Singapore-registered firm in India scandal; CEO in hospital with cancer

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By Zafar Anjum

ComputerWorld Singapore

A Singapore-registered e-commerce company is in the eye of a storm with the Indian police accusing it of forgery, criminal conspiracy, cheating and money-circulation schemes which resulted in the loss of about $400 million . It is the business model of the company, SpeakAsia, that is at the centre of the controversy. Indian police say the company has violated the law of the land by indulging in money circulation schemes. But SpeakAsia countered by saying  its business is about “creating a panel community of empowered consumers, which earns reward points by participating in many of the company’s activities'”

To add to the drama, the company’s CEO, Manoj Kumar Sharma, 53, is being treated for cancer at the John Hopkins Singapore International Medical Centre.

Sharma’s troubles started on July 28, 2001 when the Mumbai Police’s special branch, the Economic Offences Wing (EOW),  registered a case after a client alleged that some investors had cheated him by acting in a criminal conspiracy with SpeakAsia Online Pte. Ltd., Singapore, and its CEO Haren Kaur and others “by inducing him to invest about $11,000 in a money-rolling scheme knowing that the company is a fraud and has no product”.

Mumbai  police said that those accused also cheated many other Indian investors.

The investigation revolves round the company’s e-zine sales, survey fillings, product referrals and sales, advertising-based surveys and training programmes. These activities are carried on (or they used to be) partly on SpeakAsia’s website, and partly through affiliates and authorised agents in the real world. As a result of these activities, consumers earn reward points that they can use to buy products (mobile phones, TV sets, etc) and services from the company.

Most precisely, it is the company’s business model that is at the centre of the controversy. SpeakAsia claims its business includes e-zine sales, survey fillings, product referrals and sales, advertising-based surveys, and training programmes. These activities are carried on (or they used to be) partly on SpeakAsia’s website, and partly through affiliates and authorised agents in the real world.  However, according to Indian police, this foreign-registered company has violated the law of the land by indulging in money circulation schemes.

MEETING WITH CEO SHARMA

I met Sharma at a café in Orchard Road a year ago. He said that his was not a Ponzi scheme. His wife was in Mumbai and police had impounded her passport. He could not travel to India for fear of getting arrested. All his companies’ bank accounts in India have been frozen. And he did not have much longer to live. He was in a limbo, a man on the run, living on borrowed time..

After the police filed provisional charges against SpeakAsia on Dec 19 last year, I met Sharma again — this time in the  hospital.

“We are glad that the police have filed a charge sheet,” he says. “Now we have the opportunity to explain our case before the judges.”

Why did it take Mumbai Police more than two years to file a 5,000-plus page charge sheet against the 13 office-bearers and franchisees of SpeakAsia and eight other companies?

“The charge sheet contains all the evidence that we have collected during the investigation. It was a lengthy probe. The money was collected in India, laundered in Dubai and other countries, and hence, it took time to file the charge sheet. We will be filing supplementary charge sheets too,” Rajvardhan Sinha, city EOW chief told the Times of India.   E-commerce or Ponzi scheme?

The police have said in their charge sheet that SpeakAsia is a Ponzi scheme.  It involves each investor (panellist) being given two surveys a week to complete for an annual fee of about $200. If the investor successfully completes all the surveys, he or she can get about $10,000 a year.

Sharma denies this characterisation. According to Sharma, the business of SpeakAsia is not an “investment scheme”. “There is not even an iota of evidence to suggest that SpeakAsia had asked any person to invest any money with a promise of any return. It is completely misleading and incorrect,” says Sharma.

Sharma claims that the Company’s business model is valid and legal. “Since there is no element of investment and there being various external sources of income, there is no question of this business model being considered a Ponzi or money-circulation scheme which is banned under Prize Chits and Money Circulation Scheme (Banning) Act, 1979,” he says.

India’s direct selling industry, however, welcomed the SpeakAsia probe by the police. ”The SpeakAsia controversy had raised doubts over the modus operandi of other direct and multi-level marketing companies that have been flourishing in India for 15-20 years,” reported the Business Standard. India Direct Selling Association (IDSA) secretary general Chavi Hemanth told the newspaper: “We have long been requesting the Ministry of Commerce to frame a clear definition of a direct selling company to bring out clarity in the industry. The way the Department of Industrial Policy and Promotion (DIPP) had formulated a detailed wholesale policy in 2010 and set FDI limits for retail in 2005, why can’t we have a similar policy for the direct selling industry as well? We need the government to come out with a policy to regulate the industry.”