Manipulation
March 29, 2011
It remains to be seen whether the top corporate executives of India's topmost conglomerates get prosecuted over these wrongdoings.Essar and ADAG are amongst the top 10 conglomerates in India with wide ranging operations with billions of dollars in revenues nationally as well as internationally.The Supreme Court has been instrumental in bringing this case so far as the government seems totally coopted by corruption.It has been frequently been castigated by the Supreme Court and has shamelessly defended corrupt bureaucrats and politicians.It remains to be seen how this 2G Telecom Case ends.If justice is done,then it may provide a new chapter to India's corruption ridden story till now.
March 19, 2011
Wikileaks has not only caused problems for the US by exposing its diplomatic cables but has caused consternation and embarassment in almost all countries.Leaders of a lot of countries have got exposed for their hypocrisy and doublespeak.In fact Wikileaks also contributed to the current unrest in the Middle East by revealing the extravagance and corruption of the ruling regimes in Libya and Egypt.The same script is now being played out in India as well where a leading newspaper the Hindu has partnered with Wikileaks in printing the sordid details related to India.
March 17, 2011
The Wikileaks Cable says that an Indian Official Nachiketa Kapur showed an Embassy Staffer Two Chests filled with millions of Ruppees in Cash meant for bribing legislators.This corruption scam is the latest in a series over the last 6 months or so.Already India's previous Telecom Minister is cooling his heels in Jail and crucial leaders of the ruling coalition have been questioned in the 2G Scam.Most of Indian corporate chieftains have also been implicated in the Telecom Scam with mudslinging in full flow.India's Foreign Policy is being made by such crass and corrupt leaders is a shocking revelation though nothing new.Earlier Jharkand state had seen its legislators convicted of accepting bags full of cash during the earlier Congress regime.So this means that bribing and making Indian Policies is not a new thing.India's Opposition Parties are making a huge hue and cry and demanding the PM's resignation.
March 8, 2011
Now a senior military officer of the Indian Air Force has been caught taking a bribe of Rs 20000 ( $450) for giving a favored spot to a company for displaying its fares at an exhibition.With their seniors reaping in the moolah through corruption,it has become acceptable to lower level officers to take bribes as well.The venality is spreading at a rapid pace though the Indian system.The Indian government despite being repeatedly rebuked by the courts for their inaction,remains shamelessly unrepentant.With the Indian Defense Forces now also being caught in the corruption tangle,India's external security has also become riskier.
March 8, 2011
It is impossible to buy tickets to cricket matches as all the tickets have been given by the officials to their cronies and colleagues.So if you want to buy a ticket to see a cricket match you can't do that.This has even led to the ICC saying that it will lead to bad relations with sponsors .Note the Minister has cropped up in a number of major scams like the Lavasa Scandal,IPL Scam etc.However his role as an ally supporting the government has made him immune to any prosecution.The Indian Police instead of booking a case against ICC corruption has hit out at fans angry at being denied to see a match as no tickets are sold.India is a Banana Republic except that the Supreme Court manages to occasionally shame the government and bring a culprit or 2 to book
March 7, 2011
Some of the airplanes make a rickety bus in Indian cities seem better while the service staff can be highly rude.Note most of these jobs are secure for life giving very little incentive for the Air Indian employees to improve their performance.As a result you can expect the worst.While a number of PSUs in India have improved tremendously after public listing and liberalization,Air India has seemingly got worse.The company makes massive losses and has to be bailed out by the government.There is total lack of accountability in Air India and little impetus for reform.The government ministers want to keep the Air India to keep milking money.A new panel has now suggest that the government of India keep giving regular billions to keep the airline afloat as it flies to unprofitable routes.Another stupid reasoning because these routes can be easily be auctioned out to the lowest cost private airline.Why the government needs a state owned airline is beyond me as it can easily commandeer the aircraft of private airlines in times of war etc. like the US does.But then how will corrupt ministers make money.
March 4, 2011
Corruption in India seems to be throwing up a new character everyday with almost all the major institutions - judiciary,executive,corporates,bureaucrats,media being tainted by it.The latest to join the corruption bandwagon is the US Food MNC Kraft specifically its subsidiary Cadbury.Note Carbury is one the biggest chocolate brands in India and has been present in the Indian market for a long time.The Corruption Charges are said to be in minor in nature as SEC is probing whether Cadbury gave bribes to set up a manufacturing plant in India.I would be surprised if they managed to set up a plant in India without giving a bribe.India's bureaucrats are notoriously corrupt and the venality has only increased despite numerous scams and scandals being exposed.
February 28, 2011
Indian Stock Markets are full of stock market manipulators and operators trying perennially to loot the small investor with the regulator SEBI mostly turning a blind eye.Pump and Dump IPO issues,circular stock rigging in small caps,corporate governance issues in even large companies are quite endemic.Investing in the Indian markets is a very hazardous activity for the small investor.Its not only the Indian companies but also large reputed MNCs who also keep pulling fast ones on the minority shareholders.The Cairn-Vedanta deal is a recent example where the promoters are rewarded at a higher premium in takeovers through legal shenanigans by large corporate groups.
February 28, 2011
The Indian Stock Market Regulator SEBI has been seen doing nothing against blatant market manipulation and stock rigging scams.Mid cap and Small Cap Stocks are havens for rigging by promoters and stock brokers as SEBI seemingly does nothing.Even in the primary market,junk IPOs rule the roost with even the recent correction failing to see crap stocks making a debut (Sudar Garmets,Fineotex,Omkar etc.).To anyone with a modicum of common sense it is apparent that such low quality companies could not raise money without manipulating the markets.However SEBI in its infinite wisdom remains blind to this.Stock brokers like Ashika,Dangi continue to operate unimpeded despite being indicted for scamming.Even reputed stock brokers are involved in underhand and shady dealings.However SEBI does nothing indirectly encouraging fleecing of small and retail investors.Not that big investors like Goldman,GMO are immune to fly by night operators as well.
February 19, 2011
The CleanTech and Green Theme is being increasingly used by fraudsters and fly by night operators in the stock market.CO2 Tech Ltd.,a Pink Sheets Company has […]
February 18, 2011
Note it would not be surprising if the allegations were true as the Indian stock market is a pump and dump heaven of IPOs with blatant manipulation by market operators.Price Rigging Rings are also present with mid cap and small cap scams happening with an alarming regularity.With Corruption touching a new high,the Supreme Court has taken over the investigation of the Telecom Scam Probe from the Government.This has led the CBI which is mostly a ruling party puppet to question some top billionaires and politicians.However it remains to be seen if some of the top fish are caught or just some small scapegoats are imprisoned.
February 16, 2011
In the season of scams and scandals when the erstwhile high flying mid cap and small cap names are getting battered for management issues,Sudar Garments has surprisingly come out with an IPO despite spotty corporate governance issues.Like so many of the junk IPOs coming out in 2010,this one too should managed to raise money through market operators.The modus operandi of these IPOs is mostly pump and dump where a few unscrupulous and shady brokers are responsible for managing the issue.With the stock market regulator SEBI refusing to crack down on these blatant manipulation,the pipeline of crappy small cap junk IPOs in the Indian stock market keeps growing.Thought that the current market crash would have removed them,but apparently not so as the junk IPO industry keeps growing stronger.This despite the more than 50% crash on issue day of Omkar Chemicals ( a junk IPO).Here are some of the notable negatives of the issue which has been given a 1 out of a 5 rating by rating agency CRISIL (not that the rating help the retail investors).
February 14, 2011
The Liberalization of India in the 1990s ushered in a new era of not only high growth as its industries and enterpreneurs were unshackled from the chains of License Raj but also an era of Crony Capitalism.The erstwhile business barons who maintained their fiefdoms through manipulation of licenses,now shifted their focus elsewhere.With new sectors of the opening up and growing exponentially unscrupulous promoters had the chance to mint billions.The bursting of the 2G Telecom Scam has bust the cozy Crony Capitalism Relationship.India's Supreme Court reposing lack of faith in the investigative powers of the government has personally taken charge of the prosecution.With powerful ministers,bureaucrats and billionaire businessmen involved,only India's Supreme Court has the chance to bring the guilty to justice.
February 14, 2011
This time India's Space Research Agency ISRO has come under the scanner for giving a sweetheart deal to a private company without bidding and tenders.This has resulted in another huge loss for the public treasury just like the Telecom Scam.The Space Agency comes under the direct authority of the Prime Minister and has further muddied the waters for the ruling coalition.With scam per day performance,the government is under tremendous pressure and losing its way in reforming the economy.Corruption in India is literally taking on Galactic Proportions and showing no signs of stopping.The Devas-Antrix Deal has also foreign investors which makes scrapping the contract for giving spectrum to Devas difficult.With India's Supreme Court breathing down its neck over prosecuting the guilty in the Telecom Scam,the government finds itself besieged.It can hardly afford opening another corruption frontier when it already finds its hands full with the existing scams.
February 10, 2011
India's Infrastructure Sector which was considered the ideal play on India's fast growing GDP and its huge infrastructure requirements long commanded nosebleed valuations.While realty stocks which are closely related to the infra ones had long collapsed after the GFC in 2008 ,the infrastructure stocks had retained their preeminence in the stock market rally.However end 2010 and 2011 has seen a vicious change in their fortunes.Stocks like IVRCL,IRB,Punj Lloyd,L&T,Gammon etc have seen their stock prices nosedive.The stocks have corrected far more than the broader market which has itself fallen more than 15% in 2011. The problems related to the infrastructure stocks are varied and they have converged for investors to totally lose confidence in this sector something akin to the realty sector.The list of the problems are
February 10, 2011
India’s Stock Market has been amongst the worst performing market in the world in 2011 due to a number of converging issues.While Inflation and Interest Rate […]
February 10, 2011
In 2010,the Indian Stock Market boomed for junk IPOs with a number of low quality issues raising money.Most of these stocks made no sense from the valuation point of view and were clearly being manipulated by stock market operators in nexus with their promoters.However,it was possible for retail investors to gamble and make money in IPOs by applying and selling on the day the issue listed.If you held on then massive losses were in store as most of the IPOs are trading at less than half of their initial price.Now it seems that even this tactic has gone out of fashion with another low quality IPO Omkar Speciality Chemicals going 50% below its issue price.Note the Indian stock market has falled by more than 15% in the last month or so,with many of the operator driven stocks taking a big hit.This means that these manipulated stocks have little support and would fall to their true value which is a small percentage of their issue price.Hopefully we won't be seeing any more these crappy junk issues for a long time.
February 7, 2011
Indian Stocks Market are a very difficult place to invest despite claims to the contrary which will be made by institutional investors.The all pervasive corruption present amongst most of the company managements makes bottom up stock picking a tough call.Even institutional "smart" investors like Goldman,GMO frequently get tripped by fly by night operators.Market operators blatantly manipulate stocks while the primary market is a "pump and dump" heaven.However the Indian growth story has fooled fund managers from outside to keep investing into the story.I have written in the blog numerous pitfalls present in investing in India.Some of these are coming home to roost as the Indian stock markets have fallen by more than 10% in 2011 despite other markets making new highs.Here are the top 5 Headwinds facing the Indian markets in 2011.
February 7, 2011
These 3 Indian companies DB Realty,Sun TV,Spice Jet have very little to relate to each other.One is a real estate company,one is one of the fastest growing media companies while the third one is one of the biggest low cost airlines in which Wilbur Ross was an investor.The common thread running through these companies is their association with a regional political party in India at the center of a massive billion dollar telecom scam in India.The leader of this party Raja was recently sacked from his post as the telecom minister and has now earned the dubious distinction of becoming the first minister to get jail time from his own government.Corruption Scandals have ruled the roost in the last 6 months frequently leading to huge stock price drops.Small Cap,Mid cap scandals,insider trading,bribery rings have all been documented by this blog which led to huge losses for investors.
February 7, 2011
Switzerland is one of the richest,most developed countries in the world hosting one of the biggest financial centre in the world and home to two of the largest banks UBS and Credit Suisse.Switzerland has been long been regarded as a neutral safe haven for money with the its currency Swiss Franc thought to be a risk averse store of value.Switzerland is known for its excellent banks which provide a high quality of service and safety.But the less publicized fact is why this small mountainous country attracts trillions of dollars in wealth from around the world.Its because of its secrecy laws which don't allow the name of the bank account holder to be revealed unless its proven that it is due to criminal misconduct.This Law has made Switzerland the safe haven for all kinds of criminal wealth including drugs,guns,prostitution,genocide etc.The recent spat between USA and Switzerland over the revealing of US tax evaders brought this anomaly into the open.Switzerland is the only large country to have such a law which promotes crime and tax evasion globally.
January 25, 2011
The Indian government has been rocked by a series of corruption scandals which have been documented in this blog.The scandals have not only touched the political sphere but also the stock markets.The scams have not stopped with new ones being reported almost on a daily basis but no convictions have happened.The corrupt and the guilty keep on going about their business as usual as the Indian ruling party thinks it can cure corruption with words.The Congress Party in its annual meeting had said that removing corruption would become its top priority with expeditious proceedings against public officials in graft cases.However the law has been criticized as having too many loopholes even before being passed.Even the actions of the government does not inspire much confidence.The Commonwealth Games which was a much publicized national corruption scandal has yet to see a single prosecution.The guilty officials have managed to all get bail with the Suresh Kalmadi the scandal in chief goes about his business as the powerful ruler of the Indian Olympic Committee.All the government has done is to remove him from the post of the Chairman of the Organizing Committee of the CG .Note this is already a dead body with the Games over a month ago.Note Kalmadi is a leading party member and despite his obvious corruption the government refuses to move against him.
January 25, 2011
India's Fossil Fuel Subsidies have led to a massive growth of the petrol and diesel mafia in the country.India gives subsidies on diesel,kerosene and cooking gas through its state owned petro/gas companies like BPCL,IOCL,HPCL etc.These subsidies have been given for a long time and have led to the growth of a parallel black economy in these products.They not only lead to capital misallocation but also to the massive illegal profits for a few.It is a well known fact that all petroleum pump owners adulterate petroleum ( which power most of the cars) with subsdized diesel and kerosene.This massive racket earns millions of dollars (if not billions) for a network of company officials,pump owners,government bureaucrats and politicians.The mafia is so strong and powerful that it thinks nothing of burning alive a senior police official.The racketeers are so rich and well connected that despite common knowledge nothing gets done about it.
December 9, 2010
Carbon Emissions Trading has always had profiteering built into it as private companies try to game a government regulated system for reducing GHG emissions.Carbon Trading which came into being after the birth of the Kyoto Protocol has got a lot of consultants and investment banks involved.While many of the schemes to earn carbon credits seem unethical they are not illegal.However a number of frauds have been unearthed in Europe which is the ground zero for Emissions Trading.The number of frauds have only increased since then with Italy suspending trading and 1.6 million carbon credits stolen from a Romanian carbon registry.The complexity and information asymmetry has always put the insiders in an advantageous position.The red tape and bureaucracy associated with the Carbon Trading Scheme ensures that common people and small business cannot take advantage of the carbon reduction scheme.
December 9, 2010
Indian Small Cap and Mid Cap Stocks got massacred today even as the rest of the global markets were up.There was no specific catalysts for the sharp sell off in the small cap space which was down more than 5% with a large number of stocks hitting circuit filters on their way down.FII and brokerage favorite mid cap stocks were the worst off declining by anywhere between 10-20%.Note India has seen a huge wave of scandals hitting the political and business spheres in the past couple of months.While Corruption is nothing new to India with India's Supreme Court calling "Corruption a Way of Life" ,the rising frequency has unnerved the investors.The Stock Market has also seen a number of scams hitting the news with well regarded stocks tanking by more than 50% in less than a week.Since its hard to explain all the scams that have been hitting India,I am listing out the blog posts explaining the scams here.
December 8, 2010
Now the Investigative Bureau (IB) has said that another stock market operator Rathod was colluding with promoters of agricultural companies like Ruchi Soya,Karuturi Global and KS Oils to rig stock prices.This was being done through various front companies and maverick investor C Shivasankaran was behind these moves.Note these companies have become the darling of brokerages and media being touted as the next big thing with vertical integration and acquisitions of agricultural land in Africa.The media hype that these companies got also makes one suspect that some of these firms were also involved in this scam.The Modus Operandi was again the same as followed by Dangi and Ashika group firms earlier.It remains to be seen if prosecution results in any jail time for any of these offenders.Generally nothing happens in corruption scandals in India as a SC Judge recently note that corruption had become a way of life.
December 7, 2010
Midfield Industries which is a small low quality company did an IPO around 3 months ago at a very expensive price that did not justify the […]
December 6, 2010
Here Honda which is a Joint Venture between Japanese Automajor Honda and the Hero Group of India is restructuring such that Honda will exit the JV.Note Hero Honda has been immensely successful over the last 2 years riding a vehicle boom in India.While other autos stocks like Mahindra,Tata Motors have risen a lot,Hero Honda has been the star with its leading marketshare in the motorcycle market of India.The terms of the deal in which Honda will sell its 26% stake in the company to the Hero Group is very damaging to minority investors in the JV.According to the deal proposed by the Hero Group and accepted in principle by Honda,the Hero Group will get the 26% at a sharp discount from its market price and in return Honda will get much higher royalties for the next 3 years.This is an open and blatant looting of the minority investors.Note the beneficiaries of this deal will be the promoters at the expense of minority investors since they will have to bear the burden of much higher royalties in the future.
December 3, 2010
Karnataka,the southern state of India is known for fostering the growth of the IT industry in India.Bangalore which is the capital of the state is known around the world for being the Technology Capital of India.The state is home to India's biggest and most famous companies like Wipro,Infosys and numerous other IT MNCs.However the state which was known for its Technology prowess is fast becoming the Land Scam Capital.Karnataka has seen numerous land scams as the states politicians took advantage of the appreciating real estate price in Bangalore and surrounding areas.With the sharp increase in purchasing power amongst Bangalore's citizens,the real estate prices shot up in a crazy manner.Real Estate in India is the worst sector in India in terms of Corruption and Real Estate Companies are known to be totally sleazy and corrupt.In fact most of the recent scams in India has one or more Realty Companies as the main prognosticator.
December 3, 2010
India's Stock Market Regulator has been hardly proactive in cracking down on stock market manipulation except for some inefficient scolding.It has banned some companies and a stock market operator for artificially rigging up stock prices through a nefarious scheme so that the stock could placed through QIBs at higher prices.Recently GMO,Goldman,Morgan and Fidilety got conned by a fly by night Indian financier who managed to place $100 million of his company's shares a hugely inflated price.A cursory due diligence by these high flying financial institutions would have shown his business model to a sham.Realty Investing in India is always a dangerous game with real estate firms involved in all sorts of corruption scandals.Akruti City whose shares had seen a massive rise some months ago has been implicated by SEBI for rigging up its share price with the help of a "stock market operator" Dangi.Some other firms like Murli Industries,Welspun Corp have been found to be part of this corruption game as well.Broking Firms like Ashika and Anand Rathi were broking for the Operator.Note SEBI has not done much except banning these firms.I would have though that these white collar crimes should be punished more stringently.Banning some entities without any jail time will lead to more and more of these stock rigging in the future.
November 26, 2010
India's new Corruption Scandal involving a Housing Loan Scam involving Bribes paid to India's top public bank officials has ensnared top notch financial institutions in the West as well.The whos-who of Wall Street got dazed by spectacular growth and profits of a 3 year old financial outfit in India which had been built on a foundation of lies and bribers.This Corruption Scam was started by a Financial Outfit called Money Matter Financial Services which started as a 2 person outfit.However through arranging of debt to big corporate houses by paying bribes to top officials of India's large government owned institutions such as Bank of Indian,PNB and others,the outfit saw its share price increase by 7 times.