How did billionaire Lakshmi Mittal's brother Pramod go bankrupt?

When it comes to London’s richest men, they don’t come much wealthier than Lakshmi Mittal.

With a fortune estimated at nearly £7 billion, the gods have been smiling on the tycoon who built his riches buying and building steel factories around the world.

Indeed, when he was born in India his parents named him after Lakshmi, the goddess of wealth.

Fittingly, 70-year-old Mittal lives in one of the most expensive properties in London on what Foxtons describes as one of the priciest streets on the planet – Kensington Palace Gardens.

Foxtons should know – its billionaire founder Jon Hunt is one of Mittal’s neighbours, living just a few doors down from Mittal’s £117 million pile.

On the far end of Hyde Park lives another Mittal – Lakshmi’s younger brother Pramod. His pad – off Park Lane and reputedly bought by his father long ago - is big but chintzy. A more modest affair, it is valued at “only” £17 million, but still has the obligatory valet, chef, chauffeurs and the rest.

Pramod, 63, has also lived the life of luxury thanks to the family steel business, but with far less success.

This week, at the High Court in the Strand, a judge ruled him bankrupt.

All his assets around the world are now the property of trustees acting on behalf of his creditors.

The man whose name means “happiness”, is left owing a debt of nearly £140 million.

Having once boasted of being friends with the world’s political elite, he has spent this week explaining himself to the grey bureaucrats of the Court’s official receivers’ office.

It seems a century away from 2013 when Pramod splurged a reputed £50 million on his daughter Shristi’s three-day wedding in Barcelona. There, one of the city’s finest public museums was taken over for the event, musical fountains played and a two-starred Michelin chef cooked for 500 guests, served by 200 butlers, cooks and chefs flown in for the occasion from India and Thailand.

It was a big, fat Indian wedding to beat all big fat Indian weddings. Except, perhaps, for the week-long extravaganza Lakshmi threw for his daughter Vanisha in Paris nine years earlier. That one included a ceremony at the Palace of Versailles, a private concert by Kylie Minogue and fireworks at the Eiffel Tower.

While Pramod’s bankruptcy shocked London’s super-wealthy set, for those in the City who know him well, he had it coming.

Sources in the London steel trading industry who dealt with him over many years say he had a reputation for running up debts in his business dealings.

One former executive at City trading empire Stemcor says: “Our legal department was regularly having headaches with Pramod.”

Another industry source says: “Pramod was always driven by this desire to be as successful as his brother. But when your brother’s Lakshmi Mittal, that’s a big ask.”

This person adds: “Many people say he’s stupid. He’s not. He can find good deals but just can’t execute them well, and that has got him into lots of trouble.”

It is Pramod’s debts with Stemcor which are at the crux of his current troubles.

The family business of Labour Party doyenne Dame Margaret Hodge MP, Stemcor itself got into major financial difficulties after the financial crisis and was totally overhauled in 2015. The shares of Hodge and her family, the Oppenheimers, were wiped out and debts owed to the old business were hived off into a new company. It is this firm, Moorgate, that demanded Pramod be declared bankrupt.

Moorgate has been trying to get Pramod to pay up for a debt that he had guaranteed for a Bosnian firm called Gikil, which made coke used in steelmaking. The London courts first approved its claim for $167 million in 2017 and Moorgate has been chasing him for payment ever since. Some close to the situation say the two sides have come close to settling numerous times for far less money but each time Pramod has moved the goalposts.

Some say Lakshmi and the family had come close to a deal to rescue him earlier this year but pulled out when covid-19 hit their finances.

Observers of the case say that the Moorgate team had hoped the embarrassment of having a bankruptcy in the family would force Lakshmi to bail his brother out.

Such a strategy would make sense. As one City executive puts it, people sometimes did business with Pramod in the hope of getting an introduction to the real money fountain – Lakshmi. Now, the creditors are doing the same thing but with the bankruptcy courts, they speculate.

It wouldn’t be the first time Lakshmi stepped in. Only last year, he reportedly stumped up $200 million to get Pramod out of trouble over debts to India’s State Trading Corporation.

That was just two months before Pramod was arrested and jailed in Bosnia in a fraud probe also related to Gikil. He was released on €1 million bail and the investigation remains ongoing.

There have been other clouds over his business dealings. He previously bought the Bulgarian football club CSKA but two years later sold it at a loss after running up large debts, while the Industrial Global Union has criticised his businesses’ behaviour in Nigeria, Libya and Bulgaria. One trader says Pramod did not have Lakshmi’s sensitivity to the locals in the countries he operated in.

When asked about all these situations, Pramod described the claims through his lawyer as “baseless”. He says he will appeal the bankruptcy before a 10th July deadline.

It is often reported that the two brothers are at loggerheads or that Lakshmi has disowned his sibling, but friends of Lakshmi say that is not true. “There was friction when Lakshmi decided to break off from their parents’ family steel business decades ago, but that was patched up long since,” says a Lakshmi ally. Not everyone agrees, however, with another friend saying the relationship remains rocky.

So, how, exactly, did their fortunes come to differ so greatly? Primarily, analysts say, it was due to Lakshmi’s superior dealmaking cunning and aggression. Nicknamed the Carnegie of Calcutta after legendary steel baron Andrew Carnegie, Lakshmi started off in the family business but upset his father and brothers by doing his own risky steel deals around the world.

Then, in the mid-1990s, he split his interests off into his own separate operation. The two halves of the extended clan did not speak for two years, and Lakshmi moved his family to London. They started off at one billionaire’s row, The Bishops Avenue in Hampstead, then moved to another, Kensington Palace Gardens. There, according to the biography Cold Steel, rival tycoon Guy Dolle sneered: “His house is so big you need to catch a bus to visit the bathroom.”