Lakshmi Mittal, steel mill millionaire

Lakshmi Mittal: Still one of the UK's richest tycoons

By BBC News Online's Mike Verdin

Poor Lakshmi Mittal.

The billionaire at the centre of garbagegate, the latest "cash for influence" scandal, has developed something of a habit of unintentionally tarnishing the Britain he loves.

When his son Aditya was married in 1998, Mr Mittal laid on a celebration at Calcutta's Victoria Memorial, an unusual choice given that it houses mementos of Britain's rule over India.

A minor riot ensued.

Now he has found his £125,000 support for Labour at the last election has prompted a major political row.

A letter written by Prime Minister Tony Blair within weeks in support of Mr Mittal's steel company, LNM, looks at best unfortunately timed.

Scrap factor

The affair is steeped in ironies, not least Mr Mittal's residence in London's chic Hampstead area, whose media-heavy populace has done so much to support the New Labour project.

Lakshmi Mittal - career profile

1970: Gained degree in commercial studies

1976: Establishes Ispat Indo, Indonesia

1989: Leases Iscott, Trinidad & Tobago

1992: Enters Mexican market

1994: Buys Sidbec-Dosco, Canada

1995: Buys Hamburger Stahlwerke, Germany

1995: Moves HQ to London

1995: Enters Kazahkstan market

1996: Buys Irish Steel

1997: Ispat International floated

2001: Irish Steel closed

2001: Buys Sidex plant, Romania

Even the name garbagegate is ironic given that it is precisely by ignoring rubbish that Mr Mittal has built a steel empire, and a personal fortune which at one time topped £2bn.

One of the key factors in the growth of LNM into a concern spread from Mexico to Kazakhstan has been to avoid sourcing iron from the higher-cost scrap sources favoured by rivals.

Another factor has been his championing of smaller steel mills, a strategy followed even since his days as a steel magnate elect in 1970s India.

It was then that Mr Mittal opened his first steel plants, in Calcutta - where he had attended university - and Bangalore.

Dynasty

He was following in the footsteps of his father, Mohan, who had set up the Ispat steel firm in the 1950s.

But where Mittal junior found the route to rewards of gargantuan proportions was in the international marketplace.

Blair wrote to Adrian Nastase, the Romanian prime minister

With the Indian government heavily restricting domestic steel production, Mr Mittal in 1976 opened a state-of-the-art mill in Indonesia.

His search for non-scrap iron to feed the thriving plant took him to Trinidad and Tobago, where he in 1989 took on Iscott, a government-founded steel firm which was losing more than $100,000 a day.

Within a year, after air-freighting in cutting edge technology, Iscott was making a profit.

And the stage was set for a decade of international expansion which saw Mr Mittal's LNM, through various Ispat-named subsidiaries, buy plants in Mexico, Canada, Germany, Ireland and Kazakhstan.

Billionaire

Connections with London were established in 1995 when the firm's headquarters were transferred from Indonesia to a city Mr Mittal still rates as the world's financial centre.

Still his star rose, taking Mr Mittal, with a fortune estimated at £2.2bn, to the number four spot in The Sunday Times' rich list for the year 2000.

It was to prove a high water mark. In the latest list published in March 2001, with his mills succumbing to an industry downturn exacerbated by global oversupply, Mr Mittal was ranked 17th.

In August, the Irish Ispat plant was closed, as losses topped 750,000 punts a month.

While Mr Mittal in November persuaded Romania's government to back his purchase of state-owned Sidex, the involvement of Mr Blair's support has left a sour taste to the deal.

Troubles ahead?

Not that a little political controversy is any reason why the deal need not help restore Mr Mittal's top 10 ranking in the UK tycoon league.

Indeed the buyout propelled LNM to fourth spot in the world steelmakers' league.

But problems may follow if the spotlight intensifies on Mr Mittal's empire, and on a network of high-profile friends including India film magnate Kishore Lulla.

(It was reportedly on a 370-foot yacht Mr Mittal rented for his daughter's birthday in 1998 that Mr Lulla came up with the idea for the Hindi film network Bollywood For You.)

Already media have uncovered more than the famously-private Mr Mittal might have liked - about his private jet, 21,000 square foot home, his continued status as an Indian citizen.

It was eight years ago that Mohan Mittal was quoted in The Economist as saying: "The day you go high profile is the day you begin to fall."

Holders of Ispat shares will be hoping the elder member of the Mittal dynasty is not also the one gifted with the most senior business brains.