Corruption | Green World Investor

Easiest Way to Become Super Rich in India – Become a Politician Crony (Ponty Chadha stashes $20 million cash in Mall Basement)

1 Feb, 2012

India is a country with one of the biggest population of poor people living hand to mouth. But becoming super rich in this country is quite easy if you know how. All you have to do is become a political crony and start counting your millions if not billions. Corruption in India has become rampant with a scam being uncovered almost every day. Politicians and Businessmen have been jailed but they have managed to get out on bail using their millionaire lawyers to fake illness and other shenanigans. Some politicians are now involved in both professions with some rumored to be billionaires owning companies through surreptitious means and parking their money in Swiss banks. Business Groups in India see their shares rising and going down depending on which political party wins proving the nexus between politicians and businessmen. There has been no reforms to separate these two and now powerful politico-business dynasties have started ruling large parts of India.

Leaders of Political parties have their favorite businessmen which they shower with goodies. There are example galore which is described below. Today a businessman in Uttar Pradesh was found to have stashed around $20 million in cash in the basement of a mall that he owns. Ponty Chadha is real estate and liquor tycoon with close ties with the leader to that state. Both industries are rampantly corrupt and sources of massive black money generation. Like other scamsters expect this one to get away too.

Nira Radia reveals Sordid Corruption Nexus – DB Realty owned by Pawar,Tata Companies TCS,Tata Motors Bending Backwards in giving Favors to DMK Raja for Telecom License

Nira Radia the millionaire lobbyist who became a public figure overnight as tapes leaked to her phone conversations were printed by the mass media has revealed sordid details about the politician businessmen nexus.In the chargesheet presented by the CBI to the Supreme Court she has revealed the multi billion dollar realty company DB Realty is a front for Sharad Pawar and controlled by him.This hardly comes as a surprise as powerful Agri Minister Pawar has been linked to a number of corruption scandals like the Lavasa Scandal,2G Telecom Scam,IPL Scam etc.Note DB Realty CEO has been directly implicated in the transfer of bribe giving to Raja the former Telecom Minister in exchange for a Telecom License at dirt cheap prices.It is a tribute to the power of Pawar that despite such massive circumstantial evidence against him and his family,there has been no court case or police charges against him.Note a number of big companies in India are known to be secretly owned and controlled by powerful politicians.Not that politicians don’t own billion dollar businesses openly and use their political muscle to further their own interests in a blatant manner.

India Corruption Unlimited – Sharad Pawar gets Linked in yet another Scam (DB Realty,Pune,Sule)

Sharad Pawar,India’s powerful agricultural minister and the president of the international cricket body ICC has managed to get involved in most corruption scams coming out in the last year or so.However he has managed to come out unscathed even as his fingers are in multiple corruption pies.The name of Pawar and his daughter Supriya Sule ( who is a MP what a surprise) has come up in multiple corruption scandals like the 2G Telecom Scandal,IPL Cricket Scandal and Lavasa Scam etc.However it points to his influence and reach,that nothing has happened.He is the leader of a regional party which is part of the ruling coalition in the centre.

The ICC and the BCCI are one of the most corrupt and opaque sporting bodies in the country.Cricket is a religion in India and generates billions of dollars in revenue which is monopolized by the BCCI which is a private cabal of corrupt politicians and businessmen.TheBCCI runs with no accountability and the corruption of the BCCI is openly condoned.The IPL Scam involving Modi revealed the extent of rot in the game administration and led to his ouster.However his mentor Pawar escaped without a blot.The arrogance and power of the BCCI is reflected in the fact it has refused to let enter any members of the electronics media into the final match of the World Cup despite a request from the information ministry.Now there is news that Pawar has close links with the real estate firm DB Realty which is another billion dollar corruption based company.DB Realty is one of the ringleaders in the 2G Telecom Scam being investigated by the Supreme Court.It has led to the jailing of India’s former Telecom Minister and revealed the systematic corruption in all major institutions in the country.

India’s Business and Political Elite continue to Mock Indian Laws;Raju gets Bail

India’s Business and Political Elite continue to mock the Indian Legal System through loopholes and expensive lawyers.I had written earlier in a post of how Satyam Scandal Kingpin Ramalinga Raju enjoyed luxurious facilities at hospitals despite his jail term.He had managed to avoid questioning by the authorities through excuses of bad health and now he has managed to get bail for the Biggest Corporate Scandal to hit India.This reduces the trust of the Indian citizens on the State and tarnishes the reputation of the country as a vibrant democracy.A number of scandals have hit the Indian legal system with a powerful criminal convicted of murder recently partying in the capital.He had got time away from jail on the recommendation of the state government.Politically connected powerful criminals manage to enjoy jail time through lenient jail authorities who let them out frequently on flimsy conditions.Even in Jail,they enjoy a privileged existence denied to common criminals.Their army of expensive lawyers keeps finding loopholes to get off their rich clients as India’s Justice System remains mired under millions of long due cases.

It is a matter of concern that everyone of the accused in this scandal has managed to get bail as India’s premier agency CBI has not been able to build a watertight case till now.This is despite Raju accepting his role as the master rogue in the siphoning of millions of dollars from India’s 4th largest IT company at that time.Despite the media spotlight on this case,blatant corruption has won again.

“Corruption as Tradition” Justification in Bangalore Land Scam by Chief Minister of Indian State

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.Note the rest of Karnataka has also been made famous by Illegal Mining.Robber Mining Barons have become powerful enough to topple governments with some heading the administration as Ministers.

The Chief Minister of the State has justified Corruption in Land Dealings as Tradition.Being Accused of favorably allocating Prime Land to Companies owned by his sons,he has sought to defend himself by accusing previous administrations of indulging in land scams as well.India’s Image of Corruption has become bleaker by the Day with the Commonwealth Games Scam,Adarsh Housing Scam and the Multi Billion 2G Telecom Spectrum Auction Scam.Now comes this Scam perpetrated by the leaders of the Chief Opposition Party.India’sPolitical and Business Elite have scant regard for India’s Justice System as hardly anyone is prosecuted for Corruption.Only some small fish are made scapegoats while the Ringleaders blatantly and openly indulge in manipulation and corruption.

Foreign Banks, Investors and Funds the Real Culprits Behind India’s Criminally High Property Prices

31 Jan, 2012

Real Estate and Construction

India’s Real Estate Companies have seen a very tough 3-4 years with interest rates climbing, investors running away from shoddy accounting and the global macro scene being quite bad. One needs only to look at the stock price chart to see times have been very bad. Besides some of these companies have come under court scanner for their practices with Unitech CEO spending some months in jail for a telecom scam. However property prices have not come down as India’s real estate bubble seems immune from crises in the West and in India . Prices have more or less remained stable while other assets have seen a major carnage at one point or the other.

One of the major reasons is that Foreign Fund and Investors have continued to pour big money into the Indian Property Developers . They are getting a big pound of flesh getting returns of 20% per year or more as the Indian Realtor is squeezed for cash .Indian Banks have grown wary of lending while the IPO market remains closed because of the corruption and scamming. Foreign Funds have huge assets and bolstered by the zero interest rate regime in the West are spending money here where the returns are quite high.They don’t mind waiting for some years for returns given that Real Estate Demand in India is high and growing.

A large European bank, which continues to be an aggressive player in the Indian property market, is organising Rs 1,800 crore funding for a Delhi-based developer who will use the money to pay off its foreign bond holders. The foreign banking group will use its FII arm to subscribe to the securities that the property firms will issue. The same bank will also invest and rope in other investors for a Rs 800-crore non-convertible debenture issue of another large builder in Mumbai which is dabbling in multiple projects. Besides some offshore institutions, wealthy local investors (better known as HNIs) have emerged as the biggest buyers for real estate papers. They are either buying the papers directly or through the portfolio management schemes run by brokerages managing their money. In a few cases, investment banks and their finance companies are playing the role of anchor investors – a strategy that has helped in attracting HNIs

I have tried to explain the reason for India’s Real Estate Bubble here.

1) Corruption,Opaque Regulations,Use of Black Money – Real Estate in India is a Cesspool of Corruption and even India’s Prime Minister has also accepted it saying that high Stamp Duty on Real Estate Buys result in the preponderance of Black Money in Real Estate Deals.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.

2) Global Real Estate Bubbles – One of the reasons for the sharp price rise in Real Estate in India is that Real Estate in many parts of the world are a bubble.Allowing Foreign Money into Real Estate in India has made these PE investors pay the same valuation for properties in India as outside.Note many of these “Real Estate” Private Equity Investors have yet to recover from the fall in property prices in the 2008 crash though many have been saved by the Bernake reinflation.

3) Tax Laws and Policy Stupidity - India’s Tax Laws impose high capital gains on land that is sold and not reinvested back into real estate again.That keeps the huge sums from gains in the real estate to be funneled back again.Otherwise a lot of the money would have gone elsewhere bringing the Real Estate back to earth again.India also allows an exemption of Rs 1.5 laks ceiling on interest payments on Real Estate Payment giving an impetus to investing in RE.Note such misguided laws were a leading cause of trouble for the Real Estate in USA.

4) Local,State Laws on Real Estate prevent Market Forces of Demand/Supply to Operate – India’s Local and State Laws dealing with Real Estate are as bad if not worse than Laws at the central Level.These Laws in most cases prevent the normal working of the Market Forces of Supply and Demand.The biggest proof of this in the fact that the Rental Yields on properties on India are way lower than if you took out money from selling the real estate investment and putting in a safe goverment bond.People in Mumbai the biggest real estate bubble market in India have stopped buying houses and going for rental leases.

Creative Accounting

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 trust in the financial statements published by the Real Estate Companies.With the whole industry most unogranized and companies playing with their books,its not a wonder that the sector continues to languish nearly 70-80% of its 2008 peak despite the broader market being only 10% below its all time peak.Real Estate Companies trying to raise funds in the Primary Market have been stymied by the lack of interest and distrust by the investor community.Recent IPO’s like Nitesh Estates and Jaypee Infratech have rewarded investors with huge losses in a rising Stock Market.The Industry is Synonymous with Frauds and Scams besides everyday violation of norms and contracts.Even the most famous Real Estate Groups are frequently in the news for scams and frauds.Here is a real life example of the ways that these companies inflate their revenues and profits through use of creative accounting.

Hedge Fund Employee of Steve Cohen SAC Jailed in New Insider Trading Scandal, Level Global Investors and Diamondback also caught

18 Jan, 2012

Green Investing

More Hedge Fund Employees were arrested by the FBI on Insider Trading Charges . Note Raj Rajaratnam the high profile hedge fund manager of the technology hedge fund is already cooling his heels in jail after being convicted of insider trading by paying money to company and insiders for illegal information. A number of low rung employees have also been jailed for lesser terms. His friend Rajat Gupta who was a former Mckinsey chairman is also facing charges which may result in conviction for passing confidential information to Rajaratnam.

Raj Rajaratnam, a self-made hedge fund tycoon convicted in the biggest Wall Street trading scandal in a generation, was ordered on Thursday to serve 11 years in prison, one of the longest sentences ever in an insider-trading case. But judges have been handing down some tough sentences recently. A former Galleon employee, stock trader Zvi Goffer, 34, was sentenced last month to 10 years in prison and ordered to forfeit $10 million after being found guilty at trial.Prosecutors had made Rajaratnam the central figure of a sprawling criminal case, unveiled in October 2009, that touched some of America’s top companies, including Goldman Sachs GroupInc, Intel Corp, IBM and the elite McKinsey & Co consultancy.

The employees of these funds SAC, Diamondback and Sigma Capital Management have been arrested by the FBI. Note Sigma Capital is a subsidiary of SAC Advisors which is led by the famous fund manager Steve Cohen who has given stunning returns in the past . In the past scandal also fingers were raised that SAC might have indulged in insider trading as well. Arrest of a SAC employee may mean that the employee may be used to get proof against Steve Cohen.Earlier he said that the insider trading regulations were vague

Hedge fund billionaire Steven A. Cohen in sworn testimony earlier this year called the rules on insider trading “very vague” and said sometimes it’s a “judgment call” as to whether a tidbit about a public company is inside information.

The founder of SAC Capital Advisors LLC, one of the hedge fund industry’s best-known firms, offered up his views on insider trading during two days of deposition testimony in February and April this year as part of a long-running civil lawsuit filed by Canadian insurer Fairfax Financial.

Note Insider Trading though illegal in all countries is widely practised as it is very difficult to prove charges and it is not considered too big a crime. In countries like India where the rule of law is not that strict, it is done quite blatantly and invites only monetary fines at best . This has encouraged a culture of widespread insider trading profiteering.

Insider Trading in the Indian Stock Markets is quite rampant with promoters of business groups known to indulge in this white collar crime. However it continues to flourish as the market regulator SEBI has not done much about it. Note Insider Trading is very difficult to prove , though the recent conviction and jailing of hedge fund manager in the US Raja Rajratnam and some of his associates shows it can be done if the regulators and enforcers are proactive. India seriously lags behind in cracking down on Insider Trading though in the recent past SEBI has woken up from its stupor.

India Engineering Conglomerates GMR and L&T Raise their Solar Ambitions

14 Jan, 2012

Energy,Solar Energy

The Indian Solar Power has been one bright spot in the gloomy infrastructure and engineering sectors in 2011. With share prices crashing with growing corruption, land acquisition and financing problems, Solar Energy has surged in India thanks to government support and subsidies . While a number of Green Technology companies have started up to capitalize on the growing renewable energy trend, the established construction companies in India have not been far behind . While utilities like Tata Power, Adani, Reliance Power, NTPC have already built or are setting up power plants based on solar panels , L&T has become a major solar EPC players . L&T is now raising debt with a $100 million issue to fund its solar expansion plans .

The travails of Indian Infrastructure Stocks

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 GMR Group which has its fingers in a number of sectors has also managed to complete a 25 MW solar pv plant and is looking to set up more . Note other industrial groups particular Mahindra Solar One has also become very aggressive in the solar energy area. With multiple entries into the Indian solar industry, one can only hope that overcompetition does not make solar energy another instanace of the larger electricity industry which is going through a sever downturn.

It plans to grow the installed capacity to 100 mw from 25 now, said the company.GMR has also commissioned its first 25 Mw solar power project Gujarat with a total investment of Rs 360 crore.The project was awarded in October 2010 under the Gujarat SolarPolicy. Power from this plant will be supplied to Gujarat Urja Vikas Nigam Ltd on a 25 year Power Purchase Agreement under the Gujarat State Solar Policy.

GMR Energy is currently operating 808 MW of power projects and is in the process of executing another 7500 mw. “Out of this, 2500 MW capacity will become operational in 2012 through commissioning of Projects at Vemagiri in AP, Kamalanga in Orissa and Warora in Maharashtra,” the company said.

L&T Infra Raising $100 million in External Commercial Borrowings

L&T Infra Finance, a subsidiary of L&T Finance Holdings on Thursday said it has raised close to $ 100 million through the External Commercial Borrowing (ECB) route this fiscal, largely to fund solar power projects.“We have raised $ 100 million through ECB route so far this fiscal, mostly to fund solar power projects,” L&T Head Financial Services, Mr Shiva Rajaraman, told PTI.

Green Jobs in India to be driven by Real Estate and Construction Sector

11 Jan, 2012

Real Estate and Construction

Green Jobs in India is going to grow at a high double digit rate driven by the Real Estate and Construction Industry. The hiring will be done by Real Estate Companies in India looking for Energy Efficiency and Green Building professionals. Note the Green Industry globally has had a torrid 2011 with most of the major sectors like wind, solar, biofuels and lighting facing oversupply amidst slowing demand due to global macro problems. However the Green Industry has a great future driven by secular drivers like

a) Global Warming

b) Energy Security

c) Peak Oil

Real Estate in India is facing a Bubble and in general I have a bad opinion about the real estate developers and promoters. But this is one reason to be positive about the real estate industry in India . Note Green Buildings have become important not only from the planet point of view but also economically given the rising energy costs. Also LEED certified buildings command a higher valuation and rentals which drives the real estate protomers towards green buildings.

Why Green Buildings are Needed

Buildings account for a huge percentage of Energy Consumption and Carbon Emissions.They also use a massive amount of Resources and are responsible for a majority of the Solid Waste.Here are some fact about Green Building from the EPA.

39 percent of total energy use
12 percent of the total water consumption
68 percent of total electricity consumption
38 percent of the carbon dioxide emissions

What are the 7 Elements of Green Buildings

Green Buildings are made up of 7 Elements which need to incorporated during the Design and Construction of Green Buildings.

Energy Efficiency and Renewable Energy
Water Efficiency
Environmentally Preferable Building Materials and Specifications
Waste Reduction
Toxics Reduction
Indoor Air Quality
Smart Growth and Sustainable Development

According to an estimate from Jones Lang LeSalle, a real estate consultancy, there will be a demand for around 1,000 energy and sustainability professionals. Primarily dominated by engineers and architects, this opportunity could also attract people from more diverse fields, as the market opens up. “With the introduction of the LEED Green Associate accreditations last year by the GB Certification Institute, more professionals from diverse backgrounds are keen to consider this career option,” he says. All one needs is an endorsement from a LEED-accredited professional and preparation to take an online exam facilitated by Prometric, an online testing solutions provider.

Seeds of Dystopia being Sown by Increasing Global Income Inequality – WEF Davos Report

11 Jan, 2012

World Economy and Markets

The rising income inequality throughout the world is sowing seeds of dystopia according to a report released by World Economic Forum. The biggest risk amongst the 50 risks listed is the increasing wealth gap between individuals in all countries. Gini’s coefficient has risen in most countries developing as well as developed and this has a strong correlation to globalization. The global arbitrage of labor has tilted the scales towards capital and increasingly made wages become stagnant. Developing countries with weak institutions are showing income inequality in horrific forms with $2 billion homes existing in the middle of millions surviving on less than $2 day. US has already seen the OWS movement as a result of this increasing income gap between the have and have nots. Middle Eastern countries have also seen revolutions brought upon by the massive riches of the elite compared to the rising poverty of the poor and even the middle classes.

India Income Inequality

Income Inequality in India has been rising at an unprecedented rate in the last couple of decades.The opening of the Indian economy has led to even starker levels of income disparity among the very rich and majority of the Indian citizens.The Crushing Income Disparity is seen in the world’s most expensive $2 Billion House set amongst 42% of the world’s hungry children.The latest Forbes report lists 50 Indian Dollar Billionaires with 2 in the Top 10.A 2007 report by the state-run National Commission for Enterprises in the Unorganised Sector (NCEUS) found that 77% of Indians, or 836 million people, lived on less than 20 rupees (approximately US$0.50 nominal; US$2 PPP) per day.India Middle Class is sharply cutting down on shopping,entertainment and other discretionary expenses as food,education and medical costs go through the roof.A recent survey done by Assocham proved these anecdotal stories true as middle class has gone into a spending shell while the richer upper classes continue to spend affected.The only class that is feeling super great is the Super Rich who are going feeling gung ho and most likely in the world to spend on yachts and private jets.Note the Super Rich are seeing more billions pouring into their offshore bank accounts while poor Indians are finding it difficult in these days of high food prices to even get 2 square meals a day for their children

US Income Inequality

Once upon a time, the United States had the largest and most vibrant middle class that the world has ever seen. Unfortunately, that is rapidly changing.

#1 Today, only 55.3 percent of all Americans between the ages of 16 and 29 have jobs.

#4 Since the year 2000, the United States has lost 10% of its middle class jobs. In the year 2000 there were about 72 million middle class jobs in the United States but today there are only about 65 million middle class jobs.

#5 According to the New York Times, approximately 100 million Americans are either living in poverty or in “the fretful zone just above it”.

#6 According to that same article in the New York Times, 34 percent of all elderly Americans are living in poverty or “near poverty”, and 39 percent of all children in America are living in poverty or “near poverty”.

#7 In 1984, the median net worth of households led by someone 65 or older was 10 times larger than the median net worth of households led by someone 35 or younger. Today, the median net worth of households led by someone 65 or older is 47 times larger than the median net worth of households led by someone 35 or younger

Cybercrime has been listed as another major threat to peace as countries and individuals increasingly look vulnerable to private and government sponsored hacker groups. Even powerful organizations like Google have become victims of cyberwarfare while Iran faced an attack on its nuclear facility through a sophisticated virus.

Dystopia what it means (Wikipedia)

A dystopia is the idea of a society in a repressive and controlled state, often under the guise of being utopian, as characterized in books like Brave New World and Nineteen Eighty-Four. Dystopian societies feature different kinds of repressive social control systems, various forms of active and passive coercion.

Growing wealth divide puts globalization at risk

Rising youth unemployment, a crisis of retirement among pensioners dependent on debt-burdened states and a yawning wealth gap have sown the “seeds of dystopia,” according to the report, based on a survey of 469 experts and industry leaders.For the first time in generations, people no longer believe their children will grow up to have a better standard of living.”It needs immediate political attention, otherwise the political rhetoric that responds to this social unease will involve nationalism, protectionism and rolling back the globalization process,” said WEF managing director Lee Howell.