Normally, Lord Bilimoria’s appearance in a business publication would be as remarkable as a bottle of Hildon water in a conference room. The founder of Cobra Beer has, in recent years, become omnipresent, banging on at every opportunity about the early days of the company, when he was delivering beer in a 2CV so battered that you could see the road through the floor.

But two advertisements in a recent issue of Management Today, one informing us that he would be a keynote speaker at the Chartered Management Institute’s 2009 National Conference, and another alerting us to the news that his book, Against the Grain: Lessons in Entrepreneurship, was available for purchase, caught my eye, because in the gap between them being placed and being published Cobra went into pre-pack administration.

Most of the company, which not long ago was touting itself around leading brewers with a reported price tag of £180 million, subsequently re-emerged under the ownership of Molson Coors, having been sold to the American brewer for £14 million, with Lord Bilimoria retaining a 49.9 per cent stake. But unsecured creditors, owed about £75 million, got nothing. Painful.

Something else quite painful: the way in which the business establishment failed to spot any problems. Here, in February 2007, we have the Press Trust of India reporting that “Bilimoria, one of the ten youngest members in the House of Lords, aims to make Cobra into a $1 billion retail brand by 2014”. Here we have Director magazine remarking in March 2007 that Cobra’s strategy “will almost certainly make [Bilimoria] a very rich man”. And here, just months ago, we have a trade publication reporting that Cobra reported a “20 per cent rise in beer volumes for its fiscal first half”, which “contrasts with an 8 per cent volume decline across the UK beer market in the last three months of 2008”.

No one seems to have picked up, until it was too late, that for all Cobra’s glitzy marketing efforts — it spent £40 million on marketing over 20 years — people rarely drank the stuff unless in Indian restaurants, that the company had never been profitable and that, in the year to July 2007, the latest for which accounts are publicly available, Cobra lost £13 million.

Indeed, the story of Cobra highlights a number of awkward truths for the business world, the first of which is this: business journalists rarely get the full truth about companies. The fact is that, despite all the awards we enjoy giving ourselves, with the exception of one or two individuals, we failed to predict almost all the crises enveloping us: the Ponzi schemes, the frauds, the credit crunch, everything in fact, including Cobra. Not that it’s our fault: journalists are only as good as their sources and if there’s one thing we’ve learnt this year it is that the people running businesses are as clueless as everyone else.

The second painful truth revealed by the Cobra debacle is that the business world is hugely susceptible to the influence of public relations. This is, in part, because business is overrun by PR people — and Cobra was more image-obsessed than most, announcing plans to sponsor this year’s Bafta awards as part of a £8.4 million PR and marketing drive only months before it went into administration — and, in part, because business is a bit boring and a good story, such as Cobra’s, gets seized upon.

I’m not guiltless in this respect. I was one of the hundreds of journalists who wrote positively about Bilimoria in recent years, penning a piece a decade ago that mindlessly cited growing sales without mentioning the lack of profits. Frankly, I should have realised when the company subsequently sent me some Cobra wine to try — a beverage that tasted like fermented mouthwash — that its attempts to diversify were going to get it into trouble.

Which brings me to a third painful truth revealed by the Cobra debacle: Asian entrepreneurs get away with more than most. I don’t mean this in a way to suggest some kind of politically correct conspiracy. But in my experience Asian companies don’t get subjected to as much critical analysis as they should be because: a) a huge number of Asian entrepreneurs are very successful and it is just assumed that they all are; b) the rags-to-riches tale is a seductive and romantic one; and c) people want to write about and hear about Asian entrepreneurs doing well, as it is one of the things that shows that multiculturalism and immigration can work.

As it happens, Bilimoria is not the most extreme example of the phenomenon. This unhappy accolade must go to Reuben Singh, who, as a schoolboy, founded Miss Attitude, the fashion chain, and was listed as the youngest millionaire by Guinness World Records, publicly fêted by Tony Blair, made a government adviser, dubbed “the most powerful man in Britain under 30”, had his picture hung in the National Portrait Gallery and named entrepreneur of the year at various awards ceremonies, but who in 2007 was unmasked as a serial fantasist, branded a “liar” by a judge and declared bankrupt.

Also, as it happens, Bilimoria is not your typical Asian entrepreneur, arriving in Britain with £5 in his pocket and subsequently building a huge company. For all the talk of delivering beer in a 2CV so battered that you could see the road through the floor, he comes from a privileged background. His father was a general in the Indian Army, he left India for England at the age of 19 to train as a chartered accountant, attended Cambridge and speaks with an accent that would make the Duke of Edinburgh sound chavvy.

But his ethnicity was undoubtedly one of the reasons he had a profile that far outstripped his achievements and one of the reasons he was so ludicrously overpromoted, being enobled and, among other things, being made deputy president of the London Chamber of Commerce and Industry, chairman of the UK-India Business Council and Chancellor of Thames Valley University.

sathnam@thetimes.co.uk

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