Thirteen billion dollars is a lot of money to make in a week. Very few men have done so, particularly in India. None though has lost that much in such a short period of time though there are some who have managed it over a longer time period. To that list of those whose fortunes have faced such sudden erosion was added the name of Gautam Adani in the week of June 14 when a few news reports raising questions about some offshore investors triggered a collapse in the share price of many of his group companies. While the veracity of the reports was immediately questioned, the debacle led to the second richest Indian losing nearly 15% of his personal wealth almost overnight.
Of course, that still left the tycoon, whose rise to the top of the wealth table over the last one year has been equally electrifying, with the small matter of $65 billion. Others, hit by similar cloudbursts in the past, haven’t been nearly so lucky.
Anil Ambani, for instance, who once boasted a fortune valued at over $40 billion, lost almost all of it in the next 10 years and by 2019 was telling a London court that his annual income was down to some £12.3 million. By then his ADAG group was neck deep in debt though coincidentally as Adani’s fortunes suffered a temporary setback last month, those of the younger Ambani, showed a welcome upturn.
Across the world, there have been other spectacular collapses including a few that coincided with that of the ADAG group. Irish property magnate Sean Quinn built a $6 billion family fortune to become Ireland’s richest man by 2008. But the financial crisis burst the Irish property bubble and Quinn’s business simply crumbled leaving him bankrupt. Iceland billionaire Bjorgolfur Guomundsson was another man who lost his entire billion dollar fortune, most of which was through his majority holding in the country’s bank Landsbanki, during the financial crisis.
But these were billionaires who lost their fortunes following a cataclysmic global or local event. Even John D. Rockefeller, possibly the richest American ever, is believed to have lost $700 million in 1929 dollars (adjusted for inflation that’s almost $10 billion in today’s terms) during the great depression.
On the flip side there were men like Bernie Madoff and Allen Stanford who bet their fortunes on fraudulent ponzi schemes and ended up losing everything when these came to naught. While Madoff passed away recently, Stanford is currently serving a 110-year federal prison sentence in the US.
Anil Ambani’s story, in fact, bears some resemblance to the rise and fall of Yasumitsu Shigeta, the Japanese billionaire who was valued at nearly $42 billion during the height of the dotcom boom at the turn of this century. His company Hikari Tsushin which had a string of mobile phone retail franchisees caught the fancy of the markets and its stock skyrocketed sending Yasumitsu’s net worth soaring. The business magazines loved this flamboyant young billionaire whose comments on the new order of business sounded so exciting.
Eventually in March 2000, Hikari Tsushin imploded under a series of fraud allegations. Its stock dived, taking the Nikkei down with it. By September the company’s stock had fallen to just 1% of its peak value with investors falling over each other to sell their holdings, leaving Yasumitsu poorer by $41 billion or the bulk of his wealth. His former partners filed charges claiming they had been kept in the dark about the firm's poor financial health and prospects. Shareholders, too, accused the 36-year-old Yasumitsu of fraud and incompetence while he blamed the weak global economy and the loss of confidence in dotcom stocks for his fall. But the real reasons were more familiar: dodgy accounting practices and inflated numbers.
Barely evading bankruptcy, he resurfaced in the business world over the next five years and rebuilt his business. Today, he’s back in the Forbes billionaires list, albeit with a much reduced net worth of $4.6 billion.
In the rarified world of big business, a billion gained or two lost hardly makes news. But when those numbers spike dramatically, as they did last month when Adani suffered a severe reverse, we are all reminded of the adage, what goes up doesn’t always stay up!
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