Sucheta Dalal :Iraqi scam?
Sucheta Dalal

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Iraqi scam?  

Dec 11, 2005

Most regular internet users have, at some time or the other, received scam email from Nigeria and other African countries seeking their help in getting out a few million dollars of ill-gotten wealth out of the country with half the money as a reward. Often, the writers claim to be inheritors of some deceased African leaders or government officials with access to a big stash of illegal income. The prospect of easy money apparently lures so many people that it began to known as the ‘‘Nigerian Scam’’. Individual greed dictates how badly it ends for the target who responds to the emails and part with money claimed as processing fee or for bribes to get the funds out of the country. Some have even landed in foreign jails and had to bribe their way out. The success of the Nigerian Scam soon spawned imitators from other countries. I have received scam emails from Russia, Spain, Australia and even China. The latest is an email, ostensibly from Basra in Iraq. What makes this unique is the heart rending human interest story blended into script. The writer claims to be a 46-year-old solicitor who has lost two children in a bomb blast at their school and wants to get away from the death and destruction wreaked by the militants as well as the American army. He claims to have realised $10 million by selling his companies and physical assets and wants access to a ‘bank account’ to transfer the money out of a Iraqi bank, with the assistance of its manager. The fee offered: 10 per cent of $10 million for use of your bank account and the added incentive of an investment advisory opportunity. Although it is nowhere in the league of the oil-for-food scam, this one too will successfully trap several gullible people.


Dead FCCBs


Two months, and a couple of revisions later, the Foreign Currency Convertible Bonds (FCCBs) are almost dead. The government was correctly worried about promoters using the FCCB route to bring back illicit funds stashed abroad, but investment bankers say that even genuine borrowers have now been affected. Here is the catch: the guidelines prescribe a pricing formula for converting debentures into underlying equity, leading to a static number that cannot be changed regardless of the stock price performance. This prevents companies from ‘‘resetting’’ the conversion price, a feature that was usually embedded in FCCB terms. If companies performed badly, investors could demand a lower conversion price; but not anymore. Investment Bankers argue that small FCCB issuers are generally small companies with no credit profile, debt rating, asset swap bids etc. In such cases, international investors are unwilling to invest in convertible bonds without the option to reset the conversion price based on financial performance. Bankers say that the government worries about round-tripping of foreign funds are valid; but the baby may have gone out with the bath water. They want the conversion price floor to be a floating number that can be recalculated only a year of the issue date. This will prevent promoters from giving themselves shares at a discount (in the form of FCCBs) and at the same time revive the market by giving global investors the comfort to invest in small and lesser known Indian companies.


Ayurvedic medicines


Everything ayurvedic is not necessarily good for health. The Journal of the American Medical Association (JAMA) and Health Canada (published by the Canadian government health department) has published a list of 18 Indian ayurvedic medicines that failed to declare the presence of heavy metals such as lead, mercury or arsenic. Out of 14 medicines covered by JAMA, 13 had lead above acceptable levels, with potentially damaging consequences to the liver, kidneys and nervous system. The warning list includes brands such as Baidyanath and the caution list includes Zandu and Dabur. Specific warnings have been issued about Mahayogaraj Guggulu with Silver and Makardhwaj, Mahalaxmi Vilas Ras with Gold, Navratna Rasa and Swarna Mahayograj Guggulu with Gold. While some atribute these findings to pharma multinationals’ attempts to discredit ayurvedic medicine, the Consumer Education and Research Society (CERS) says that India does needs stricter labelling and testing norms. Fortunately, herbal product companies have to declare ‘‘heavy metals within permissible limits’’ on export packaging from January 1, 2006, says CERS, but domestic consumers are still not being protected by this directive.


-- Sucheta Dalal