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Just another billionaire?

Can Najib Mikati replicate his considerable business success in the bedlam of Lebanon’s boardroom?

by Executive Editors

If it is true that one can study the heart and mind of an artist through examining his work, it is equally true that one can learn about, and perhaps understand, a tycoon through his business.

The most general public knowledge of Najib Mikati, Lebanon’s prime minister designate as of January 25, 2011, is that he made a fortune as a telecommunications entrepreneur.

The Mikati corporate family, with older brother Taha at the helm, began their succes in a modest and traditional Lebanese industry — construction — but things started to take off in the 1980s, when the siblings invested in telecommunications and established Investcom Holding.

As the face of Investcom, Najib Mikati rose to prominence when the company became the junior partner to one of Europe’s best known telecommunications firms, France Telecom. The joint venture, in which Investcom held one third, was in ownership of the incongruously named FTML, a Lebanese company that has been defunct for some years now. In its heyday, however, FTML operated the Cellis mobile phone network. It was an effective money-making machine and key enabler in Lebanese economic growth.

A growing wealth

The FTML joint venture could only come into being with the support of the Lebanese prime minister and telecommunications minister at the time of its creation in 1994/95, the legendary Rafiq Hariri.

Investcom’s value was estimated at $30 million by the late 1990s, according to information on the website of parent company, M1 Holding. By 2000, Investcom and its subsidiaries had projects across the Middle East and Africa, in Ghana, Guinea Bissau, Benin, Syria, Liberia and Yemen, with Cyprus added in 2003. A decade after the establishment of FTML, the Mikatis’ telecommunications empire had expanded to five million subscribers in the Middle East and Africa.

After a profitable initial public offering in London and Dubai in October 2005 and a $5.5 billion cash-and-shares-transfer deal with South African telecommunications operator MTN in May 2006, the Mikatis were bona fide billionaires and emerged on the Forbes list of the ‘super-rich’ at $5 billion, or estimated net worth of $2.5 billion each.

They were no longer running telecoms in Lebanon but M1 Holding owned ventures such as travel and aviation, oil exploration, a finance company, a management company, luxury fashion chains here and there and real estate in countries including the United Kingdom, United States and Lebanon.

According to business information provider Zawya, M1 Group interests presently include a Luxembourg-domiciled oil exploration company called Avante, whose website identifies Columbia and Mexico as countries of operations, Swiss airline Baboo (formerly Flybaboo) and 10.33 percent in MTN, through the group’s Dubai arm, M1 Limited.

At the time when M1 and MTN structured the merger deal in April 2006, the cash component was said to be valued at more than $3 billion and the MTN stock was quoted at less than $10 per share. According to data from the Johannesburg Stock Exchange, MTN presently has 1.88 billion shares outstanding and a market capitalization of $33.2 billion, of which M1’s 190 million shares are worth $3.4 billion. The MTN stock traded at around $18 per share in January 2011.

While the MTN shareholding alone justifies the billionaire label for M1 and its four current family owners — Taha and Najib and their respective eldest sons, Azmi and Maher — other M1 business forays are harder to assess in value and some may not have been as profitable. Baboo, essentially an Alps-hopping service with a fleet of two aircraft, appears not to have fulfilled expectations. Neither Avante, nor the Swiss carrier, nor Faconnable, the French fashion brand which M1 acquired in 2007 for $210 million, have been releasing results for public scrutiny, making the group’s total economic worth and performance hard to gauge. 

The businessman through his business

However, real business success is no more about being a billionaire than art is about a sculpture’s price tag in a Sotheby’s catalogue. In this sense, success in art and business are both about making a lasting impact and about the authenticity of style. It is largely immaterial how rich Najib Mikati is from the first billion to the second or third. But what can be said about his style of business leadership or deduced from his corporate successes and failures?

First, the picture is one of keeping things in the family. M1 is a family business, owned entirely, but to undisclosed percentages, by the brothers and their sons.

The appearance of family unity and coherence are carefully maintained. The reporters are kept at bay and the laundry, if any ever got dirty, is kept in the basket. In this regard, the Mikatis have much more in common with the Hariris than with other politico-economic families such as the Berlusconis, the Bushes or the Sarkozys.

The downside of the family business’ gleaming facade lies in shortfalls of transparency. Mikati stressed that he did not retain business interests in Lebanon when assuming the premiership in 2005, but one would wish for more disclosure on holdings and goings-on related to the family empire. 

Another practice of the Mikati family, which also has parallels to the Hariris, is early grooming of the sons to take responsible roles in the family enterprise.

Najib Mikati, by way of the Investcom business success, gives the impression of a mind that is able to see a need and turn it into an opportunity even if the risk might scare others, and do so to considerable personal advantage. From the way in which Investcom and M1 have evolved there is, moreover, reason to assume that as a business leader he resisted the impulse to micromanage and instead developed the ability to entrust and relinquish control, to a notable degree. 

What seems evident is that the Investcom philosophy attributed priority values to the corporate interests that were conducive to Mikati family interests. As many of the M1 and Investcom decisions were presented to the public through the second-generation executives, Azmi and Maher, while at the same time some of the decisions represented by Najib Mikati were reportedly driven by his older brother, Taha, a twofold picture suggests itself wherein Najib Mikati exhibited no fundamental objections to either frequently remaining in the background for the sake of family interests nor accepting a frontline position in representing interests that were said to have been decided primarily by others. Fear of risk, by the way, was not part of the Investcom mindset at any time.   

More Rafiq than Saad

The names Hariri and Mikati stand for two Lebanese families whose fortunes have risen in the second half of the 20th century in cities where the communal leadership had for many generations resided in the hands of other, more entrenched clans. Although he was born half a generation later than Rafiq Hariri, Najib Mikati’s ascent and ambitions have perhaps more points of similarity with the elder Hariri than between Hariri father and son.

When Najib Mikati walked into Lebanese politics as minister in the 1998 cabinet of Prime Minister Selim Hoss, he did so with presence and personality but not with an overwhelming aura of charisma.

When he was appointed prime minister last month, a German news magazine falsely labeled him “Hezbollah’s billionaire.” He is “not Hezbollah and not Iran,” was the perspective offered more aptly by an editorial writer at the Israeli daily Haaretz.

The historic track record of Hezbollah shows an unbroken political priority on protecting its assets — its people, security and military hardware — at any cost.

In matters of policy making, the organization and its political wing have demonstrated no inclination to impose changes, and they have also expressed few perspectives that would suggest ambitions to do so.  

Community leaders from his hometown who say they know Najib Mikati said that he foresees an opportunity to found a political heritage for his family and his northern city of Tripoli, long neglected by the capital. 

He may want to bank on his business experience of successfully navigating concessions to formal and informal partners while still achieving his own objectives. However, Mikati is likely to find that every move of his will be scrutinized much more closely, on the basis of a host of opposing agendas, than any past business decision.

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Executive Editors

Executive Editors are the collective voice of the magazine. Stories written by Executive Editors are the culmination of discussions, brainstorming, research and information-gathering by our editorial team. Over decades, our editorial team has applied a blend of seasoned expertise and a discerning eye to bring you insightful and engaging and substantive reads that eschew sensationalism.
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