = poet).
The above lines were the thoughts of a poet who deeply felt that when he was gone, the world would forget him and move onto other things. And he was right. The world at large is too busy to bother about someone who is no longer there. Nobody remembers Sahir anymore. But there are always exceptions that prove the rule. Yash Raj Chopra is that exception.
His death has led to a tremendous outpouring of grief and sorrow from India at large and the Hindi film industry in particular. Very few film directors in the Hindi film industry have lasted as long as Yash Chopra did. His first film as a director Dhool Ka Phool was released in 1959. His latest film Jab Tak Hai Jaan is scheduled to release on November 13, later this year. During this period he worked with the biggest superstars of Hindi cinema from Dilip Kumar to Rajesh Khanna to Amitabh Bachchan to Shah Rukh Khan.
Chopra was often referred to as the King of Romance given his penchant for shooting in beautiful locations (particularly in Kashmir earlier and later Switzerland) with his heroines looking extraordinarily beautiful in their red and white chiffon sarees and singing and dancing to some brilliant lyrics set to fantastic music.
And this sobriquet of the King of Romance has stuck to Chopra even in his death. A random search on Google on his death throws up the following headlines:
Yash Chopra: King of Romance leaves void in Bollywood
King of Romance: Yash Chopra dies at 80
King of Romance: Yash Chopra no more
Yash Chopra, Bollywood’s King of Romance passes away
An important part of justifying the tag of being the King of Romance lay in making his heroines look beautiful on screen especially when they were singing songs. Raakhe has never looked as beautiful as she did when she was singing Kabhie Kabhi Mere Dil Main Khayal Aata Hai in the movie Kabhie Kabhie. Rekha was at her sexiest in the random shots that make the song Ye Kahan Aa Gaye Hum Yun Hi Saath Saath Chalte in Silsila. Sridevi outshone even Switzerland in Chandni.
Juhi Chawla in the rain dance in Darr made millions of hearts go K K K K Kiran…. Both Madhuri Dixit and Karishma Kapoor danced their hearts out in Dil To Pagal Hai. And Preity Zinta and her dimples last saw success with Veer Zaara.
But just calling him a King of Romance would be doing a great injustice to the body of work that Yash Raj Chopra has left behind. In fact romance and candy floss cinema was something he discovered only in the latter part of his career.
His first film as a director was Dhool Ka Phool in 1959. It was produced by his elder brother BR Chopra (who later went onto produce and direct the Hindi serial Mahabharat among other things). Dhool Ka Phool is a very sensitive story of an illegitimate child, whose parents happen to be Hindus, being brought up by a Muslim man. The film also had the brilliant song Tu Hindu Banega Na Musalman Banega Insan Ki Aulad Hai Insan Banega among other things.
Chopra followed it with Dharmaputra in 1961, one of the first movies to deal with the horrors of partition. Some of the riot scenes were too real for the audience to handle and caused problems at the cinemas the movie was playing in.
As film journalist Subhash K Jha wrote in a 2004 piece about the movie “The film about Hindu-Muslim relations, touched on the raw history pertaining to the happenings which were just 12 years old. The re-construction in Dharamputra of the carnage during the post-Partition riots opened up raw wounds in the audience, and sparked off riot-like situations at theatres screening the film. Yash Chopra vowed never to go into the thorny communal issue again.”
His next movie was the multi starrer Waqt. The movie is still remembered for the song Ae Meri Zohra Jabeen Tujhe Maloom Nahi picturised on Balraj Sahni. It was one of the earliest movies to be based on the lost and found formula (which the likes of Manmohan Desai later perfected to an art form).
Waqt is the story of Lala Kedarnath (played by Balraj Sahni) who has three sons whose birthdays are on the same day. There is an earthquake and the family is separated and loses contact with each other (what we call bichadna in Hindi movies).
The story goes that BR Chopra, the producer of the movie, wanted Prithviraj Kapoor and his three sons (Raj, Shammi and Shashi) to portray the role of the father and his three sons. But eventually only Shashi Kapoor acted in the movie.
“My brother B R Chopra thought it was a dream cast. One day, he was traveling with Bimal Roy when he narrated the script and also discussed the casting. Bimal immediately told him that the cast was a misfit. The movie was about separation and here I was casting three real brothers so anyone could recognise them. Ultimately the film was made with Shashi Kapoor, Sunil Dutt and Raj Kumar,” Chopra said in his recent interview to Shah Rukh Khan.
Waqt also had one of my all time favourite dialogues in Hindi cinema. “Chinoi seth jinke apne ghar sheeshe ke hon wo doosro par patthar nahi phekan karte,” Raj Kumar (who plays the eldest son) tells the villain Chinoi Seth (played by Rehman). Waqt turned out to be the biggest grosser of 1965.
Four years later in 1969 Yash Chopra made the suspense drama Ittefaq starring Rajesh Khanna, Nanda and Iftekhar. The movie was largely set in one room and did not have any songs, which was a big risk at the point of time it was made. It still remains one of the best suspense movies made in Hindi cinema, and is nail biting till the very end.
In 1973, Yash Raj Chopra launched his own banner Yash Raj films with Daag – A Poem of Love. The story was written by the ace Hindi novelist Gulshan Nanda and was apparently inspired by the English novel The Mayor of Casterbridge. This was Chopra’s sixth film as a director. His first five films were all serious movies. Daag was also high on emotion and melodrama but it had a lot of romance in it as well with superstar Rajesh Khanna romancing both Sharmila Tagore and Raakhe. The movie had some superhit songs like Ab Chahe Sir Phoote Ya Maatha and Mere Dil Main Aaj Kya Hai. Chopra won the Filmfare award for the best director for this movie.
Chopra had also taken to directing movies for film financer Gulshan Rai in the meanwhile. He directed the Dev Anand starrer Joshilla which was released in 1973. The movie did not do well at the box office and is now remembered only for the song kiska rasta dekhen ae dil ae saudai, set to tune by the great RD Burman.
Chopra next directed Deewaar for Rai. The movie was written by the angry young men Salim Khan and Javed Akhtar. Chopra in a recent interview to Shah Rukh Khan on his eightieth birthday said that Deewaar was Salim-Javed’s best script. It was perfect. The movie which released in 1975, the same year as Sholay, went onto become one of the biggest hits of Hindi cinema.
Said to be loosely based on Mazagon dock coolie turned underworld don Haji Mastan, it saw Amitabh Bachchan being firmly established as the angry young man who mouths lines like “main aaj bhi feke hue paise nahi uthatha” and wears billa no 786. The movie was originally not supposed to have any song but songs were added later under pressure from the producer.
While shooting Gulshan Rai’s Deewaar Chopra was also shooting Kabhie Kabhie. This movie Chopra’s ninth film as a director, would turn out to be his first out and out romantic film. The movie had some brilliant songs written by Sahir Ludhianvi and set to tune by Khayyam. When it comes to describing the love for one’s beloved no better song has been written in the annals of Hindi cinema than
kabhie kabhie mere dil main khayal aata hai,
ke jaise tujhko banaya gaya hai mere liye.
tu ab se pehle sitaron main bas rahi thee kahin,
tujhe zameen par utara gaya hai mere liye.
In the years to come Chopra would make Trishul for Gulshan Rai. He would also make Kaala Pathar under his own banner along with Trishul. Kaala Patthar released in 1979 was set around a coal mine and had Bachchan at his brooding best, even though it did fairly average business at the box office. Both Trishul and Kaala Patthar were multi-starrers which revolved around the angry young man played by Bachchan and had very little scope for romance, though they did have the mandatory romantic song.
The year 1981 was a landmark year in the history of Hindi cinema. It saw the release of Silsila starring Amitabh Bachchan, Jaya Bachchan and Rekha, which was a rather inspired casting. The story goes Smita Patil and Parveen Babi were supposed to star in the film originally opposite Amitabh Bachchan. But as Yash Chopra explained in a recent interview to Shah Rukh Khan. “Smita was going to play the role that was ultimately played by Jaya Bachchan. I was not very convinced with the casting. I always wanted Rekha and Jaya Bachchan. Amitabh was shooting for his film Kaalia in Kashmir. I went to meet him. He likes to read the bound script. He read the script and asked me, ‘Are you sure you have made the right casting.’ I told Amitabh (Bachchan) that I wanted Jaya and Rekha in the film. He paused for a moment and then said, ‘Bombay jaake unko mil lete hai‘ (Lets go to Bombay and meet them). The very next day we took a flight and during the whole journey we didn’t even speak a word. I met Jaya and Rekha and both of them agreed to do the film.”
Another version of the story goes that Smita Patil pulled out at the lost moment and thus Jaya Bachchan had to step in.
The movie was beautifully shot in Kashmir and Netherlands. Dekha Ek Khwab to Ye Silsile Hue shot in the background of Dutch tulips remains one of the best shot songs in Hindi cinema. It looks fresh even 31 years later. But the movie’s theme of an extra marital affair between two married individuals did not go down too well with the Hindi film audience.
Nevertheless Silsila set the template for what would become the Yash Chopra romance. Good locales, beautifully shot songs, brilliant music and lyrics, and heroines dancing in the rain. The story and the script of the movie which were strong points of Yash Chopra movies till then took a backseat.
Between Silsila in 1981 and Chandni in 1989, Chopra made box office duds Faasle (which people feel is the worst of the 22 movies that he directed) and Vijay (highly inspired by Trishul). Vijay was more in the news for a 16 year old Bakhtawar Murad Khan (better known by her screen name Sonam) cavorting in a bikini with a much older Rishi Kapoor than for its storyline or entertainment value. Chopra also directed Mashaal with Dilip Kumar and Anil Kapoor during those years. The film had some excellent performances and brilliant songs composed by Hridaynath Mangeshkar.
Yash Chopra became the King of Romance with his 1989 hit Chandni. The film had a fairly common do hero-ek heroine waala love triangle story. But it had some excellent songs shot in Switzerland, and it had Sridevi at her peak looking fresh and beautiful as ever. With this film Chopra furthered the Silsila formula and it was a huge box office success despite its weak storyline.
Two years later in 1991 Chopra made Lamhe with Sridevi and a moustache less Anil Kapoor. The movie had all the ingredients of his Silsila formula but it also had a strong storyline of a younger woman falling for an older man who had once loved her mother. The movie has found its audience since its release.
With Darr in 1993, Chopra established Shah Rukh Khan as what came to be known as the anti hero (whatever that means) in Hindi cinema. Four years later in 1997 he made the candy floss Dil to Pagal Hai which had Shah Rukh playing Rahul and saying “Rahul naam to suna hoga” every ten minutes. With a very thin storyline Chopra managed to make Madhuri Dixit look gorgeous, and that along with some great music and Shah Rukh sold tickets at the box office.
In 2004, Chopra directed the Indo-Pak love story Veer Zaara. His last film Jab Tak Hai Jaan is scheduled for release on the day of Diwali next month (I have this nagging feeling that the story line is similar to Daag – A Poem of Love, Chopra’s first independent production).
Like he was in his life, in his death, Yash Chopra has been christened the King of Romance. But romance was something he discovered in the second part of his career. Rather ironically some his best movies from Dhool ka Phool to Waqt to Itefaaq to Deewaar to Trishul had very little romance in them, though his later romantic movies like Chandni, Darr, Dil to Pagal Hai and Veer Zaara, definitely made more money. And his latest movie Jab Tak Hai Jaan might very well be the next Rs 200 crore superhit.
The obituary originally appeared on www.firstpost.com on October 22, 2012. http://www.firstpost.com/bollywood/for-yash-chopra-romance-was-a-much-later-discovery-498079.html/2
(Vivek Kaul is a writer. He can be reached at [email protected])
‘Warren Buffett does not practice what he preaches’
Satyajit Das is an internationally renowned derivatives expert. His works include the best-selling Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives. His latest book Extreme Money – Masters of the Universe and the Cult of Risk deals with the messy details of the 2008 financial crisis, the lessons from which have still not been learnt, feels Das. As he puts it, “We keep repeating the same mistakes over and over…The only lesson of history after all is that no one learns the lessons of history.”
In this freewheeling interview with Vivek Kaul, he talks about how investing is never going to be the same again, why financial TV is pornography, and that Warren Buffett does not practice what he preaches. The interview will be published in two parts. This is the first part.
Why do you call “financial TV” pornography?
Pornography is formulaic, explicit subject matter is depicted to sexually excite the viewer. Financial TV shares the characteristics of pornography — sleaze, intrusiveness and a desire to titillate and shock. It is a 24/7 Joycean stream of consciousness, a financial noise machine with the inevitability and repetition of all sexual congress. No one seriously relies on financial TV for deep insight. If it is on TV, then it’s already happened. It’s entertainment. Attractive men and women cater to all possible proclivities in the audience. It’s like wall paper or eye candy – pleasant but not essential. In dealing rooms, generally you don’t even have the sound on, so it is like pornography in another sense – dialogue is superfluous. The only time financial TV is interesting is when I am invited on to offer my money making insights – buy low, sell high etc.
Whatever his record as an investor, there are differences between Buffett’s pronouncements about the standard of conduct he requires of others and that he follows. Getty Images
You say that investment genius was always little more than a short memory and a rising market? You write that the assumed sophistication of finance and financiers is overrated. Why do you say that?
Investing is like captaining a cricket side – 90 percent luck and 10 percent skill, in the words of former Australian Test captain Richie Benaud. But as he said, don’t try it without the 10 percent! The last 30 years were an exceptional period of investment history which provided high returns for reasons which are unique to that period. The best investment strategy would have been to buy stock or real estate and leverage it up. Then go to sleep or play golf for 25 years. You would have been a rich man.
When people make money, they theorise too much about it – hence all the books about trading success. The latest fad is about explaining the trader’s personality via his biology. Some research suggests that male traders perform better when they have elevated testosterone levels. As prices increase and decrease, traders experience chemical changes. Euphoria caused by boosted testosterone levels from successful trades drives higher risk taking. Losses or reversals increase levels of the defensive steroid cortisone leading to risk-aversion. The experimental data is thin.
Could you elaborate on that?
If correct, you could take steps on banks and fund managers to manage risk. You could artificially manipulate the biology of traders and investment managers to improve performance. It is not hard to imagine a future where traders will need to have their supplements –uppers and downers (in the old parlance) — at hand to improve trading, similar to the experience of competitive sports where drugs have become relatively commonplace to improve performance. It is also not hard to imagine internal risk mangers and regulators insisting on regular monitoring of hormone levels as part of the compliance regime, with attendant cheating.
Isn’t that far fetched?
This is not far-fetched. Already, organisations are adopting unusual initiatives to gain a critical edge. A trader at Steve Cohen’s SAC Capital was allegedly forced by his boss to take female hormones and wear articles of women’s clothing at work, leading to a sexual relationship between the men, one of whom was married. The bizarre behaviour was to eliminate the trader’s aggressive male attitude, making him a more obedient and detail-oriented trader. How can you take an industry which actually does this seriously!
In this freewheeling interview with Vivek Kaul, he talks about how investing is never going to be the same again, why financial TV is pornography, and that Warren Buffett does not practice what he preaches. The interview will be published in two parts. This is the first part.
Why do you call “financial TV” pornography?
Pornography is formulaic, explicit subject matter is depicted to sexually excite the viewer. Financial TV shares the characteristics of pornography — sleaze, intrusiveness and a desire to titillate and shock. It is a 24/7 Joycean stream of consciousness, a financial noise machine with the inevitability and repetition of all sexual congress. No one seriously relies on financial TV for deep insight. If it is on TV, then it’s already happened. It’s entertainment. Attractive men and women cater to all possible proclivities in the audience. It’s like wall paper or eye candy – pleasant but not essential. In dealing rooms, generally you don’t even have the sound on, so it is like pornography in another sense – dialogue is superfluous. The only time financial TV is interesting is when I am invited on to offer my money making insights – buy low, sell high etc.
Whatever his record as an investor, there are differences between Buffett’s pronouncements about the standard of conduct he requires of others and that he follows. Getty Images
You say that investment genius was always little more than a short memory and a rising market? You write that the assumed sophistication of finance and financiers is overrated. Why do you say that?
Investing is like captaining a cricket side – 90 percent luck and 10 percent skill, in the words of former Australian Test captain Richie Benaud. But as he said, don’t try it without the 10 percent! The last 30 years were an exceptional period of investment history which provided high returns for reasons which are unique to that period. The best investment strategy would have been to buy stock or real estate and leverage it up. Then go to sleep or play golf for 25 years. You would have been a rich man.
When people make money, they theorise too much about it – hence all the books about trading success. The latest fad is about explaining the trader’s personality via his biology. Some research suggests that male traders perform better when they have elevated testosterone levels. As prices increase and decrease, traders experience chemical changes. Euphoria caused by boosted testosterone levels from successful trades drives higher risk taking. Losses or reversals increase levels of the defensive steroid cortisone leading to risk-aversion. The experimental data is thin.
Could you elaborate on that?
If correct, you could take steps on banks and fund managers to manage risk. You could artificially manipulate the biology of traders and investment managers to improve performance. It is not hard to imagine a future where traders will need to have their supplements –uppers and downers (in the old parlance) — at hand to improve trading, similar to the experience of competitive sports where drugs have become relatively commonplace to improve performance. It is also not hard to imagine internal risk mangers and regulators insisting on regular monitoring of hormone levels as part of the compliance regime, with attendant cheating.
Isn’t that far fetched?
This is not far-fetched. Already, organisations are adopting unusual initiatives to gain a critical edge. A trader at Steve Cohen’s SAC Capital was allegedly forced by his boss to take female hormones and wear articles of women’s clothing at work, leading to a sexual relationship between the men, one of whom was married. The bizarre behaviour was to eliminate the trader’s aggressive male attitude, making him a more obedient and detail-oriented trader. How can you take an industry which actually does this seriously!
Does Warren Buffett practice what he preaches?
Talking about Warren Buffett is like discussing the existence of God. He is either great or he is not (the minority view). I am an atheist. Whatever his record as an investor, there are differences between Buffett’s pronouncements about the standard of conduct he requires of others and that he follows. While he dispenses finely crafted criticism of derivatives as weapons of mass destruction, Berkshire Hathaway (Buffett’s holding company) makes extensive use of derivatives and invested in Salomon Brothers and General Reinsurance, both participants in derivative markets.
During the crisis, Buffett, a significant investor in Moody’s, was silent about the problems surrounding rating agencies. Having uncharacteristically declined an invitation to appear in June 2010, Buffett testified before the Financial Crisis Inquiry Commission under subpoena. Buffett emphasised that he knew little about the rating process other than its profit margins. He had never visited Moody’s offices, not even knowing where they were located. He also defended Moody’s not acknowledging any failure or complicity of the agencies in creating the bubble. When Goldman Sachs was indicted for alleged violations in structuring and selling CDOs (collateralised debt obligations, a kind of security backed by loans and bonds), Buffett, a major investor in Goldman, defended the firm, its actions and its CEO.
Satyajit Das.
Could you tell us a little more about this?
Critics have frequently pointed out anomalies in the firm’s corporate practices. Berkshire Hathaway’s dual-class share arrangement gives Buffett voting control whilst owning 34 percent of the equity. Until a decade ago, Berkshire Hathaway’s seven-person board of directors consisted of mainly insiders such as Buffett’s son. The new ‘independent’ directors include Bill Gates, a close friend of Buffett, and his regular bridge partner, as well as co-investor in the Gates Foundation. Critics also pointed to that fact Buffett’s partner Charlie Munger’s family owned a 3 percent stake in BYD, the Chinese electric battery maker, before Berkshire bought a stake in 2008.
As to his record as an investor, there are a number of interesting aspects. Firstly, what is the right benchmark to measure his performance against – it can’t be the broad market index. Secondly, the source of his investment success is not that complicated. His main source of investment capital is the premium income from his insurance businesses (cash received today against a promise to honour a future contingent claim). This provides him with effective economic leverage (at low interest cost) to buy low beta assets. The strategy worked well but whether it will continue to work is more difficult. The past, as they say, is “another country”.
In your book Extreme Money you write “Archimedes said, “Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.” You paraphrase it to write “give me enough debt and I shall make you all the money in the world”. Can you elaborate?
Borrowing amplifies economic growth. Debt allows society to borrow from the future. It accelerates consumption and investment spending, as borrowed money is used to purchase something today against the promise of paying back the borrowing in the future. Spending that would have taken place normally over a period of years is accelerated because of the availability of cheap borrowing. In this way, debt generates economic growth. In financial markets, debt and leverage amplify returns.
Could you explain this through an example?
Assume an investor uses $20 of its own money – equity – and borrows $80 (80 percent of the value) to purchase an asset for $100. If the asset increases in value by 10 percent to $110, then the investor’s equity increases on paper to $30 ($110 minus the fixed amount of debt of $80). If the investor maintains its leverage at 5 times then it can buy $150 of assets (funded by $30 of equity and $120 of debt). If the investor can now leverage 6 times then it can buy $180 of assets (funded by $30 of equity and $150 of debt). The investor still only has his original $20 investment in cash, unless he sells the asset to realise paper gains, which can vanish.
But now, this $20 supports even more debt, as much as $160 (the $180 of assets that the investor can buy if it leverages six times less its original investment). The real leverage is around nine times, which means an 11 percent fall in the value of the asset purchased can wipe out the investor’s wealth entirely. Where the supply of assets does not increase as quickly as the supply of debt, the price increases allow the process to continue. In the period to 2007, the use of leverage, in different ways, to make money was rampant. Unfortunately, it was never real money. Of course, when prices start to fall the entire process operates in reverse.
The interview was originally published on www.firstpost.com on October 2o, 2012. http://www.firstpost.com/economy/warren-buffet-does-not-practice-what-he-preaches-496581.html
Vivek Kaul is a writer. He can be reached at [email protected]
Talking about Warren Buffett is like discussing the existence of God. He is either great or he is not (the minority view). I am an atheist. Whatever his record as an investor, there are differences between Buffett’s pronouncements about the standard of conduct he requires of others and that he follows. While he dispenses finely crafted criticism of derivatives as weapons of mass destruction, Berkshire Hathaway (Buffett’s holding company) makes extensive use of derivatives and invested in Salomon Brothers and General Reinsurance, both participants in derivative markets.
During the crisis, Buffett, a significant investor in Moody’s, was silent about the problems surrounding rating agencies. Having uncharacteristically declined an invitation to appear in June 2010, Buffett testified before the Financial Crisis Inquiry Commission under subpoena. Buffett emphasised that he knew little about the rating process other than its profit margins. He had never visited Moody’s offices, not even knowing where they were located. He also defended Moody’s not acknowledging any failure or complicity of the agencies in creating the bubble. When Goldman Sachs was indicted for alleged violations in structuring and selling CDOs (collateralised debt obligations, a kind of security backed by loans and bonds), Buffett, a major investor in Goldman, defended the firm, its actions and its CEO.
Satyajit Das.
Could you tell us a little more about this?
Critics have frequently pointed out anomalies in the firm’s corporate practices. Berkshire Hathaway’s dual-class share arrangement gives Buffett voting control whilst owning 34 percent of the equity. Until a decade ago, Berkshire Hathaway’s seven-person board of directors consisted of mainly insiders such as Buffett’s son. The new ‘independent’ directors include Bill Gates, a close friend of Buffett, and his regular bridge partner, as well as co-investor in the Gates Foundation. Critics also pointed to that fact Buffett’s partner Charlie Munger’s family owned a 3 percent stake in BYD, the Chinese electric battery maker, before Berkshire bought a stake in 2008.
As to his record as an investor, there are a number of interesting aspects. Firstly, what is the right benchmark to measure his performance against – it can’t be the broad market index. Secondly, the source of his investment success is not that complicated. His main source of investment capital is the premium income from his insurance businesses (cash received today against a promise to honour a future contingent claim). This provides him with effective economic leverage (at low interest cost) to buy low beta assets. The strategy worked well but whether it will continue to work is more difficult. The past, as they say, is “another country”.
In your book Extreme Money you write “Archimedes said, “Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.” You paraphrase it to write “give me enough debt and I shall make you all the money in the world”. Can you elaborate?
Borrowing amplifies economic growth. Debt allows society to borrow from the future. It accelerates consumption and investment spending, as borrowed money is used to purchase something today against the promise of paying back the borrowing in the future. Spending that would have taken place normally over a period of years is accelerated because of the availability of cheap borrowing. In this way, debt generates economic growth. In financial markets, debt and leverage amplify returns.
Could you explain this through an example?
Assume an investor uses $20 of its own money – equity – and borrows $80 (80 percent of the value) to purchase an asset for $100. If the asset increases in value by 10 percent to $110, then the investor’s equity increases on paper to $30 ($110 minus the fixed amount of debt of $80). If the investor maintains its leverage at 5 times then it can buy $150 of assets (funded by $30 of equity and $120 of debt). If the investor can now leverage 6 times then it can buy $180 of assets (funded by $30 of equity and $150 of debt). The investor still only has his original $20 investment in cash, unless he sells the asset to realise paper gains, which can vanish.
But now, this $20 supports even more debt, as much as $160 (the $180 of assets that the investor can buy if it leverages six times less its original investment). The real leverage is around nine times, which means an 11 percent fall in the value of the asset purchased can wipe out the investor’s wealth entirely. Where the supply of assets does not increase as quickly as the supply of debt, the price increases allow the process to continue. In the period to 2007, the use of leverage, in different ways, to make money was rampant. Unfortunately, it was never real money. Of course, when prices start to fall the entire process operates in reverse.
The interview was originally published on www.firstpost.com on October 2o, 2012. http://www.firstpost.com/economy/warren-buffet-does-not-practice-what-he-preaches-496581.html
Vivek Kaul is a writer. He can be reached at [email protected]
Guess who paid for Vadra’s Bikaner land? DLF again
Vivek Kaul
The floodgates seem to have opened when it comes to news reporting on Robert Vadra and his real estate dealings. The Daily News and Analysis today reported that “In a flurry of deals between June 2009 and August 2011, Robert Vadra purchased at least 20 plots of land collectively measuring more than 770 hectares in Rajasthan’s Bikaner district, in a region that would see prices spiraling soon after. A clutch of investors, including Vadra, apparently privy to information on upcoming industrial projects in the vicinity, reaped huge profits with land values appreciating by up to 40 times since 2009…These companies together invested Rs2.85 crore in barren land here during this period.”
The story suggests that “A clutch of investors, including Vadra, apparently privy to information on upcoming industrial projects in the vicinity, reaped huge profits with land values appreciating by up to 40 times since 2009.”
Vadra bought these plots of land through his companies Sky Light Hospitality Private Ltd, Sky Light Realty Private Ltd, Real Earth Estates Private Ltd, North India IT Park Private Ltd and Blue Breeze Trading Private Ltd.
The question is where did these companies get the money to buy this land? The one word answer is DLF. Let’s try and understand this in a little more detail. Take the case of Real Earth Estates Private Ltd. As on March 31, 2010, the company had an issued capital of Rs 10 lakh. This is the money that the owners of the company (Robert and his mother Maureen) had put into the business.
Here is where things get interesting. As on March 31, 2010, the company had 10 plots of lands listed under fixed assets. These plots were bought at a total cost of Rs 7.09 crore. Of these plots three plots were in Bikaner. These plots were bought at a total cost of Rs 1.16 crore.
The question is how did a company with an issued capital of Rs 10 lakh buy plots which cost Rs 7.09 crore in total?
The answer is that the company borrowed money. As on March 31, 2010, Real Earth Estates Private Ltd had a loan of Rs 5 crore on its books from DLF. Arvind Kejriwal in his exposure of links between Vadra and DLF had categorised this to be an unsecured loan. An unsecured loan is a loan in which the lender does not take any collateral against the loan and relies on the borrower’s promise to return the loan. Over and above this Rs 2 crore loan came from Sky Light Hospitality Private Ltd another Vadra company.
So this money was used to buy ten land plots in total and three in Bikaner. Let’s dig a little more on how Sky Light Hospitality managed to give a Rs 2 crore loan to Real Earth Estates. As on March 31, 2010, Sky Light Hospitality had an issued capital of Rs 5 lakh. So how did company with a capital of Rs 5 lakh manage to give a loan of Rs 2 crore to another company?
This is where DLF again comes into the picture. The company had given Vadra’s Sky Light Hospitality an advance of Rs 50 crore.
DLF had said in an earlier statement that “Skylight Hospitality Pvt Ltd approached us in FY 2008-09(i.e. the period between April 1, 2008 and March 31, 2009) to sell a piece of land measuring approximately 3.5 acres…DLF agreed to buy the said plot, given its licensing status and its attractiveness as a business proposition for a total consideration of Rs 58 crores. As per normal commercial practice, the possession of the said plot was taken over by DLF in FY 2008-09 itself and a total sum of Rs 50 crores given as advance in instalments against the purchase consideration.”
The first instalment of the advance was paid to Vadra in was paid on June 3,2008, but the sale deed of this land for was registered only on September 18, 2012, The Hindu pointed out a a few days back. What this meant was that the advance stayed with Vadra’s Sky Light Hospitality for more than three years. An advance unlike a loan is made interest free for a short period of time.
Vadra had access to a part of the Rs 50 crore advance for a period of more than four years, given that the first instalment was paid in June 2008. And he had access to the entire advance of Rs 50 crore for greater than three years, given that the sale deed was registerd only last month.
DLF in its statement refers to giving advances as normal commercial practice. But the question that crops up here is whether it is regular practice for the company to give advances for such long periods of time? “DLF has not been able to cite other instances of where interest-free advances have been given, and over such long periods of time,” wrote the Financial Express a few days back.
This Rs 50 crore was at the heart of Vadra’s operation and was used by him to buy land as well as flats. Rs 2 crore out of this Rs 50 crore available with Sky Light Hospitality was used to give a loan to Real Earth Estates Private Ltd. Effectively DLF gave money amounting to Rs 7 crore to Real Earth Estates Private Ltd to buy land. Of this Rs 1.16 crore was used to buy land in Bikaner.
Sky Light Hospitality bought land in Bikaner on its own account as well. The balance sheet of the company as on March 31, 2010, shows a plot of agricultural land worth Rs 79.56 lakh in Bikaner. It need not be said this was financed from the Rs 50 crore so called advance received from DLF.
Now let’s turn our attention to North India IT Parks Private Ltd. The balance sheet of the company as on March 31, 2010, shows two entries under fixed assets. The first entry is 85.62 acres of agricultural land bought at Rs 48.78 lakh. Another entry is for 75 acres of land in Bikaner bought at Rs 53.32 lakh. This means the total cost of land bought by the company in Bikaner was around Rs 1.02 crore. Interestingly the company has an issued capital of Rs 25 lakh. So how did a company with an issued capital of Rs 25 lakh manage to buy land which cost over Rs 1 crore?
It got loans from other Vadra companies. There is a loan of Rs 10 lakh that was made by Sky Light Hospitality Private Ltd. This of course came out of the Rs 50 crore advance that DLF gave Sky Light. Then there is a loan of Rs 55 lakh that came from Real Earth Estates Pvt Ltd, which in turn had a loan of Rs 89.5 lakh from Blue Breeze Trading Private Ltd, another Vadra company. Where did Blue Breeze which has an issued capital of Rs 5 lakh get Rs 89 lakh to loan, this writer has been unable to establish. North India IT Parks Private Ltd had another direct loan of Rs 38 lakh from Blue Breeze Trading Private Ltd. Blue Breeze Trading Private Ltd as on March 31, 2010, had total current liabilities amounting to Rs 2.86 crore.
So all in all this makes it clear that unless DLF had given Vadra a so called Rs 50 crore advance he wouldn’t have been able to go on his property buying spree in Bikaner.
The article originally appeared on www.firstpost.com on October 19,2012. http://www.firstpost.com/business/guess-who-paid-for-vadras-bikaner-land-dlf-again-496475.html
(Vivek Kaul is a writer. He can be reached at [email protected])
Rahul: Reluctant politician who was once afraid of the dark
When Rahul Gandhi was young he was afraid of the dark. He felt that darkness held ghosts and bad things. His grandmother Indira Gandhi helped him overcome that fear. As Aarthi Ramachandran writes in Decoding Rahul Gandhi “Speaking to young children at the opening of a science fair at a Delhi school in November 201 he(i.e. Rahul) told them how he was scared of darkness when he was young as he felt it held “ghosts” and “bad things”. Then, he said, one day his grandmother had asked him why he didn’t go and see himself what was inside the darkness. So, he had walked into the garden in the dark and he had kept walking and then realised suddenly that ‘there was nothing there in the darkness to be scared of’.” And thus Rahul overcame the fear of darkness and ghosts.
The life of Rahul Gandhi has largely been a mystery for India and Indians. Where was he educated? Where did he work before joining politic full time? What are his views on various things? What does he think about the current state of the Indian economy? What does he think of the government which his mother Sonia runs through the remote control? Does he have a girl friend? When does he plan to marry? Why hasn’t he given any interviews to the media since 2005?
These are questions both personal and professional that Indians would love to have answers for. Aarthi Ramachandran answers some of these questions in her new book Decoding Rahul Gandhi.
After the assassination of Indira Gandhi, both Rahul and his sister Priyanka were largely taught at home. Ramachandran quotes out of Sonia Gandhi’s book Rajiv: ““The day of my mother-in-law’s assassination was the last day Rahul and Priyanka ever attended school…For the next five years the children remained at home, studying with tutors, virtually imprisoned. The only space outside our four walls where they could step without cordon of security was our garden,” Sonia wrote.”
Rahul is a year and a half older to his sister Priyanka and was a student of the St Columba’s school before the assassination of his grandmother. But both Rahul and Priyanka ended up in the same class despite their age difference. “Rahul’s education was disrupted due to that incident (Indira Gandhi’s assassination) and he dropped a year of school, possibly the same year that Indira died. Rajiv was asked how both Rahul and Priyanka were in the same class during an interview in 1988. “Only one year separates them. And with all the shifting, they came to be in the same class. But that has one advantage: they can be taught each subject by the same tutor. Now, we can’t possibly keep separate tutors for each of them, that would be too expensive,” he quipped – both children were being home tutored,” writes Ramachandran.
Rahul joined Delhi’s St Stephens College in 1989 to study history. He got admission under the sports quota. And there was a lot of controversy surrounding his admission. As Ramachandran points out “When Rahul entered Delhi’s prestigious St. Stephen’s College in 1989 after finishing his schooling, the Bhartiya Janata Party (BJP) claimed his admission, under the sports quota for his skills in rifle shooting, was invalid. The allegation appeared to be that with 61 per cent marks in his school-leaving examinations, Rahul was not academically bright enough to enter the college. The BJP’s Delhi chief at that time, Madam Lal Khurana, claimed that Rahul’s certificates in shooting were fake.” The National Rifle Association came to Rahul’s rescue issuing a statement in his favour about his ability as a rifle shooter. During Rahul’s time at Stephens 20-25 special protection group (SPG) guards would be all over the college with sling bags which supposedly had guns.
After a year at Stephens, Rahul left for Harvard. There is very little clarity on the period he was at Harvard or the subjects he studied there. “It has been widely reported in the Indian media and some foreign publications that Rahul took courses in economics at Harvard,” writes Ramachandran. “Neither Rahul nor Harvard officials have confirmed this. Rahul did not respond to questions about this course of study and the time period he was at Harvard….Harvard too said it could not disclose details about Rahul Gandhi’s time at Harvard.”
Though Harvard did confirm that Rahul was a student without getting into the specifics of the time period or the courses he attended. In May 1991 Rahul’s father, Rajiv Gandhi was assassinated. This compelled him to take a transfer to Rollins College in Florida and from here graduated with a BA in 1994. The website of the college lists him as alumnus who graduated in International Relations.
After this, Rahul went to get an MPhil in developmental studies from the Cambridge University, in the United Kingdom. There has been some controversy surrounding this as well. “In the run up to the 2009 general elections…The New Indian Express alleged that Rahul had not only got the name of his course wrong but also the year. The paper said he had attended the course only in 2004-05. It produced a certificate from the university as evidence of its claim. Rahul…sent a notice to the newspaper….With the notice was a letter issued by Cambridge University…in which its vice chancellor…clarified that Rahul was a student at Trinity College from October 1994 to July 1995. She also said that he was awarded MPhil in developmental studies in 1995,” writes Ramachandran.
What comes across here is a reluctance on part of Rahul to be open about his educational qualifications. As the author explains “Rahul’s unwillingness to be open about his educational background is similar to Gandhi family’s secrecy over Sonia Gandhi’s illness. Sonia and her family have been resolute in their silence on her medical condition despite speculation…that she is suffering from some kind of cancer…It can be argued that her health is a matter of public interest given that she is the de factor head of the Congress-led coalition government…In the same way Rahul Gandhi’s educational qualifications are of the importance to the public at large as he is perceived to be a future prime ministerial candidate of the Congress and is a Member of Parliament.”
After Cambridge, Rahul Gandhi worked for three years with consulting firm Monitor in London. Strategy guru Michael Porter was one of the co-founders of the firm. Rahul was with Monitor from June 1996 to early March 1999. As Ramachandran writes “According to sources, who have known Rahul from his time at Monitor, there were no problems with his performance at the firm. He worked there under an assumed name and his colleagues did not know of his real identity, said a Monitor employee who was at the firm around the same time as Rahul. ‘His looks gave it away to those of us who knew who he could be,’ the source said.” But beyond this nothing is known about his key result areas or the sectors Rahul specialised in during his time at Monitor.
After quitting Monitor, Rahul came back to India to help his mother Sonia with the 1999 general election campaign. Once the elections were over Rahul disappeared from the political firmament. “There is no exact information about any other job Rahul might have taken up in the intervening years after he left Monitor in March 1999 and returned to India for good in late 2002,” writes Ramachandran.
During the time Rahul spent at London the media also discovered his girl friend Veronique (though they kept calling her Juanita). He was spotted with her watching an India-England cricket match at Edgbaston and holidaying with her in the Andamans at the end of 1999, and again in Kerala and Lakshdweep in 2003, for a year end family vacation.
Rahul finally cleared the mystery himself in an interview to Vrinda Gopinath of the The Indian Express during the run up to the 2004 Lok Sabha elections. As Ramachandran writes “’My girlfriend’s name is Veronique not Juanita…she is Spainish and not Venezuelan or Columbian. She is an architect not a waitress, thought I wouldn’t have had a problem with that. She is also my best friend,’ he told her…After he won from Amethi, he held a rare informal interaction with journalists in his constituency. They asked about his girlfriend’s nationality to which he replied she had been living in Venezuela for a long time although her parents were Spanish. He also said that he was not planning on getting married anytime soon.” Nothing has been heard of Veronique since 2004.
His years in consulting seem to have had a great impact on Rahul and since coming back to India in late 2002, Rahul has been trying to apply The Toyota Way on the functioning of the Congress party. The Toyota way is a series of best practices used by the Toyota Motor Company of Japan. As Ramachandran explains “The Toyota Way spoke of making decisions slowly by consensus, thoroughly considering all options and then implementing decisions rapidly…The consensus process, though time-consuming, helps broaden the search for solutions and once a decision is made, the stage is set for rapid implementation.”
Such strategic ideas are being used for the revamp and promotion of internal democracy within the Indian Youth Congress and the National Students Union of India. Processes are being built to ensure ending the role of family connections in appointments and promotions in the two organisations.
But the big question on everybody’s lips has been when will Rahul Gandhi join the government? In a controversial interview to the Tehalka magazine in September 2005, Rahul Gandhi is reported to have said that he could have become the Prime Minister at twenty-five. Abhishek Manu Singhvi the then Congress spokesperson later specifically mentioned that Rahul wanted to state that he had not said ‘I could have been prime minister at the age of twenty-five if I wanted to’. Rahul hasn’t given any interview since then.
On another occasion Rahul said that “Please do not take it as any kind of arrogance, but having seen enough prime ministers in the family…it is not such a big deal. In fact, I often wonder why should you need a post to serve the nation”.
Rumors of Rahul Gandhi joining the cabinet in the next reshuffle have been doing the rounds lately. But as and when that happens Rahul Gandhi will have to let go of what seems like an unwillingness to be open.
People will analyse what he says. He may still not give interviews but as a minister he will surely have to make speeches, address meetings etc. His decisions will be closely watched. And the files he signs on will be open to RTI filings. In short, the mystery surrounding him will come down.
Things as they are currently will have to change. As Ramachandran puts it “In situations where he is required to speak, whether it is the Parliament or his elections speeches, he is uncomfortable. He is only now beginning to find his public speaking voice. For the most part, however, he has tended to avoid speaking in the public or to the press on issues. He comes across as a politician who is reluctant to share his views on issues of national importance or worse as someone who does not have views at all.”
The article originally appeared on www.firstpost.com on Ocotber 19,2012.
http://www.firstpost.com/india/rahul-reluctant-politician-who-was-once-afraid-of-the-dark-495947.html
(Vivek Kaul is a writer. He can be reached at [email protected])