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Indians against Corruption (IAC) becomes India’s Muddy Waters – After DLF, Indiabulls and GMR Stocks Plunge on Corruption Charges

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Indians Against Corruption

Carson Block’s Muddy Waters has become famous for exposing the various scams and frauds amongst Chinese companies. The most famous expose was that of a multi-billion dollar company called Sino-Forest listed in Canada which counted blue chip investors like Paul Hankson amongst its investors. The exposure of deep corruption amongst the Chinese companies has led to a strong drastic fall in the average valuation of all the Chinese stocks listed in the USA.

Now Arvind Kejriwal’s Indians against Corruption (IAC) is doing the same thing though for a different motive. IAC has launched a new political party in India and is exposing the deeply entrenched graft and nepotism amongst the older established political parties like BJP and Congress. Crony Capitalism is deeply rooted in India’s economy as we have shown repeatedly here on the Greenworldinvestor. IAC is just reiterating the same about huge amounts of black money being invested in top listed stocks like the Indiabulls and GMR Group.

Note some time ago, an independent Canadian research house Veritas had come out with scathing indictments of corporate governance amongst India’s top industrial groups like DLF, ADAG and Indiabulls. Most of India’s companies have pathetic to zero corporate governance with swindling of shareholder’s money considered fair game by almost all promoters. Like all the previous scams and scandals, this will get its 24 hours from the mainstream media before dying away without any results.

Common Scams in India

India’s business houses are hardly the paragons of virtue as everyone knows. Many of the business houses are known to siphon money from the public companies to their private coffers through various legal and illegal means. It is difficult to find a company in India which has good corporate governance and the trust of investors. Investing in a mid cap and even sometimes a large cap company can be dangerous because of problems associated with corporate governance and information disclosure. Even after the fraud or malfeasance is proved, promoters and big stock market players can get away with nominal punishment like not operating in the market for X number of year. Unless the scandal turns out to be a huge one, life goes on as usual without any punishment or prosecution. Here are some of the common schemes used by companies to defraud investors:

  1. Vanishing Companies – Small companies simply vanish from the stock market. They stop reporting results to the market and the investors have no way to exit as their stock stops trading as the exchange bans the company from trading. You are literally left holding scraps of paper.
  2. Collusion between Promoters of Companies and Big Brokers – There have been many instances when promoters and big brokers manipulate the market to ratchet up the prices of stocks with no fundamentals to speak of .The instances of the “pump and dump” are too many to enumerate.
  3. Accounting Scandals – While the “Satyam Scandal” is the biggest one, PWC in a recent report estimated that a very high percentage of companies resorted to accounting gimmicks. Read Satyam Computer Services scandal
  4. Incestuous Dealings between private and public companies in the same group – Most of the Indian family groups have a labyrinthine maze of company holdings. Most of the dealings done between these companies are to the benefit of the promoter at the expense of minority shareholders.
  5. Tax Frauds – Tax Frauds are dime and dozen. They are frequent and don’t even raise much of an eyebrow. Get frequently entangled in the Indian judicial system for years.
  6. News Frauds – Somebody circulates a fraudulent letter through major news media. Stock price goes up, people in the know sell out to investors who believe authoritative news media. Read  Pyramid Saimira scam: How our business media was taken for a ride

Assocham which is India’s premier industry association however does not want to improve the corporate governance of its members. Rather it wants independent equity research houses to stop publishing the damning truth about its members. Note a Canadian research house Veritas has come out with scathing reports on top business groups like DLF, Indiabulls, Reliance and ADAG. Rather than introspect and try to improve the situation, Assocham wants to muzzle the independent unbiased voices. All the Indian and foreign brokerages and research firms are totally compromised and are unable to come out with truthful analysis.

Read more about how corruption in Indian stock markets:


Shares of IndiaBulls Group companies were witnessing selling pressure in early trade after activist-turned-politician Arvind Kejriwal in his second press conference put two real estate firms — BPTP and IndiaBulls — on notice, accusing them of having investments by politicians and seeking information from the public about these firms. Shares of DLF were down 2.81 per cent on the BSE. It has plunged over 9 per cent in the past three sessions following allegations against the company by India Against Corruption activists.

On Tuesday. activist-turned-politician Arvind Kejriwal released documents against DLF that purportedly show deeper links with Robert Vadra and favours from the Haryana government, intensifying the pressure on the country’s biggest real estate group, the Gandhi family and Congress party.


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

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