Scam
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 14, 2010
India has been plagued with a large number of scams and scandals in recent days.Not that it has made much difference to the functioning of politicians and bureaucrats.India's Agriculture Minister was blatantly defending favored business interests while India's PM seems more interested in Big Business Privacy rather than tackling corruption.The Stock Market after falling for a couple of days due to increasing number of stock market scandals,has returned to normal.However the Indian politicians keep shocking the country with even more and more brazen acts of corruption and nepotism.
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 8, 2010
The Tata Group in India is known for its high standards of corporate governance and ethics.In an environment where Big Business openly colludes with politicians/bureaucrats to blatantly loot and plunder,the Tata Group has stood out for its success and reputation of honesty.While Stock Market Scandals and other Scams happen with great regularity,Tata have generally stayed away from the mess.The Group's Success in diverse sectors such as Metals (Tata Steel),Automobiles (Tata Motors) ,Software(TCS) have made it the most successful business conglomerate.Audacious acquisitions of overseas companies like Jaguar,Corus,Daewoo have announced the arrival of the Indian MNC.However the recent 2G telecom scam has tarnished this reputation of integrity as Nira Radia tapes reveal the chairman of the group Ratan Tata of hobnobbing with a shady lobbyist.Ratan Tata has gone to court over breach of privacy but has not explained why his group companies has appointed an obviously corrupt lobbyist.His Telecom Companies Tata Teleservices and Tata DocoMo were obvious beneficiaries of the adhoc regulation and policy in the last 10 years.A letter from Rajeev Chandrasekharan has in a succinct and factual manner raised questions about the silence of the Tata Group over the last 10 years as the Telecom Shenanigans were being played out.
December 7, 2010
India has been plagued with numerous corruption scandals being exposed in the last few months.While a number of such scandal like the Adarsh Land Scam,Commonwealth Scams,Stock Market Scam,Stock Market Scam,Housing Finance Scam have been written about in this blog,the spate refuses to stop.With India's Chief Vigilance Officer calling 30% of Indians as utterly corrupt and even the Supreme Corrupt calling corruption in India "mind boggling",it is not a surprise.2G Telecom Scam Prime Suspect Telecom Minister Raja has come into the spotlight again for threatening a High Court Judge in a CBI case related to an eduction scam.The background relates to a High Court Judge of Tamil Nada accusing a Union Minister of influencing a decision of the court.This created a huge ruckus as the said Judge refused to name the Minister.India's Judiciary is one of the more powerful institutions in the country and considered much more trustworthy than the other 2 arms executive and the legislature.The Agriculture Minister brazenly supports favored Business Interest while another Minister was sent packing off after unethically supporting a cricket franchise
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
Now the Agricultural Minister of India has come out brazenly batting for his favored corporate interests.It is openly known that Sharad Pawar is closely associated with the Lavasa City Project being built by HCC near Pune.The Company has criticized the Environment Minister for questioning the environment clearance.The Minister on the other hand wants to know why he was not consulted.Don't know how Agriculture expertise will help in deciding the environment clearance of a Realty Project.But in case of India's Business Elite anything goes it seems.Note the Agricultural Minister is said to be close business ally and played a prominent role in the recent cricketing scam as well.However as usual nothing came out of it as the politician-business unholy alliance brazenly runs the Indian government.
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.
December 1, 2010
The low level of trust in the Indian government's investigative and vigilance agencies was revealed when India's Highest Court,the Supreme Court of India blasted the government for its choice of the Central Vigilance Commissioner.India has been rocked by a series of Housing Loan,Telecom and Land Scams recently implicating top politicians,bureaucrats and even army generals and admirals.However no one expects anyone significant to be prosecuted as the prosecutors themselves are compromised.It is openly known that the Central Bureau of Investigation (CBI) is totally controlled by the ruling party at the centre.The Income Tax and Enforcement Directorate also serves as puppets of the government being selectively used against opposition politicians and businessmen.
November 29, 2010
Organized Real Estate Industry in India is only a couple of decades old .Real Estate Industry in India took off with the global boom in the Realty Sector which percolated down to India as well.Lack of clear land titles and litigation has made this industry one of the most opaque and corrupt ones.Due to the massive price appreciation and huge valuations,Land Scams have become quite common with Chief Ministers,Generals,Top Bureaucrats all involved in the murky environment of Real Estate in India.The most recent scam related to bribing of top public banks officials in the LIC Housing Finance Scandal has again put question mark on the fundamentals of the industry.Valuing the industry and making a real estate investment remains one of the most difficult investing tasks in the Indian Stock Market.Even Fund Managers are staying away from the Sector due to lack of trust in the Financial Statement given by the industry.That said modern India presents a booming picture of tall buildings and huge office areas & shopping malls. A list of the chief players in Indian market is given below:
November 28, 2010
Nira Radia one of the top lobbyists in India has been exposed through wire taps done by Indian investigative agencies which has been leaked to the media.The conversations in the tape have revealed how this lobbyist has India's top politicians,bureaucrats,journalists at her beck and call.While it is known that corporate interest wield huge influence amongst Indian government officials,the tapes reveal that Big Business has the government almost completely in its pocket.The 2G Telecom Scam had earlier shown that how top ministers had connived with capricious business houses in swindling the Indian taxpayers of billions of dollars.LIC Housing Finance Scam which has been recently exposed has led to top government company officials being arrested for taking bribes in sanctioning loans to top realty and infrastructure companies.This had been done by a financial intermediary listed on the stock exchange and which had top investors like Goldman,GMO,Fidelity and Morgan Stanley.With the scam exposed these top investment banks have lost their shirt in this investment.
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.
November 24, 2010
LIC Housing Finance is one of India's Largest Home Lenders with a huge distribution network around the country.LIC Housing Finance Stock has been on a roll propelled by fast growth of the company and the housing loan growth sector.The Company was a relatively safe investment being promoted by Life Insurance Corporation (LIC) which is India's largest insurance company owned fully by the government.The Foreign Ownership of the LIC Housing Finance Shareholding is quite high at 40%+ due to its relative safety and high growth.However the Central Bureau of Investigations (CBI) raids on the company has resulted in a sharp 20% price fall.The company's top officials have been implicated in misappropriation of money and home loan scams along with a company called Money Matters.
November 24, 2010
Now it has come to light that one of India's Leading Bureaucrats sold sensitive details related to Telecom Security to private firms in return for sex and money.Through an elaborate web of codes and multiple mobile phones,this IAS officer used to sell security information related to India's recent telecom security to leading telecom firms.Note India had recently taken stringent action against RIMM( Blackberry maker) and some others for failing to provide security codes.It was an opaque regulatory action ripe for bribes and corruption which was taken advantage by Ravi Inder Singh, the Director in the Union Ministry of Home Affairs (MHA).Note it is openly known that nothing moves through the central ministry without bribing the corrupt officials manning those offices.Powerful Business Houses have most of these bureaucrats on their illegal payrolls as most policies are known much before by bigger corporates before they become policy.The expose done in the magazine "outlook" clearly demonstrates how India's powerful minsisterships and policy decisions are sold in closed rooms in the capital.Investors should be careful about investing in Indian companies as regulatory/corruption risk remains high as the SKS Microfinance and Unitech/Videocon stock falls show
November 16, 2010
Corruption in India has taken a widely virulent and blatant form with scams popping up almost everyday.Greed is Good has become the motto for India's Role Models in Sport and Military as well.India's Politicians are Leading the protagonists with Realty being the Main Theme.Note Real Estate companies in India are notorious for corruption with the sector being avoided by Fund Managers.India's Southern State of Karnataka is known for its IT Industry with capital Bangalore famous as a Knowledge Hub.However the Politicians of that State have made it the Corruption Capital with Bangalore equally famous for Land Grabbing and Real Estate Scams by Bureaucrats and Politicians.While Districts in the State have been made famous by Robber Mining Barons,the capital is famous for Realty Shenanigans.
October 22, 2010
Surprise Surprise : Indian Real Estate Company Emaar MGF implicated in the Massive Commonwealth Scam
Indian Real Estate Companies have the worst reputation amongst the different sectors in India.Corruption,Irregularities,Creative Accounting,Defrauding Consumers,Tax Raids are common to these companies.In fact the financial statements of the Realty Sector are considered so untrustworthy that some Fund Mangers are loath to invest in the whole sector.Despite a Stock Market Bull Run,a line of Realty Companies have not still managed to raise money from the primary markets because of the distrust with which the general public regards them.A Truly Dubious Achievement for the Real Estate Sector in India.Note both small developers and big developers have been involved in scams and shenanigans.2 Real Estate Companies in the National Capital Region Oreo and Emaar MGF,two of the better known Realty Companies have come under the focus of Indian Investigative agencies.Emaar MGF has been trying to do an IPO for a long time without success.Now it has come under the scanner for irregularities for construction of the Commonwealth Games Village.
October 20, 2010
The Commonwealth Games (CWG) hosted in New Delhi,India recently gave rise to a monumental scam.It is an open secret that huge amounts of cash were siphoned off by officials,politicians and contractors involved in infrastructure building.The cheating and fraud committed on public money has been exposed already.Some of the officials have been fired without a single one being jailed or convicted.The CWG Committee was led by a leader of India's ruling party Suresh Kalmadi while the provincial government of Delhi is also ruled over the the Congress Party.The probes and investigation which were held in abeyance until the completion of the Games has started now.However like always expect a lot of media fanfare without any convictions or jailtime for the offenders.India's Ruling Party Members are already blaming each other openly for being corrupt without fear of retribution.India's Political and Business Elite has made the mockery of Indian Justice System a Child's Game.The Chief Opposition Party also can't come all guns blazing as one of its leader Sudhanshu Mittal has also been a kingpin in the Corruption Racket.
September 13, 2010
Supreme Court which is India's topmost Judial Authority has accepted a petition to look into the aspects of the 2G Scandal.Note past experience does not instill much confidence that justice will be served.The prosecuting agencies such as CBI and CVC are known to be puppets in the hands of the Ruling Politicians and you can't expect a person to prosecute himself.India's Manmohan Singh who has a very clean image strangely has defended A.Raja damaging his own credibility instead of taking a high moral stance and firing the Minister
August 25, 2010
Global hopes of an agreement on Carbon Emissions to stop the advance of Global Warming has been put in the Cold Storage.With little consensus and declining […]
August 23, 2010
India’s Real Estate Sector is one of the most unloved sectors in the Stock Market.Even Fund Managers shun this Sector because of the complete lack of […]
August 17, 2010
The Board has lashed out at IL&FS for forgetting the strictures under which the company was given to the management of IL&FS.The government appointed directors had also been silent at the flouting of these norms.Note the company has already sold the preferential shares in the company without the approval of the CLB.Now IL&FS finds its reputation tarnished due to the jinxed Maytas.I am not superstitious by nature but it definitely seems that Maytas brings bad luck to its promoters.
July 19, 2010
While their growth and margins are comparable to the private and foreign owned banks in India,the P/E multiple is much lower despite lower risks.The cause of this discount become apparent when you consider some of the loans these banks make.LIC had come under a cloud in nineties for making investments and loans to favored companies
June 20, 2010
Satyam scam tainted Indian infrastructure company Maytas has agreed to sell a 20% stake to Saudi BinLaden Group.Note Maytas Infrastructure was an integral part of the […]