THE interests of political parties and business groups often overlap in India and it is not uncommon to find politicians interfering in the affairs of businessmen, or vice versa. Much of the time, however, this kind of wheeling-dealing is done in a subtle manner, with very few outside a charmed circle being privy to the developments.

Last week, however, saw an embattled United Progressive Alliance (UPA) government being snared in a nasty corporate war between the two bickering Ambani siblings. With the Left parties, who were providing ‘outside’ support to the government over the past four years, deciding to withdraw crucial backing to the Manmohan Singh ministry (following its decision to go ahead with the Indo-US civilian nuclear deal), the Congress-led alliance was forced to seek the help of the Samjawadi Party (SP).

Amar Singh, the powerful backroom operator and close aide of SP chief Mulayam Singh Yadav, has two extremely close, non-political friends: Anil, the younger Ambani brother, and Amitabh Bachchan, the Bollywood superstar. The three ‘A’s – Amar, Anil and Amitabh – have formed a formidable troika in the world of Indian politics, business and entertainment.

In fact, the SP had backed Anil’s foray into politics, nominating him to the Rajya Sabha, the upper house of the Indian Parliament, on its ticket, in 2004. But Anil Ambani got disenchanted with politics and quit Parliament rather abruptly.

Last week, when the SP rushed to fill in the breach caused by the departure of the UPA’s Left supporters, it had a few demands of its own. They pertained to two crucial sectors, energy and telecommunications, segments that are dominated by Mukesh and Anil Ambani respectively.

The brothers Ambani – who were ranked by Forbes magazine as being the fifth and sixth richest individuals in the world, with net assets of $43 billion (Mukesh) and $42 billion (Anil) – have been squabbling publicly ever since the death of their father, Dhirubhai, the founder of the Reliance group.

Their mother forced both of them to sign a truce, but the tenuous ceasefire is observed more in the breach. The two brothers are now engaged in another nasty round of battle, involving the UPA government, the SP and South African telecommunications major, MTN. In fact, the very survival of the Indian government – and also the Indo-US civilian nuclear deal – now depends on the outcome of this battle.

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EFFORTS are now on by the top UPA leadership and other intermediaries to bring the two feuding brothers together and to make them smoke the peace pipe, even as pressure mounts from the SP.

The party’s articulate spokesman and trouble-shooter, Amar Singh, raised two crucial issues while offering support to the Congress-led alliance. Singh demanded the imposition of a windfall tax on private oil firms and the withdrawal of concessions granted to them. The biggest private oil industry player is Reliance Industries Ltd (RIL), controlled by Mukesh Ambani.

Last year, Anil Ambani had urged the government to impose windfall tax on private oil companies. His Reliance Energy is engaged in a fight with RIL over the supply of gas to its power plants.

But Mukesh, who is the RIL chairman and is opposed to the concept of windfall taxes, points out that private oil firms are governed by production sharing contracts (PSCs) with the government. “The higher the price of crude, the more the government gets in the form of profit,” he says. “Besides, all price increases also go back to the government embedded in tax.”

Incidentally, the Left parties have also been demanding the imposition of ‘windfall taxes’ on oil companies, instead of the government going in for an all-round increase in the retail price of petroleum products. The government is, however, reluctant to impose such a tax.

Singh has also targeted Petroleum Minster Murli Deora (besides of course, Finance Minister P. Chidambaram), hinting that the Mumbai politician is close to Mukesh Ambani – hence the reluctance on his ministry’s part to impose windfall taxes. The SP leader claims that he has taken up this issue as a national cause.

The other point raised by Singh pertains to telecommunications and if the government accepts his proposal it would hurt rivals of Anil Ambani’s Reliance Telecommunications (RCom). The SP has demanded that the government charge GSM (global system for mobile communications) players with over 6.2 MHz of frequency a one-time market rate.

He also wants the government to hike the revenue share for operators holding more than 8 MHz of radio frequencies. Both these moves would fetch the government about Rs150 billion in revenues, argues Singh. Anil Ambani (whose RCom is a dominant player in the CDMA – code division multiple access – segment) had made similar demands last year. And the Association of Unified Service Providers of India, which is the CDMA players’ lobby, has also written to the government on similar lines.

If the government accepts Singh’s demand, it would hurt leading telecoms players including Bharti Airtel, Vodafone Essar and Idea.

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THE fight between the Ambani brothers has also spilled over internationally. Anil’s RCom has been in talks with South Africa’s MTN group, and the two were discussing the possibility of a reverse merger, which could result in the creation of a new global telecom giant, among the top-10 in the world.

The MTN-RCom merger would have about 120 million subscribers in over two-dozen countries in Africa, the Middle East and India, making it one of the biggest telecom players in the emerging markets. The plan envisaged a share swap, with the Anil Dhirubhai Ambani group (ADAG), RCom’s parent, emerging as the largest shareholder in the MTN group; RCom would then be a subsidiary of the group.

However, Mukesh Ambani objected to the move, claiming he had the right of first refusal, in case RCom was to be sold to a third party. Mukesh warned off legal action, in case the two sides went ahead with the proposal. The Reliance group’s foray into telecommunications was initiated by Mukesh, but after the group split two years ago, the telecom venture went to Anil.

Bharti Airtel, India’s largest mobile phone service provider, initiated moves to acquire MTN. However, when the African group insisted that Bharti Airtel become its subsidiary, the Indian company pulled out of talks in May.

Anil Ambani then stepped in and started a 45-day ‘exclusive talk’ with the African group. But the talks stalled after elder brother Mukesh warned of legal action. Last Tuesday was the deadline and the talks almost failed, but fortunately for Anil, the Leftists withdrew support and the UPA sought the SP’s help in propping up the government.

The original deadline was then extended by two weeks up to July 21, though neither of the two parties gave an explanation for the extension.Both companies also informed stock exchanges in Mumbai and Johannesburg that “there is no certainty either on completion, or the timing of the said proposal.”

Earlier this month, attempts by RIL and RCom to sort out the issue of right of first refusal also failed. According to RIL, both brothers enjoy the right of first refusal in case any of their businesses are sold to a third party. The two brothers signed an agreement in 2005, de-merging their businesses and going in for a mutually acceptable settlement. However, despite the agreement, fights have surfaced frequently between the two groups.

Besides the dispute over the supply of gas from RIL’s Godavari basin in Andhra Pradesh, the two brothers have also fought over the contract for the construction of a major trans-harbour link between Mumbai and its satellite city. The Maharashtra government recently decided to hand over the project to its own agency, disgusted with the squabbling between the two groups.

With the UPA government also being dragged into this nasty fight, mediators are now desperately trying to hammer out an amicable solution to ensure lasting peace between the two siblings.