After starting its innings with a spate of actions against a variety of ponzi and money-circulation schemes, the National Democratic Alliance (NDA) has gone slow on investigating such dubious entities that loot gullible Indians with the promise of extraordinary returns or selling dodgy products. The ministry of consumer affairs (MCA) has been seeking self-declared affidavits from direct selling companies under a set of guidelines the acceptance of which is being projected as a sort of clearance. There is no effort to probe into their actual operations.
The most notorious of these is QNet which has been the subject of a detailed report by the serious frauds investigation office (SFIO). It is projecting as a clean chit a stay-order of the Supreme Court (SC) on action by the economic offences wing (EOW) of the police. The company has been employing extraordinary dubious strategies to get us, at Moneylife, to delete articles with regard to investigation and enforcement action against it from our website, forcing us to file a complaint with the Mumbai police and the cybercrime police. Its digital team follows a strategy of intimidation and character assassination of whistleblowers and others who complain against it. With the matter now in the SC, there is a chance of its fate being decided one way or the other, especially in the light of a detailed SFIO report.
A revival of QNet in India raises questions on the government’s seriousness about tackling dubious money-circulation schemes, especially the financially powerful ones with global operations and fund flows. In early December 2017, the reputed blog known as BehindMLM (http://behindmlm.com/mlm-reviews/qnet-review-how-is-this-mlm-company-still-in-business/), which tracks shady multi-level marketing (MLM) schemes, published a detailed analysis of QNet, with a large segment on its Indian operations.
It says, QNet (originally started out as QuestNet to sell numismatic gold and silver coins at fancy prices) has “spawned at least 76 related shell companies” and is itself a subsidiary of the QI Group started by a Malaysian national, Vijay Eswaran. The blog says, QNet is headquartered in Hong Kong, but “has been very careful not to conduct business in either Hong Kong or China.” Further, other than Malaysia, “QNet has run into regulatory trouble in pretty much every country it’s established a significant presence in.”
The blog goes on to list such regulatory action in the Philippines, Bhutan, Nepal, Sri Lanka, Iran, Indonesia, Afghanistan, Rwanda, Sudan, Syria, Turkey, Saudi Arabia, Azerbaijan and even Burkina Faso, which labelled QNet ‘a network of crooks’ (2016) and India. In many jurisdictions, its officials have been arrested and released. And, like in India, it has managed to obtain reprieve in some others.
The same analysis reveals that India gives QNet its third highest traffic (Alexa data), after Cameroon and Morocco. What is worse, regulatory action has ensured that QNet has collapsed all over Asia, except in India; African governments have also intensified their crackdown on the business. Ironically, while India claims to be going after shell companies, here is what the analysis concludes about QNet’s ability to survive: QNet is still in business due to is rampant use of shell companies, “for no other reason than to confuse authorities and make investigations harder, coupled with hopping from one market to the next as they each collapse.”
The question then is: Why is this government encouraging the company through inaction? Comments posted on Moneylife’s articles online expose the large number of people who feel cheated by its sales strategies. And, yet, the company is working at gaining acceptability by offering to sponsor the events and activities of several large chambers of commerce. While it is already a part of the ASSOCHAM (Associated Chambers of Commerce and Industry), the Federation of Indian Chambers of Commerce and Industry (FICCI) has resisted its inclusion, despite an offer of substantial funds for its programmes.