Adani is the latest and most spectacular example of the toxic effect of insidious influence-peddling conferences like Davos on global public good
There is a rush to pin the Adani Group fiasco on the supercharged nationalism of India’s Prime Minister Narendra Modi. He no doubt bears a hefty dose of responsibility. But those tut-tutting Western critics should turn the mirror on themselves. Western bankers and investors have enabled these get-rich schemes for decades. But a less scrutinized form of enablement has grown in importance as powerful business barons increasingly co-mingle personal objectives with state policy. The enablers are the organizers of a web of “thought leadership” conferences that stretch from the mountains of Davos, Switzerland, to ‘Davos in the desert’ in Saudi Arabia, with stops in between in London, New York, Aspen, and Washington, DC.
At first glance, it all seems harmless: self-important people grandstanding in exotic locales to massage their insatiable egos. These conferences claim to gather carefully screened “agents of impact” to convene to share-worthy ideas for human progress. In reality, they are little more than well-funded “experiential marketing events” organized and underwritten by the banks, consultants, technology companies, and sovereign states eager to promote the work and ideas of their clients, not the global public good.
It’s all a lot of fun until it all goes horribly wrong when a feted Davos champion turns out to be a financial scoundrel like Adani, whose inflated business empire now endangers the lives of billions of his fellow Indian citizens.
It’s all a lot of fun until it all goes horribly wrong when a feted Davos champion turns out to be a financial scoundrel like Adani.
Catnip for capitalists
Call it Davos capital. For it was at this Swiss ski resort that World Economic Forum founder Klaus Schwab came up with the ingenuous idea of offering the equivalent of an intellectual facelift to private sector titans who were no longer satisfied with just doing business in private board rooms. At first, they flocked to the ski town of Davos. And then to revitalized events organized by more traditional think tanks like the Aspen Institute, the Atlantic Council, or The Council of Foreign Relations, all of whom now wanted a piece of the action. The idea has become so popular that Saudi Arabian Crown Prince, Mohammed bin Salman bin Abdulaziz Al Saud (MBS), created his thought leadership oasis dubbed “Davos in the desert.”
At these sprawling global policy theme parks, “Davos capital” is coined, and aspiring global leaders are nurtured and celebrated as champions of innovation, globalism, and free markets. Davos participants, Schwab proudly proclaims, influence “the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas.”
Champions of goodness or con artists?
While that might make sense at a university debating society, it is downright dangerous when under the influence of the world’s richest people and companies. Adani is just the latest example of a too-good-to-be-true Davos tale. He kicked the year off traveling Davos with an impressive entourage of Indian businessmen and government officials. He did what so many CEOs do, scheduling round after round of 30-minute meetings where he was busy selling $2.5 billion in Adani stock. However, weeks later, a small New York research fund, Hindenburg, who clearly had not been at Davos, spoiled the party by releasing a mountain of information that painted a very different picture. Overnight, the man championed by Davos as committed to “growth with goodness” was accused of pulling the most significant con in corporate history.
So why do heads of state, titans of industry, and rising tech stars rush to these conferences? In an era of rising ESG expectations, these august conferences bestow an intellectual halo of “VIP of goodness” on participants that, in turn, is used by them to woo capital and support their “breakthrough” business ideas.
What investor was not impressed when Theranos founder Elizabeth Holmes was feted in 2015 by the WEF as one of 187 “entrepreneurial leaders under 40”? Last year, it also escaped no one’s notice that crypto wunderkind Sam Bankman Fried shared the Davos stage with Bill Winters, CEO of Standard Chartered Bank, one of the world’s most conservative banks. And it did not hurt Adani’s fundraising last month to be seen swanning around Davos pledging to plant 100 million trees and penning his LinkedIn ‘Davos Chats.’
For capitalist upstarts like Adani, Holmes, and Bankman-Fried, these convenings are crucial votes of confidence for investment schemes whose risk and valuations are too rich for more traditional sources of finance.
For capitalist upstarts like Adani, Holmes, and Bankman-Fried, these convenings are crucial votes of confidence for investment schemes whose risk and valuations are too rich for more traditional sources of finance. At these rarified temples of thought, the impossible becomes possible. In each case, the personal brand and the value of their schemes rose with the level of their conference profile.
Growth with badness
Sadly for them, all good things must end. With one false move, yesterday’s Davos rockstars become today’s pariah, quickly abandoned by the jet-setting conference crowd who now fix their gaze on the next shiny capitalist object.
But the collateral damage can be devastating. The Adani collapse is a massive blow to India’s ambitious green energy ambitions. Literally, billions of lives are at stake as India struggles with a rapidly escalating climate crisis.
But that does not seem to really bother the Davos crowd. Adani is the latest beneficiary of these pay-to-play conferences that promote ideas that, more often than not, are great for conference sponsors like McKinsey, ExxonMobil, or Saudi Arabia but are terrible for the planet. All too often, “great ideas,” be it “pragmatic” policies to extend the life of fossil fuels like those of Adani and Saudi Arabia or long-dated, capital-intensive “moonshot ideas” like carbon capture championed by Bill Gates and ExxonMobil crowd out really good ideas. Championing energy efficiency or carbon-absorbing regenerative grazing practices is of no interest to Davos patrons.
There is an even deeper flaw. Davos’ fallen stars, Adani, Bankman-Fried, and Holmes, are poster children for an era of unfettered capitalism where CEOs, not heads of state, are positioned as knowing what is best for solving the world’s problems. The past four decades have been a golden age of private financing where “alternative capital,” “venture capital,” “private equity,” or “emerging market debt” have replaced government policy and funding as critical drivers of global development. CEOs like BlackRock’s Larry Fink really do believe their wise allocation of capital makes them more effective leaders than heads of state. But all this comes with a heavy price. As the global response to the climate crisis has demonstrated, the primary beneficiaries of all this corporate wisdom are private interests, not the public good.
At Davos, skepticism is silenced until a mainstage star slaughters a journalist, triggers an emerging market crisis, or perpetuates a multi-billion dollar crypto scam.
These conferences also nurture a disturbing global cultural ethos where Sam Brandman Fried’s youthful, reckless genius is more celebrated than the ideas of American president Joe Biden, who, instead, is mocked for being too old, even though his $300 billion Inflation Reduction Act may be the most important shift in industrial policy shift in American history. But Joe and all his pro-union talk is not cool to a botoxed global elite who gather in puffed jackets and hiking boots. They want magic. They want youth. They wanted to believe a woman in a black turtleneck was the next Steve Jobs. Or that Bankman-Fried was the next Warren Buffet. They thought Adani could promote reckless coal projects and fanciful renewable energy schemes to guide India into the Climate Age. At Davos, skepticism is silenced until a mainstage star slaughters a journalist, triggers an emerging market crisis, or perpetuates a multi-billion dollar crypto scam. Until then, these thought Frankensteins will be wined and dined as change makers in a club where money and influence can buy anything.
It’s a small world
It all makes your head spin. In October, Bankman-Fried visited Dubai — just weeks before his Bahamas-based company went under — to secure needed funding from the cash-flush emirate. Last week when Adani suddenly found himself in trouble, he also turned to the emirate, this time Abu Dhabi’s International Holding Co. They were prepared to invest $400 million in Adani Enterprises as a last-minute vote of confidence until Adani pulled the plug on the capital raise. Earlier this year, MBS, Saudi Arabia’s Crown Prince, was busy meeting with the President of the World Economic Forum to consider new ways to underwrite these influence-peddling juggernauts. At the same time, Adani was busy exploring potential business partnerships with Saudi Arabia.
Is this what we call meritocracy?