Will Madoff scandal rock India too?

Bernard L Madoff, the former chairman of Nasdaq and a force in Wall Street for half a century, was hailed as the Tsar of high finance in Manhattan. Little did anyone realise that he would dupe the world of a whopping $50 billion in a major investment scandal, called the Ponzi scheme or the Pyramid structure.

Madoff kept the business a top secret and away from his main trade at Wall Street. The list of investors who say they were duped in one of Wall Street’s biggest frauds is growing, snaring some of the world’s leading banks and hedge funds, the super-rich and the famous, pensioners and charities. Victims include real estate magnate Mortimer Zuckerman, the foundation of Nobel laureate Elie Wiesel and a charity of movie director Steven Spielberg.

Britain’s HSBC Holdings PLC, Royal Bank of Scotland Group PLC and Man Group PLC, Spain’s Grupo Santander SA, France’s BNP Paribas and Japan’s Nomura Holdings all reported that they had fallen victim to Madoff’s scheme. Madoff was arrested by the FBI after his own sons turned him in on his self-confessed declaration that he had duped the world and would rather go to jail than struggle to repay.

Many of these banks operate in India. RBS has gone in a big way with ad spends to popularise its operations in India. To what extent will the Madoff scandal affect their operations in India? And what kind of exposure did Indian banks have to Madoff’s mad schemes?

The Madoff scandal comes atop the global financial crisis which has sent several banks across the world into a tail spin because they had risked exposures in Lehman brothers and AIG and Citi Group, which are being bailed out by a $750 billion package by the outgoing Bush administration. Sarkozy of France and Gordon Brown of Britain have pieced together a trillion dollar package to rescue their banking systems.

Desi software brothers in trouble

Jayant and Rajat Agarwal, founders of the Indian IT firm RJ Software, got into serious trouble when they tried to imitate the time immemorial game of Scrabble licensed by the renowned toy maker, Hasbro Inc. They called their game Scrabulous, but Hasbro wasn’t amused. It slapped a lawsuit against RJ Software in the US district court in New York for an unspecified sum.
Hasbro, famous for Transformers and other toys, holds the exclusive patented rights for North America for Scrabble. So the Agarwal brothers changed the name to Lexulous and hosted it online in Facebook. But Hasbro claimed it was the same and forced Facebook to drop it off its website and then slapped the lawsuit on the Agarwals.

But now all seems well, as Hasbro has decided to drop the lawsuit following an agreement with the Indian IT firm, which has promised to make changes in both Scrabulous and Lexulous so that it is not similar to Scrabble.

American telecom giant AT&T Inc, which exited India in 2004, is set to stage a comeback. It has reportedly hired JP Morgan Chase to scout for telecom buys in India, reportedly the world’s fastest-growing and second largest market for mobile phone services.

Mobile penetration in the country has reached close to 300 million from just 50 million a few years ago. MTNL has now launched 3G services and players in the private sector such as Vodafone, Airtel, Reliance and Tata Telecom may all join the bandwagon. 3G or the three 3 gigawatt frequency, has a higher bandwidth to enable video streaming and other superior internet services including TV and satellite radio on the mobile. Maybe this is what is attracting AT&T back to India.

The revenues could be enormous for the players though the initial investments may be large in terms of the licences to procure from the local domestic players. Big-time players such as NTT DoCoMo, Telenor ASA and Emirates Telecommunications Corp have all made acquisitions with an eye on the future enhanced services to be made available in India.

India enters new battleground over patents on drugs

A new battleground has opened up for Indian drug companies, which are facing charges of counterfeiting drugs and patent infringement over shipments meant for Latin American countries being seized in transit at European destinations. The European Union is silent on the issue.

The Pharmaceutical Exporters Promotion Council (Pharmexcil) which comes jointly under the Commerce Ministry and the Chemicals Ministry, claims that Indian drug shipments are being detained in countries such as Germany, France and UK. A solution is to have an alternate route to send the shipments to LatAm.

But skipping Europe, the gateway to South and North America, means enormous logistics costs, leaving the exporters with a lower margin of profits. Some of the companies which have got into trouble include Chandigarh-based Indi-Swift Laboratories, Mumbai-based JB Chemicals and Pharmaceuticals, Medico Remedies, Total Pharma, and Missing Pharmaceuticals, and Hyderabad-based Sainor Pharma.

Satyam in another Scam, collateral damage for Dr Reddy’s

Satyam Computer Services Ltd is linked to another scam. One of the IT firm’s subsidiaries owned a 134 acre plot in Hyderabad on which sits the country’s most prestigious pharmaceutical firm Dr Reddy’s labs. The Andhra Pradesh government has issued a notice to claim that the land neither belonged to Satyam nor Dr Reddy’s lab but owned by it. Former Government of India Economic Affairs Secretary and Power Secretary EAS Sarma has gone on record to say that successive AP governments doled out largesse to Satyam and land was one of them, that too at unbelievably low prices.

Dr Reddy’s lab acquired this land reportedly from e-Business Ltd, a wholly-owned SIFY subsidiary. After the acquisition the name underwent change - it became Dr Reddy’s Bio Sciences Ltd as it was reportedly developing a biotechnology project on the land. And amid all this controversy, the revenue department has stirred the hornet’s nest saying the land was not Satyam’s to sell or lease.

Barclays bank to outsource jobs to India

British bank, Barclays Plc, is off-shoring some 70 jobs to India from its locations in Poole, Dorset. This has sparked protests by bank employees and workers unions in London, which has historically been witnessing racial riots where Indians have been discriminated for taking away jobs from the local whites. The bank says the redundancies were part of 1100 job losses announced last year in parallel with the decision to outsource.