Indian TVI scam highlights regulatory inadequacy
About two months ago, news broke in India that the long-running TVI Express pyramid scheme had resurfaced amongst Nagpur state-run railway employees.
Known as the “Central Railway Department”, with senior management ringleading the recruitment drive it was estimated that “hundreds” had been duped into believing they would receive ‘double returns in eight days‘.
Following a Times of India investigation blowing the pyramid scheme wide open, much huffing and puffing ensued, with the end result seeing central figure in the scam, Movement Inspector Komal Gajbhye, pay out one of the members he scammed and the Divisional Railway Manager then transferring Gajbhye and another top recruiter to a post that put considerable distance between themselves and their victims.
To date, as far as I’m aware, not one government agency has launched an investigation into the Central Railway recruitment scheme, nor has the department itself fired anyone.
An inquiry was raised by the department, to be handled by an assistant personnel officer (APO) but that appears to have been “buried”.
In a followup piece to his original article (published October 27th, 2012), journalist Vijay Pinjarkar gives his account of the events leading up to and shortly after the publication of his article:
The story landed up with me when a source saw a group of women slugging it out with a senior movement inspector (MI) in the DRM office premises.
One of the irate women even tried to hurl a chappal (slipper) at him for committing fraud. The MI had promised double returns in eight days by luring the poor women into the scheme.
I found that over a dozen MIs and a young lady with the signalling department had virtually fleeced many employees by misusing official position and machinery.
Many were made members even after the TVI shut shop in 2010. The scam grew like a weed difficult to root out.
On October 26 evening, when I was filing the story, I talked to 2 MIs, who were masterminds. Both admitted to selling memberships to make a quick buck.
My phone call pressed the panic button and the MIs involved, who chose the immoral way to become rich, huddled to stop the story.
After a while, the MI himself called me. He said, “Saheb, let’s talk when I return from Wardha. Till then you stop the story?”
Around 10 pm, the MI called me again to say, “Saheb, I’ve reached Nagpur. Where can we meet? Has the story been stopped? It will spoil my career? I’m even ready to come to your place?
The next day, the story was on the front page. It made a lot of buzz.
The MIs ducked for cover till their ‘godfather’ (senior divisional operating manager), who was on leave, returned. I was flooded with calls from hapless employee-victims who blessed me for the expose.
I used to attend at least 10-12 calls daily from employees giving me tips about corruption and illegal acts of MIs and operating managers.
Except for shifting 2 MIs, the SrDOM adopted the ‘teri bhi chup aur meri bhi chup’ (you pat my back and I will pat yours) policy.
Attempts are being made to bring back these MIs, who flatter the bosses. Even after follow up stories based on the complaints, neither the DRM nor the SrDOM showed any conviction to launch a serious probe.
For name-sake, an inquiry has been handed over to an assistant personnel officer (APO) only to bury it later.
Following the publication of Pinjarkar’s expose, those scammed of their money were “threatened (and told) to withdraw (their complaints)”, with those close to Central Railways management even go so far as to contact Pinjarkar’s family members to get them to urge him “stop writing about the scam”.
To put all this into perspective, Indian Railways is a government-run enterprise that made $1.75 billion USD in 2011-2012 and employs 1.4 million people.
Yet here we have senior management abusing their positions and recruiting hundreds of people into a scam “running into crores of rupees”, and not one single government authority has gotten involved, much the less launched an investigation into the whole sorry affair.
With stories like this coming out of India, is it any wonder that investigations into bigger scams have been dragging on for years?
These days I’m most commonly asked about Speak Asia, which was shut down by Indian authorities in mid 2011.
Speak Asia was a hybrid Ponzi/pyramid scheme, which relied on new recruits pumping new investor money to keep the Ponzi scheme the company was running afloat.
Following the bust and Indian authorities declaring Speak Asia to be “the largest fraud case they’ve ever seen”, the company launched a series of campaigns in an attempt to stop the authorities from investigating them, and to legalize Ponzi schemes in India.
This was done via the filing of numerous legal cases against the Indian authorities (and anyone else in India who dared speak up about the scam), with management even going so far to as to have their legal counsel commit perjury in the Supreme Court of India.
With most of the company’s legal action eventually dismissed or just flat-out thrown out of court, the authorities have been left to conclude their investigations for some months now, with seemingly little to no progress being made.
Last I heard defacto local management ringleader Ashok Bahirwani was playing games with the Mumbai Economic Offences Wing (EOW), wanting to film his interrogation sessions with the agency.
With Speak Asia’s management either missing overseas or unaccounted for in India itself, this case doesn’t look like it’s going to be resolved anytime soon.
It was this time last year that those following the case were eagerly looking forward to chargesheets being filed against the company (ample evidence exists proving the company was a Ponzi/pyramid scheme hybrid), but a year later we’re pretty much where we were last year.
Something about the Ministry of Corporate Affairs saying they don’t have jurisdiction over international companies, a bill before parliament proposing to change that and the local police… well, who knows what they’re doing.
Meanwhile hundreds of millions of dollars were siphoned off overseas, management of Speak Asia remain at large and the company continues to use aforementioned money to do what it can to hamper investigations and draw out the legal process as long as it can.
I don’t know what is going on India but as a casual observer, it seems from a local to international level, the country’s authorities are woefully inadequately equipped to deal with the scale of pyramid and Ponzi schemes that exist and operate there.
If self-confessed government employees running a recruitment driven pyramid scheme from within a government department involving hundreds of people can’t be brought to justice, what hope is there for bringing in those in who are hiding overseas and operated national scams that ran into the hundreds of millions of dollars?
Update 30th December 2012 – Vijay Pinjarkar has put out another article with the Times of India giving an update on the TVI Express Central Railway Department recruitment scam:
In a face-saving exercise, three movement inspectors (MIs) and a lobby in-charge were shifted on Thursday evening for their involvement in the TVI (Travel Ventures International) Express scam.
With this the number of MIs who have been transferred has gone up to 5. There were complaints against the lobby in-charge. On November 1, two MIs – P D Raut and Komal Gajbhiye – both kingpins, were shifted to Chiconda and Hinganghat stations respectively.
On Thursday, DK Soni, SS Karnale and SK Jaiswal, all MIs, and CP Varshney, the lobby in-charge were shifted. Central Railway PRO P D Patil did not go into the details and termed the transfers as routine. Interestingly, it took over 15-20 years to shift these tainted employees who were occupying sensitive posts.
The transfers seem to be cosmetic as all those shifted have been posted in Nagpur only. “It will defeat the basic purpose of employees getting justice. These people being in Nagpur will continue to scare their victims,” employees said.
Soni, who is said to be close to the bosses and made maximum TVI members, was shifted as deputy station superintendent (DySS) at Nagpur. Varshney has also been posted as DySS. Jaiswal and Karnale were posted as cabin ASMs at Ajni. Karnale is mostly involved in diverting pointsmen for household work in Sr DOM’s quarter.
Meanwhile, the transfers have caused resentment among the operating department employees who had registered in advance for getting posted in Nagpur.
Still no involvement or even acknowledgement from the Indian authorities as Indian Railways continues to sweep the blatant involvement of their management staff in a known pyramid scheme under the carpet.
What a farce.