Speak Asia to pay up with money it doesn’t have?
Last Monday saw the continuation of the Solomon James writ 383 case that is currently playing out in the Supreme Court of India.
Last we checked in the Union of India had been given two weeks to file a response to the Lahoti Mediation Report.
Unfortunately the contents of this reply were not made public with the judge’s attention instead turned towards ensuring that Speak Asia can indeed meet the financial commitments it has towards its members.
Financial commitments the company has filed an affidavit stating it can meet, but when you look at the staggering amount owed – begs the question as to just where exactly is Speak Asia going to get the funds from?
Quick to claim complete and total victory for Speak Asia and its panelists, AISPA Secretary Ashok Bahirwani did his usual song and dance update, stating that
1. SAOL has been ordered to deposit 50 crores with the Supreme Court Registry.
2. CBDT (IT Dept) has been asked to give the details of their dues.
3. EOW has been ordered to handover the admin rights of the website along with all other material to the Hon’ble Mr. Justice Lahotiji.
Of particular note here is the mention of 50 crores as, as far as I know, Bahirwani’s initial update is the only source of this figure.
A figure of 1,300 crore has been circulated around but it’s being quoted as the amount Speak Asia took from members, not what is owed. As for where this figure comes from, if you multiply 1.2 million (members) by 11,000 (membership cost), you get around 1,300 crore.
If we look at the specifics of the February 6th order, it makes no mention of a deposit having been made. Rather, the order states
We direct the concerned respondents to deposit the amount indicated by the learned Mediator with the Secretary General of the Supreme Court within two weeks of the order of the learned Mediator.
In regards to what the amount indicated by the mediator is, that appears to have not been set yet. In order to determine what Speak Asia owes its members, the court requested that
the learned mediator ascertain how much amount in fact is due and payable to the petitioners and other authorities.
We direct respondent no. 6 to provide print out of the data collected to the learned Mediator by 11/2/2012.
Respondent number 6 is the EOW and they’ve previously gone on the public record stating that ‘the total payouts assured by the company to investors is more than Rs.30,000 crore‘.
This 30,000 figure was calculated and released by the EOW after they obtained access to the Speak Asia website, including the databases the company used to keep track of reward points held by members.
As it stands, the Supreme Court have asked Lahoti (the mediator) to ascertain what is owed to panelists based on the EOW’s data. This in itself is interesting as it could be hinting at a lack of trust in the company or confidence that they themselves would be able to provide accurate data (it’s inconceivable to think Speak Asia didn’t have backups of the databases the EOW has/had access to).
With the EOW stating that Speak Asia owe 30,000 cr in reward points, one would imagine that after going over the source of this information the mediator would accept the figure. Following on, as per the order Speak Asia would then have two weeks to pay up once the mediator announced the figure owed.
It’s worth noting that the figure will most likely be higher than 30,000 as the order explicitly mentions an amount due to “other authorities”, in addition to the petitioners.
I’d assume the other authorities in this instance would be the Income Tax department, as they had launched their own investigation into Speak Asia back in June 2011. Whether or not any other authorities are owed any amounts as per Speak Asia’s financial obligations in India is unclear.
Regardless, the major problem with all this at this point is that the EOW, based on the same evidence used to calculate the 30,000 cr owing figure, at the same time announced that Speak Asia have only taken in 2,300-2,400 crore.
The discrepancy between what is owed and what has been made stands at a whopping 27,600 crore (276,000,000,000 rupees or 5.5 billion USD).
Where Speak Asia are going to get this money from when the mediator announces the final figure owed (after going over the EOW’s website data) remains a mystery.
Even if one were to take into account Seven Rings International’s previous MLM venture(s) in India, the AdMatrix and the Mister Colibri scam currently operating in Brazil, the sum total of revenue generated is likely to be nowhere near this 5.5 billion USD amount.
Also worth mentioning is the specific use of the word “petitioners” in the order. Solomon James and senior panelists have consistently told Speak Asia members that their petition applies to all Speak Asia members, yet the wording of Monday’s order is quite narrow in scope.
The order requests that ‘mediator ascertain how much amount in fact is due and payable to the petitioners‘. ‘The petitioners’ explicitly references the 115 petitioners signed on the writ petition itself, with no mention of Speak Asia’s 1.2 million panelists as a group.
If the order is to be taken literally and the mediator is only to use the EOW’s data to work out how much is owed to the petitioners, this might explain Speak Asia readiness to assure everyone it can meet its financial commitments as per the Solomon James writ.
Most definitely the amount owed to the 115 signed petitioners is going to be just a fraction of the total 30,000 crore the EOW state the company owes its members.
In the meantime, whilst the mediator goes over the EOW’s data (due to be submitted on or before the 11th February) and prepares to release the dollar figure Speak Asia owes the named writ petitioners, the company has confirmed that any notion of business operations restarting are for now on the backburner.
Shortly after Monday’s hearing Speak Asia (once again proving they can update their members if and when it suits them) put out a press release stating that they
will extend all the support required in executing this directive of the honourable Supreme Court and will actively work towards re-starting its suspended operations at earliest opportune moment.
Reading between the lines, currently it is not an opportune moment to work towards restarting business operations.
I suppose over at Speak Asia headquarters, like the rest of us they’re waiting for Lahoti to confirm once and for all whether or not the James writ 383 covers all panelists, or just those signed.
Between the possibility of facing a 30,000 crore payout and whatever is owed the 115 Jame writ 383 petitioners, it’s no wonder the company is not working towards restarting its suspended operations at this time.
When you’re potentially 5.5 billion USD in the red, it kind of goes without saying that restarting business operations is well and truly off the table for now.
In other news, if I’m understanding the order properly, it also appears that Speak Asia’s two writ petitions (3210 in Raigad and 3211 in Thane) to have investigations into the company quashed are set to be dismissed.
Both petitions were heard on the 7th February with the order for the hearing simply stating:
1. The respondent to file affidavit in reply.
2. The petition shall be disposed off at the stage of admission itself.
Adjourned to 22 nd February 2012.
These petitions were filed back in October last year and have remained in pre-admission ever since. Looking at the latest order, as I understand it one of the respondents is to file an affidavit in reply (to what remains unclear) and subsequently on February 22nd the petition itself will be disposed.
The disposal of Speak Asia’s writ petitions indicates that the Mumbai High Court believes there is a criminal case against Speak Asia and resulting charges that have yet to be brought forward.
Update 11th February 2012 – The EOW have confirmed the 50cr amount exists, but look who it’s for:
SpeakAsia, the investment firm that duped thousands of people of crores of rupees, has appealed to the Supreme Court that it will return Rs 50 crore to 115 petitioners who had invested in it.
In Supreme Court, the firm has offered to return the money of 115 investors, most of whom filed a petition, demanding their money back.
However, the police are not ready to agree: “The company is ready to return money to 115 investors, but what about the more than two million people who invested in SpeakAsia? Going by our record, the company cheated lakhs of investors of a total Rs 2,276 crore.
Why does the company want to return Rs 50 core only?”
All along these petitioners have been playing the rest of the memberbase along knowing full well the petition as it stands only covers them.
50cr divided by 115 members is a whopping 4.3 million rupees each (it obviously won’t be divided equally) so here’s your evidence that the top panelists, franchisees have been duping everyone else all along.
This 50cr figure must have been calculated in prior mediation meetings and is evidence that up until now, the payouts owed to the greater panelist base have not been considered. After all, it is only now that the court has even requested that the mediator take into consideration and calculate the payouts owed to all panelists.
Wake up people, you’ve been played.
These senior members, panelists and franchisees have invested (relatively) huge amounts of money into the scheme and will stop at nothing to keep panelists together like sheep and get their money back. Even at the expense of said panelists.
Thankfully the EOW (who have seen Speak Asia’s ‘we will pay the 115 petitioners’ affadavit and were present in court) objected to this nonsense,
opposing the move, the city police said there were many more who had invested in the firm and the amount ran into more than Rs 2,276 crore.
To prove its claim, the economic offences wing (EOW) will submit a list of all the investors who lost their money to the multi-crore fraud.
And now, only because of this objection by the EOW, Speak Asia are staring down the barrel of a possible 30,000cr payout.
Not only that, but it looks like the investigation chickens have come home to roost too:
the court also asked the investigators and other agencies involved in the probe to file their reply by February 11.
The Enforcement Directorate, which has registered a case against the company under Prevention of Money Laundering Act, is probing how the money invested in the firm was channelized abroad; the income tax department said the firm had transferred over Rs 700 crore to Singapore.
It’s quite obvious Speak Asia don’t have 30,000cr+ to pay out and were counting on just having to settle the money owing to the 115 petitioners. Looks like this is the beginning of the end.
Footnote: Whilst I appreciate that Speak Asia’s activities mostly affect Indians in India, please respect that this is an English blog. Comments in Hindi will not be published.