Dangers of Indian Realty Investing – Sahara,Oberio Realty,Lavasa and DB Realty prime suspects in latest Corruption Scandal

India Real Estate Shares Fall Sharply on Bribery Case – WSJ

Shares of LIC Housing Finance Ltd., along with those of realty companies Hindustan Construction Co., Oberoi Realty Ltd. and DB Realty Ltd. plunged early Thursday after the companies were named in a loan scandal late Wednesday.The Central Bureau of Investigation Wednesday arrested eight people, alleging they took huge bribes to issue corporate loans. The arrested include four senior bankers at state-controlled lenders, three from a financial services firm and one from India’s largest insurance company.The CBI alleged that the loans in question were given to companies including Lavasa Corp., a unit of Hindustan Construction, Oberoi Realty and DB Realty, as well as some other listed and privately-owned companies.

Market regulator Sebi on Wednesday barred two  Sahara Group companies—Sahara Real Estate Corp and Sahara Housing Investment—from raising funds from the market and, in effect, delayed the launch of the IPO for Sahara Prime City, another group company.

The market regulator also issued a showcause notice against the two companies on why it should not take action against them for issuing convertible bonds without Sebi’s permission and barred them from issuing such bonds, termed as optionally fully convertible debentures (OFCDs). In its order, Sebi also said that when asked for documents and explanation for issuing such convertible bonds, the Sahara Group companies had said that the instruments which they had issued did not come either under the jurisdiction of Sebi or the National Housing Bank (NHB). The Sebi order stated that both the companies, “… instead of providing the information sought by Sebi, (they) have adopted various means and adopted convenient pleas for not providing the information and delaying the examination process initiated by Sebi to ascertain the facts.”