The cookie crumbles

kpm basheer | Updated on April 17, 2014

Arabian nightmare P Mohamed Ali, who was a celebrated entrepreneur in Oman, now looks at an uncertain future kk mustafah

The man who built a massive fortune and reputation over four decades in Oman is now facing the prospect of jail time in that country

Back in the early ’70s, when the ‘Gulf rush’ in Kerala had just begun, a young man from Talikkulam village near Thrissur landed in the then undeveloped Oman.

With an engineering diploma in hand, P Mohamed Ali found himself in the right place, and more importantly, at the right time. Oman was on the cusp of a massive economic transformation. Sultan Qaboos bin Said Al Said, who took power in 1970, used oil revenue to build roads, bridges, seaport, airport, schools, hospitals and other infrastructure. The sultan, an ally of the West, had adopted free economy as his economic philosophy.

With an Omani sponsor and five employees, Ali founded Galfar Engineering and Contracting Company in 1972. He took advantage of the country’s feverish pace of infrastructure expansion. When his two Omani partners were jailed for political reasons, Ali single-handedly steered the small construction firm to astonishing heights.

Four decades on, Galfar is Oman’s largest construction company, with a turnover of over a billion dollars and employing nearly 25,000. Ali built Oman’s first private medical college and the first private engineering college, along with several other educational and training institutions. When Galfar became a public limited company in 2008, Ali took the backseat as vice-chairman (in 2011, however, he took over as MD as well as vice-chairman.)

“The Galfar brand is plastered across hoardings all over Oman, where it has built much of the country’s road network, as well as hospitals, palaces, ports and airports. Along the way, he has become one of the richest non-resident Indians in the world,” the Dubai-based Arabian Business magazine wrote. Ali’s personal net worth is an estimated $950 million.

In a country where Indians make up 15 per cent of the population, Ali is the richest Indian. He was conferred a major civilian award for his contributions to Oman. Last year, he was ranked 35th in a list of 100 most influential Indians in the Gulf region. In 2004, Prime Minister Vajpayee had presented him the Pravasi Bharatheeya Samman for his overseas achievements.

Fall from grace

But on January 11 this year, the masonry of Ali’s business empire crumbled. In a high-profile graft case, the Court of First Instance of Muscat sentenced him to a three-year jail term. Oman was shocked. The charge was that he had bribed Juma Al Hinai, a senior Finance Ministry official heading the tenders committee of the government-owned Petroleum Development Oman (PDO), to extend a major gas contract. During a raid on Al Hinai’s house in September 2013, authorities found Omani riyal equivalent to around ₹14 crore, a part of which had come from Galfar.

Ali denied the bribery charge, opted to appeal, and promptly resigned as managing director of Galfar. But worse was still to come. On March 9, the court sentenced him to 15 years jail on five counts of bribery charges and a fine equivalent of around ₹30 crore. His business development manager, Abdul Majeed Naushad, and Al Hinai were also handed long-term jail sentences and hefty penalties.

“I just don’t believe Ali was personally involved,” a former Galfar executive who now lives in Kochi, said. “Maybe, a senior company executive greased some palms to get things done in a country where contracts are often won using underhand dealings.”

“It’s a spectacular fall from grace for both Galfar and Ali,” Arabian Business commented. Immediately after Ali’s conviction, Galfar’s shares fell, but later recovered. Other companies, including many Indian firms are also being investigated for securing contracts using undue means.

Sources in the know believe that Ali was done in by a Turkish company that had missed the PDO contract. However, neither the Omani chairman of the company nor the European CEO have been punished. Also pertinent is the, the fact that Ali was not the MD during 2008-11 — the period related to the five counts of bribery charges.

What next for Ali, 63, who is now out on bail? People close to him say the verdict would be challenged in the Appeals Court and, if it fails, in the Supreme Court. Beyond that, he has the option to move a mercy petition before the Sultan. Ali’s friends and associates hope he will be discharged in the absence of any proof of his personal involvement in the bribing case.

Ali, who has already resigned from the Galfar board, has business interests in India too. His Mfar Group owns Hotel Le Meridien and International Convention Centre in Kochi; Westin Hotel in Chennai; and Mfar Construction in Bangalore. The convention centre, for instance, exemplifies Ali’s business vision. When he proposed it about a decade ago, it was labelled a crazy idea. Today it is venue de rigueur. Ali has also set up several charities in Kerala, working in the field of education and professional development.

Uncertainties loom

His status on the boards of many public companies that he serves in India is also unclear now. He is one of the founding directors of Cochin International Airport Ltd, owners of the country’s first greenfield airport built through the public-private-partnership route. According to the Companies Act, a person convicted by a court for an offence involving moral turpitude and sentenced to imprisonment cannot remain on a company board. A CIAL source said the company would decide on Mohamed Ali at its next board meeting.

Ali is the chairman of Cheraman Financial Services, promoted by the Kerala government. APM Mohammed Hanish, the MD, said the company was consulting legal experts on its options. Infrastructures Kerala Ltd has replaced Ali with his brother-in-law on its board.

Ali has weathered many crises. But this is all that matters now. The past is immaterial. The future, uncertain.

Published on March 21, 2014

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