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How GMO,Goldman,Morgan and Fidelity got Conned of Millions by Indian Financier

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India’s new Corruption Scandal featuring  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 bribes.The Corruption Scam was initiated by a Small Financial Outfit called Money Matter Financial Services which started as a 2 person outfit.The business model of the company was quite simple – it arranged  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.This saw the company’s share price increase by 7 times during the worst of the Lehman crisis when construction,real estate companies were desperate for liquidity.

At its stock price peak,Money Matter managed to place a large chunk of equity around $100 million through an institutional placement in which these top investment banks and asset managers subscribed.Even a cursory due diligence would have told them that the spectacular growth and the super high margin numbers were clearly unsustainable.These Financial Institutions were however totally blind  that the Loans being made to Realty Firms which are notorious for their shady dealings.The Stock Price has already fallen by almost 40% in the last 2 days without any buyers.Expect a total write-off of the combined $100 million investment.The Modus Operandi of the Company involved acting as an intermediary for paying bribes from corporate houses to public banks.This was given a legal name of “debt syndication” and fooled these top notch banks exposing their foolishness and naivety.Hope it leads to rolling of some heads in these “esteemed institutions” as their reputation stands heavily tarnished by this latest corruption scam.

Who’s Money Matters? Well Morgan Stanley, Wellington, Fidelity, GMO invested in its QIP – DNA

Money Matters Financial Services Ltd, a listed non banking finance company (NBFC), that operates from Unit 1, Court Chambers, New Marine Lines, was promoted by Rajesh Sharma in 1995. Sharma has been arrested by CBI for taking bribe to sanction big loans to corporates.

It recently raised Rs445 crore through qualified institutional placement (QIP) in October this year to expand its asset financing business which includes short -term corporate funding,
structured product funding, margin funding and acquisition funding to corporates.

IIFL/India Infoline was the issue arranger and major investors were marquee global investors such as Morgan Stanley, Wellington, Fidelity and GMO.The QIP was done at whopping Rs625.25 per share, which surprised the markets.

Money Matters’ performance has been quite stunning in the last three years.Sales in fiscal 2008 was just Rs7.80 crore. It jumped to Rs176.29 crore or by 2160% the following year. Last fiscal, Money Matters reported sales of Rs224.3 crore.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

4 Responses so far | Have Your Say!

  1. Sambit Panda

    As Merchant bankers, i think IIFL would only have access to things like audited statements etc. and not anything like ‘were these guys giving out bribes to people’

  2. decora

    This guy wasn’t stealing, he was ‘hedging’, and “doing gods work”. Just like GS on ABACUS

  3. decora

    Oh, and he wasn’t bribing. He was contributing to campaign donations, which is the same thing as Freedom Of Speech.


    seriously it is funny to see Wall Street get screwed by the same immorality and lack of ethics they practice every day against their clients and the taxpayers.