At that point, Mauritius was an English colony, Riaz explains: “The economy was effectively dominated by a handful of Franco-Mauritian families: descended from the French who established Mauritius and who owned most of the land and big sugar plantations,” he says. Riaz’s great-grandfather had two sons: “Although my grandfather was the younger brother, he very much led the business which he expanded into industry in Mauritius and the Indian Ocean region: he bought a cement factory in Madagascar and took the business into a variety of what used to be called ‘export substitution industries’.”
Riaz explains that because Mauritius was an island which depended on imports for everything, the Government encouraged some of the more established business groups to start manufacturing. “We got into manufacturing, initially making soap and laundry products, set-up a Pepsi bottling plant and a (then) joint-venture making fats; butter and spreads, as well as still importing and distributing rice,” he says.
In the 1970s, the company was among the first pioneers to launch a textile manufacturing business in Mauritius. “In the late 70s/early 80s, Mauritius became a hub for manufacturing textiles, starting with knitwear,” explains Riaz. “Mauritius benefitted from having no quotas into Europe or the USA and the Mauritian Government set-up, what was then very forward-thinking, Export Processing Zone (“EPZ”) – in the UK you would call them “free ports” – where you could set up a manufacturing business exempt from taxes and other duties for ten years. It became the family’s biggest business by turnover for a number of years until we launched the first mobile company in the Southern Hemisphere, which became operational in 1987,” says Riaz.
After that the family business expanded and diversified into many different sectors, but up until the launch of the mobile business, the company was always family run.
The importance of good governance
“The mobile company was a joint-venture with an international company, so professional management was hired,” says Riaz. “We then set-up a joint-venture with Canal+, the French broadcaster, to set-up a satellite television business which was also professionally managed. Previous to that we had a joint-venture with Elf, which became Total, in downstream oil and gas, which was also professionally run. By accident more than by design, these businesses became the biggest businesses and they were all professionally run whereas the historical businesses, the industrial, FMCG businesses, were still managed by family members.” he explains.
According to Riaz, there were a couple of major pain points in the family. “The textile company was set-up by my uncle who was a great visionary, strategic thinker, but he brought in his two sons straight from university, neither of whom really wanted to be involved in the business, and who didn’t have any real work experience. He gave them responsibility beyond their competence and experience and whilst they worked hard, it was very challenging. Because of this, and a variety of other reasons, the textile company alongside other textile companies in Mauritius, started to have financial difficulties,” Riaz reveals. “My uncle believed the company could be turned around, while it was pretty clear that it was beyond saving. It was a big business employing 3,000+ people and he convinced the family to give him another chance.
“At the same time, we had invested, as founding shareholders, into what became one of the first mobile operator in India, called Bharti Airtel,” Riaz continues. “We sold most of our shares in what became the largest mobile company in India to fund that attempt, but the textile company went “bankrupt,” he adds. “It was a real tragedy.”
“A few years after that happened, I wrote a letter triggered by those events: that we sold out of what became a massive company to fund a company that then went bankrupt, all because we wanted to avoid conflict,” recounts Riaz.
“I emailed that letter to every single member of the family and it said things that had never been said, or written down in the 100 year history of the company. I used words like nepotism and destruction of shareholder value – not very diplomatic or tactful!” Riaz exclaims. “My father told me not to do it, my cousin, who is now the CEO, told me not to do it and some of my relatives didn’t speak to me for a few years! It was very badly received by most, particularly those that worked in the family business, but well received by the minority shareholders, especially the women who didn’t work in the family business and didn’t have a voice,” he says.
“Avoidance of conflict has been a theme throughout the family: it’s probably the reason we’re still united after four generations, but it has also meant that a lot of tough decisions are avoided,” Riaz reveals.
“I actually don’t mind conflict at all, sometimes I relish it, so I’m very different from most of my family in that respect!” he adds.
“Without being immodest, I do believe that letter started discussions, first within the individual families and then eventually within the wider family, about issues such as governance, accountability and dividend payments.” Riaz says.
Towards better governance
About twenty years ago the company appointed two brothers who were family business advisers from Kenya. “We started what has now become a tradition, of yearly family meetings. We meet once a year in a hotel with the first day as effectively a shareholder meeting, and then there are family events and bonding etc, explains Riaz. “The relationship with the Kenyan advisors didn’t last and after a few years we started working with Professor Randel Carlock, Emeritus Senior Affiliate Professor of Entrepreneurship and Family Enterprise, and Christine Blondel, Adjunct Professor of Family Business, from INSEAD, who ran a series of workshops,” Riaz explains.