Vector 1/15/2010 - Business tycoons as national leaders

How effective are business tycoons as national leaders? This question has become relevant because of the emergence of Senator Manny Villar as one of the two leading candidates in the 2010 presidential lections. Here is a slightly modified version of BBC News online profiles on two national leaders:

On Silvio Berlusconi: “For some Italians, Mr. Berlusconi’s success as a business tycoon is evidence of his abilities - a reason for him to run the country. For others, his businesses have done better out of the relationship than Italy has.”

On Thaksin Srinawatra: “Big business also liked him for his CEO style of government and his ‘Thaksinomics’ policies which created a new boom in the country where the Asian financial crisis of the late 1990s began.”

In a forum last week, Mr. Villar called attention to his managerial expertise and his track record as someone who can get things done, citing the fact that he has been Senate President and House Speaker. “What have you done?”, he asked his leading rival, Sen. Benigno Aquino III.

More than managerial expertise, Manny Villar has business acumen. Here’s how Forbes magazine reported on his dramatic rise to being number five in the lich of the 40 richest Filipinos in 2007:

“The year's biggest gainer is Manuel Villar, the Philippine senate president, who is worth $940 million, up from $110 last year. He got a big boost from the public offering of Vista Land & Lifescapes. Villar, who de-listed his C&P Homes and took public a new company, Vista Land & Lifescapes, which included previously private assets as well as those from C&P. The maneuver helped boost Villar's net worth by $830 million. ‘If you want to know the past, talk to an economist. If you want to know the future, follow the tycoons,’ says Manuel Villar.”

But, as the late historian Renato Constantino once wrote, “To know the present as past is already to know the future.” Indeed, how have Messrs. Berlusconi and Srinawatra --- both leading business tycoons in Italy and Thailand, respectively --- fared as politicians and national leaders?

As reported by BBC News, Mr. Berlusconi founded his own political party, Forza Italia - Go Italy - named after a chant used by fans of AC Milan, a champion football team that he also owns. A year later, in 1994, he became prime minister, forming a coalition with the right wing National Alliance and Northern League. His government collapsed after only seven months, following his indictment for alleged tax fraud. He lost the 1996 election to the left-wing Romano Prodi but regained the prime minister’s seat by 2001.

Throughout his political career, he has been dogged by accusations and law suits for alleged embezzlement, tax fraud and false accounting, and attempting to bribe a judge. BBC News reports that he has been acquitted in some cases and convicted in others but the verdict was overturned on appeal. He claims that these charges were politically motivated but he still lost narrowly to his perennial rival, Romano Prodi, in 2006 after heading the longest-serving Italian government since World War II. He was elected anew in 2008 but “despite appearing politically stronger than ever in the early part of his third term, Mr Berlusconi has recently been embroiled in a series of allegations about his personal life.”

On Thailand’s controversial former prime minister, here’s a capsule from BBC News:

“Thaksin Shinawatra is one of the most influential - and polarising - characters in Thai politics. But for a while, at least, it seems he will not be going home. A telecommunications billionaire, he was the first prime minister in Thailand's history to lead an elected government through a full term in office. He was enormously popular, especially among the rural poor, but also proved a divisive figure and was deeply unpopular among many of Bangkok's rich elite.”

After more than five years in power, he was ousted in a military coup in September 2006, accused of corruption and abuse of power. He has been in self-imposed exile since - mostly in London or Dubai. He faces a two-year jail sentence if he returns to Thailand, after being convicted in absentia on a conflict of interest charge. But even though he is out of the country, he still has a pivotal influence. His latest visit to Cambodia to advise the government there has stoked considerable tensions.”

Just like Mr. Berlusconi, Mr. Thaksin also bought a football club, Manchester City, when he went into self-exile following his ouster. Just like Mr. Villar, his political strength was built upon assiduous cultivation of support from the poor.

According to BBC News, “Poorer voters liked his offers of cheap medical care and debt relief, his nationalist platform and his contempt for the ‘Bangkok elite’. It was his family's decision to sell its shares in one of Thailand's biggest telecom groups, Shin Corp, that led to Mr. Thaksin's downfall. The early 2006 sale, which netted his family and friends $1.9 billion, angered many urban Thais, who complained that the Mr. Thaksin family had avoided paying tax and passed control of an important national asset to Singaporean investors.”

Interestingly, Mr. Berlusconi was also a real estate developer, just like Mr. Villar. With Edilnord, a construction company, Mr. Berlusconi established himself as a residential housing developer around his native Milan. Milano 2, comprising nearly 4,000 tasteful flats in a garden setting, was built on the city's eastern outskirts in the late 1960s.Not content with providing the residents solely with housing, 10 years later he launched a local cable-television outfit - Telemilano - a project which would grow into Italy's biggest media empire, Mediaset. While he accumulated TV stations, Italy's largest publishing house Mondadori, and the daily newspaper Il Giornale, Mr. Berlusconi's company Fininvest also took nearly 150 other companies under its umbrella.”

From the experience of both Italy and Thailand, it is apparent that conflict of interest and abuse of power that spawns corruption are the two main disadvantages of placing business tycoons in positions of high power. The fusion of political and economic power can, indeed, be a toxic combination. Business savvy and managerial skills may be used to amass, enlarge and consolidate political power and personal gain for the business tycoon cum national leader.