Who is Australia’s most powerful billionaire?

Having piles of money is one thing, but having real power is not hard-wired into the DNA of the mega-rich. We sort the truly powerful from the mere filthy rich.

Who is the most powerful billionaire in Australia? Not the richest, the smartest or the most entrepreneurial, but the billionaire with the most clout over their industry, community and financial markets.

It’s a great question, and one that Forbes magazine has valiantly tried to answer by compiling a list of the 20 most powerful billionaires in the world.

To compile the list, the team at Forbes “created a formula based on the size and scope of the industries billionaires control, the political influence they exert and the fortunes they hold”.

Exactly how these various factors are weighted isn’t clear, but it appears Forbes has focused on how many people the billionaire employs, how dominant a position they hold in their industry, and their ability to move financial markets. And you get extra points if you control an army.

On top of the list is New York mayor Michael Bloomberg, who also owns 88% of the financial information and services firm, Bloomberg LP. Not only does he have control of city with eight million inhabitants, 311,000 city employees and an annual budget of $US60 billion, but Bloomberg financial information screens are a fixture in nearly every financial services company in the world.

Bloomberg narrowly tipped out Silvio Berlusconi, the Prime Minister of Italy (population 58 million, GDP $3.7 trillion) and owner of conglomerate Fininvest, which controls most of Italy’s privately-owned television channels. He also controls an army of 112,000.

Third is Indian steel baron Lakshimi Mittal, whose owns the world’s largest steel maker ArcelorMittal, which accounts for 10% of crude steel production.

In fourth place is investment guru Warren Buffett, the world’s richest person and probably the only investor who can actually move markets around the globe when he makes a decision to buy or sell. US President Barack Obama has also asked Buffett for his advice (and a donation) during last year’s election campaign.

In fifth placed is Vagit Alekperov, president of Lukoil, Russia’s largest independent energy company and owner of the world’s second largest oil reserves. He’s also a good friend of Russian Prime Minister Vladimir Putin.

Other notable entrepreneurs on the list include Mexican billionaire Carlos Slim (who recently grabbed a stake in the New York Times Company); Microsoft founder Bill Gates; Hong Kong tycoon Li Ka-Shing; and Sergey Brin and Larry Page, founders of search engine giant Google.

Oprah Winfrey also sneaks on to the list in 20th spot. “Her nod can turn an unknown book into an overnight bestseller,” Forbes says.

Forbes also solves the question of Australia’s most powerful billionaire by ranking News Corporation executive chairman Rupert Murdoch at position 14, thanks to his “dizzying array of TV stations and print publications around the globe”.

Of course, Rupert is actually a US citizen (and is thus excluded from BRW‘s Rich 200 list) but his influence over Australia is still incredibly strong thanks to News Corp’s network of media properties.

But who might be his challengers?

Frank Lowy would have to be one contender. He holds the title of Australia’s richest person, employs around 5000 people and nearly ever Australian would visit one his shopping centres every year. He’s also chairman of the Football Federation of Australia, which extends his influence into the world of sport. Lowy has also helped build his community power by funding organisations such as the Lowy Institute think tank.

After that, the field thins out. Richard Pratt dominates his industry and employs 5600 people around the world, but his power has been blunted in recent years by a cartel controversy.

Gerry Harvey is perhaps our most influential retailer, and is widely quoted on nearly everything to do with the economy, but he is more prominent than powerful. Andrew Forrest and Gina Rinehart are important figures in the mining sector, but their influence is relatively small compared with industry giants such as BHP Billiton or Rio Tinto (although Twiggy Forrest gets extra points for being able to shift a share price with great ease).

From what we know of the Forbes ranking style, media barons should score well in any power ranking, which puts Fairfax Media shareholder John B Fairfax and Seven Network executive chairman Kerry Stokes clearly in the frame.

John B owns about 14% of Fairfax Media, which owns The Age, The Sydney Morning Herald and The Australian Financial Review, which would be read by most financial participants each morning. Fairfax Media also has some of the country’s most popular websites and the Southern Cross radio network. Of course, how much power John B has over this company is debatable, given he is not even chairman.

Kerry Stokes is probably jostling with Frank Lowy for the title of Australia’s second richest billionaire, behind Rupert Murdoch. His Seven Network is clearly leading the ratings and he also owns a substantial slice of The West Australian, that state’s only daily newspaper. Like Lowy, his influence on sport in Australia is strong thanks to Seven’s control of broadcast rights for the AFL and other sports.