Pramod Mittal Arrested: Got Away in India, Caught in Bosnia
Updated on 8 August 2019 at 3.30pm to include response from Charles Russell Speechlys LLP
When Pramod Mittal was arrested in Bosnia on 24th July, it hardly caused a ripple in India, except to note that he is the younger brother of global steel magnate Lakshmi N Mittal. Although he was expected to remain in jail for a month, Mr Mittal and two colleagues were released on Tuesday, 30th July after paying a hefty €12.5 million. The release order also mandates an ‘insurance’ of €11 million deposited into a special account until the end of the proceedings.
He was held for suspicious transfer of nearly €11 million from Lukavac (Bosnia)-based GIKIL (Global Ispat Koksna Industrija d.o.o.) which is a partnership between Global Steel Holdings (GSHL) and Coke and Chemical Conglomerate (KHK) owned by the Government of Bosnia-Herzegovina. GIKIL was set up in 2003 and has over 1,000 employees. 
In May this year, Pramod Mittal got out of another sticky situation in India when his older brother Lakshmi N Mittal bailed him out by paying over $200 million owed to the State Trading Corporation (STC). This helped quash civil and criminal proceedings that had slowly wound their way to the Supreme Court of India.  
At a time when the bad loans of Indian public sector banks (PSBs) have soared to Rs10 lakh crore, it is worth remembering that Pramod Mittal’s Indian steel businesses have done their bit to bleed Indian lenders over the decades, until they were literally forced to sell their flagship company, Ispat Industries Ltd (IIL) to Jindal Steel in 2010. In fact, STC is probably the only case that was pursued assiduously all the way to the apex court.
Pramod Mittal, say lenders who knew him, had it coming. He loved to boast about his political connections and used them to the hilt. In my first meeting with him, decades ago, he freely dropped names of leading politicians across the world, who he claimed were close friends. 
He told me how a taciturn Indian prime minister used to visit him at home, although he kept a distance publicly. Over the years, he got leaders from France, Canada and the UK to smoothen the many wrinkles of his money-guzzling coal and power projects. The Indian media too has openly reported how powerful politicians, cutting across party lines, lobbied for the government to go soft on the money that he owed STC and defended him in court. 
A story that I remember well dates back to March 1999. IIL’s flagship Dolvi plant owed over Rs80 crore to the Maharashtra State Electricity Board (MSEB) which finally cut off power supply. Within hours, two powerful Maharashtra politicians (both now deceased) burnt the phone lines between Mumbai and Delhi to have the supply restored. 
This drama between the Maharashtra chief minister and his brother-in-law in Delhi was repeated dozens of times over the years, until Ispat’s outstanding zoomed to Rs247 crore by September 2001. Finally, one strong MSEB chairman put his foot down and forced them into signing a deal to make staggered payments based on an escrow account.  
If this was the attitude towards paying utility bills, imagine his attitude to bank repayments! IIL’s debts soared past Rs8,500 crore in 2002 after repeated restructuring and generous write-offs. In 1998, I had published details from confidential reports of lending institutions, which documented the diversion of hundreds of crores of rupees to purchase real estate and other investments. There was no serious effort to recover the money. 
Thanks to this style of governance, Ispat’s Indian steel operations were rarely profitable, even when steel prices were very high. For instance, all steel companies reported a turnaround in 2007 (after multiple rounds of restructuring); but Ispat Industries struggled with its repayments. 
At the same time, Mr Mittal had no qualms about flaunting his lavish lifestyle. In 2010, I wrote: “A detailed investigation will reveal how banks turned a blind eye to the fact that hundreds of crores pumped into IIL have probably funded the Mittals’ luxurious lifestyle overseas and extravagances such as acquisitions in Bulgaria, including a football club (both have failed or been sold). Some bank chairmen have even been guests at the Mittals’ palatial home in Mayfair (London) staffed by a valet, chef, chauffeurs and other help.” 
At that time, the entire shareholding of the Mittals in IIL was pledged with the lenders; Pramod and his brother Vinod Mittal had also given personal guarantees and pledged a Peddar Road property, valued at around Rs75 crore which was pretty high those days. 
Pramod Mittal had already shifted base to his $17-million home in London and established a global empire well before IIL was sold. According to a European banker, who has helped several steel magnates raise funds abroad, he used “Ispat Industries like a piggy bank.”  
The overseas business began with STC procuring raw material on behalf of Global Steel for its Philippines operations between 2005 and 2010. STC funded this through borrowings; but when Mr Mittal’s firm defaulted, it was left with the outstanding and accrued interest.
After The Philippines, Mr Mittal quickly started operations in Nigeria, Bosnia and, finally, Bulgaria by buying political influence in each country. In July 2013, IndustriALL Global Union, representing 50 million workers in 140 countries, said this in an article that is still on its website: “The Ispat Group, owned by Pramod Mittal, has a record of social destruction in several countries. Its actions in Nigeria, Libya and Bulgaria over the last five years illustrate a total institutional disregard for the company’s employees and their communities, as well as for the law and the national economies in which they operate. The record includes lengthy pay arrears of up to seven months, leading to numerous worker suicides. The company is also known for cannibalising equipment and exporting it.”
It further said that the immediate provocation for “increasing the squeeze on workers at GIKIL is the €92 million company debt. This artificial debt, however, was created through highly dubious business dealings by GIKIL, purchasing coal at an inflated price for a prolonged period from another subsidiary of the same holding company, Stenkom, owned by Global Infrastructure Holdings.”
Well, six years later, Bosnia has certainly managed to get Pramod Mittal to cough up a hefty sum in exchange for his release. One of the allegations against him is his link with ‘organised crime’; we need to see if that sticks during the trial. 
The European banker points out that this is not the first time that Mr Mittal has been embroiled in controversy. His Bulgarian adventure included the purchase of the huge, Kremikovtzi steel mill near Sofia in 2005. He went on to raise €325 million through a bond issue for an expansion programme; but the company was already making losses and soon defaulted on the bond payment as well. For a while, the socialist government kept it afloat; but it soon floundered.
In 2006, he also purchased CSKA, a top Bulgarian football club from Vassil Bozhkov, one of the richest men in Bulgaria, also known as a ‘gambling boss’. He hired a top Bulgarian politician as president of the club. Two years later, Mr Mittal had sold the club at a loss after it had accumulated large debts and was already on the path of a long decline. All this caused a lot of anger and local papers say that he purchased the club only to buy influence in a football-crazy nation. My banker source insists that there is trouble waiting for Pramod Mittal if he decides to travel to Bulgaria. 
His Nigerian operations were also controversial. In 2008, the Nigerian government cancelled its contract to two steel companies amidst allegations of ‘asset stripping’. Soon after, employees, mostly Indians with families, were left high and dry without salaries. 
At a time when Nirav Modi is doing jail time, a visionary VG Siddhartha was driven to suicide after finding himself in a massive debt trap, and the flamboyant Vijay Mallya has lost his swagger as he faces deportation, it is important to remind ourselves how much some industrialists have got away with because of corruption in public sector companies and nexus with political leaders over the decades. 
Editor's Note:
On Friday evening one Alok Gupta, ostensibly of Imaginem Media, has forwarded us a "press release" on behalf of GSHL, which claims that the arrest was in connection with a hostile takeover. The essence of the two page release is that the arrest of Mr Mittal, Rajib Das, member of the supervisory board and Paramesh Bhattacharyya, managing director/general director of GIKIL, were "the objective of hostile takeover by dislodging the present management and causing loss of value for its stakeholders and their investments."
Updated on 8 August 2019 at 3.30pm:
In an email communication, Charles Russell Speechlys LLP, which claims to represent Mark Wilson, Adrian Allan and Craig Mitchell in their capacity as the joint liquidators of GSHL, says, "... the Liquidators of Global Steel Holdings Ltd, confirm that the press statement referred to above was not authorised by them, and was not made by or on behalf of Global Steel Holdings Ltd."

Bijay Tantia
2 years ago
This company is group company of Ispat industries ltd, Balasore alloys Ltd, Gontermann Pipers India Ltd.
Bijay Tantia
2 years ago
I am holding thousands of shares of Ispat Profiles Limited. Since there Launching of company.Now i am paying maintenance charges for them in my D mat Account.There Pune factory is lying closed since long. Crores & Crores of Rupees are stucked there as non performing assets.Shares are now not even traded.
Is the Government of India or State Govt. don't any responsibilities to interfere in the matter, where lots of employees became unemployed and lots of shares holders money , Banks money ,Public money etc.are involved.
When the company started functioning, came out with an IPO, there Slogan was
What a game? Can it be played without.......................
2 years ago
Message for "Thomas Talbot" - You must either be a paid schill or PM himself writing under a nom de plume. The latter is probably correct because I know first hand that he never pays his bills ..He even stiffs lawyers. He is by now esconced in his Renaissance Court Mansion but will have to return to Bosnia for the trial or forego the 23mm or so in deposits. Neighbouring Bulgaria is following the proceedings carefully. They would love to have PM visit there. They have claims exceeding one billion.
Unless big bro steps in, which is likely, he will not be able to find lawyers to defend him in any action that could begin in a UK Court. Such action could have the unintended consequence of forcing Justice Jacobs to backtrack on his unprecedented USD 1.5 billion dollar World Wide Freeze Order directed at the Ruias of Essar. Just recently - a timely VTB intervention - persuaded a Cayman Court to reject an enforcement order requested by Arcelor. Their first setback. .Cayman - though a British protectorate - was unimpressed by Jacobs sweeping order.
The Ruias may yet have some life in them - albeit faint - in this fascinating battle of the tycoons..
Replied to PRAVIN BANKER comment 2 years ago
The biggest risk is the USA DOJ. They love this sort of thing. Under Obama a few years ago they pursued the NY Times Sulzberger Ochs Ziff Fund and fined them USD 310mm for bribery in DRC and are now actively pursuing Mozambique officials and credit suisse. AM has a huge footprint in the USA and some AM "antagonists" are begging the DOJ to "step in". Unlike in India, Baksheesh does not sway the DOJ. SC please note.
Replied to PRAVIN BANKER comment 2 years ago
Absolutely correct
2 years ago
For over 30 years all the ISPAT group stocks hardly gave any returns to their shareholders. Good that his sins are catching up with him. The business dailies too are not highlighting this arrest. Perhaps he has taken good care of the media.
2 years ago
I follow Sucheta Dalal from Harshad Mehta days. Keep writing. Good job.
You should also name the characters involved more closer to real names as
present young readers may not be able to get them correctly( subject to legal
Replied to Baskaran comment 2 years ago
Interesting you should mention Harshad Mehta. The man was a genius, al be it crooked. We were advisors to the late Kothari (Chennai) whose shares he had manipulated to over Rs 150 from under 20 where it languished for years. I had brought Soros to India. Prakash Shah was the Soros man for India. I had begged Pradip Kothari to sell the shares to Soros at these Harshad Mehta inflated prices. Pradip was tone deaf. Like the promoters who inherited fortunes he preferred to maintain his Chairman's privileges such as cricket club membership, iirst class travel etc. KICL eventually went bankrupt, his mother died of a broken heart (I admired the Lady) and he went personaly bust. That was December 1994. A few years prior I had a meetig with Manmohan Singh - then FM under Narasimhan Rao. Rao was famous for having bundles of cash placed at his feet. Jayalalitha preferred Diamonds as a womans best friend. I was there with Citibank to convince Rao to settle the ten billion dollar equivalent ruble debt to Russia in rubles - Citi would finance. Under Yeltsin the Ruble had collapsed and the settlement could have been made at 10 cents on the dollar. MMS approved but Rao declined - corruption in the armed forces forced the Defense Minister to object. Congress Party of the Gandhis.
Ratna Magotra
2 years ago
In depth reporting is educative in exposing the nexus among the corrupt who loot the public and live lavish lives. Pramod Mittal and his ilk must get no mercy and face the law.
narendra khabya
2 years ago
here pramod mittal is discussed not the policies of the bosnian govt.I, as a chartered accountant & an investor in indian equity market since last 30 years can very well vouch he is crook & corrupt to the hilt.why England is a safe heaven for such crooks?
Nurani Ramanathan
2 years ago
Superb article. A lot of articles that I am reading in money life are never / sparsely covered in the mainstream media. Has been an eye opener. Thanks and keep up the good work
Srinivas Sreeram
2 years ago
Indian businessmen were never known to be ethical or honest. They used the "democratic means of corruption" with connections in political circles, i.e. politicians always had a price for every illegal or corrupt activity cover up, which these businessmen leveraged & kept afloat.
I know this person when he put up the first plant in Kalmeshwar, Nagpur (Nippon Denro Ispat) know the actual costs & how much it was gold plated for the bonus that was promised to us for early delivery of the project never kept (1988 period).
He & his brother both Mittals are corrupt to the core.
It is time that whenever a businessmen buys or puts a new plant, he should reveal & place on record source of his money.
2 years ago
Keep up the good work. Did not know the background and our bought out media has been keeping all this under the wraps.
Any idea how they suppress such news items? Could be a great article in itself though it may lead to you being personally ostracised by the media crooks.
2 years ago
The story of crony capitalism in India eating away the economy goes long back right from 1970. It is a fact from my personal friends that Miittals in Nigeria were used to pay salary only after six months. There will be a ever running six months of arrears any time so that you do not leave the job. Employees who want to leave have to forgo the arrears in toto.
sundararaman gopalakrishnan
2 years ago
Excellent and eye opening article
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