Are all network-companies

fraudulent?

Some years back three so-called financial companies namely Bharosha Pvt.Lld, Biso and Tina finlease had swindled the people of Sikkim of more then 22 crore. FIRs were lodged at many police stations against the Managing Directors of these con companies but this proved to be a case of doctoring after death. Hundreds of depositors who had dreamt of getting lucrative returns against their deposits had nothing to show for their aspirations at the end of the day.

  The news of this scam made the rounds in the state for long time. However, public disbelief and shock had barely worn off when another networking marketing scam run by Travel Ventures International (TVI) Express appeared in news headlines in the state.

TVI Express which constantly changed its claim of base headquarters between London and Bangalore is reported to have cheated the people of Sikkim of around Rs. 8 crore. Some time back an FIR was lodged at Namchi against the company by a person who stated that when he called the TVI Express Headquarters in London, the operator there told him that TIV Express had moved out from the building. However, this address continued to be featured in the company’s website.

However, this news did not raise warning signals for the people of the state. They continued to deposit money in TVI Express till an official claiming to be the advisor of the company was arrested. Mr. Naresh Goyal was trapped at the time, when he was invited as the Chief Guest in a programme of the company organized by the local depositors. When he could not clarify the enquiries of the local agent regarding the transparency of the dealing of the company, the local police through the intimation of the depositors nabbed Mr. Goyal and took him to Sadar Thana. However, he was not arrested as his relative, a local resident acted as his guarantor. In turn, Mr. Goyal had also assured the return of the investment to depositors. This however, is yet to happen.

Such scams have raised serious doubts about the credibility of network marketing companies in the state. People are beginning to question whether all such chain business companies are fake. Mr. Malin Raj Rai, Managing Director of Star Vacation Pvt Ltd, a local chain business tourism promoter company, however, has another view. He compares the chain business companies to Phansydile medicine which, in spite of being one of the best medicines has been misused to the maximum by drug abusers. “Take the case of Phansydile, this as a powerful medicine but drug abusers misuse it. So, Phansydile is not harmful per se, but it is the abusers who misuse it,” Mr. Rai, who has vast experience in this business which has been garnered over two decades, says. Mr. Rai also suggests as to how the genuineness of chain business companies can be determined. Chain business companies also come under the Company Act of India. They have to furnish all necessary documents required to run a company. First of all, the client should know the PAN No. of the company, its registration no, whether it has paid company service tax from the commission given to the agents, whether agents have PAN No, etc.

He also says that a company can be defined as something which sells products or services. In regard to TVI Express, so far there is no proof that the clients had enjoyed the products or services of the company. Mr. Rai has also raised his doubts regarding the registration of TVI Express. He says that TVI Express, if it is a foreign company, must be a multinational company. So, it should have completed legal formalities before expanding its network. Does a company apply for registration before or after starting its business? He questions. Naturally, any company first registers itself, complying with the existing rules and regulations of respective Acts and then starts business. But this procedure was not applied by TVI Express.

Network industry has the most potential and is a powerful industry at the present time. There are many scams which happen even in traditional business i,e., corporate business, but they do not create such sensation as the ones involving network businesses do. Because, they are so powerful and vast in nature and reach, they usually are involved with millions of people. So, any small disturbance and impropriety in such companies would naturally create sensation, Mr. Rai remarks.

Thanks to the internet and the new aspect in marketing system, alternative franchise is replacing the tradition marketing system as in corporate structure limited persons are given the opportunity to do business but in this new alternative franchise business, a major portion of the people can avail the opportunity of self-employment by doing business. Now, corporate companies have also realized the importance of this franchise business and have started their business through the network structure.

Thus, we can surmise that not all network companies are out to swindle you. However, there are many bogus schemes run by bogus companies which promise dividends which are hard to believe. Investors should show prudence and be wary when dealing with such ‘too good to be true’ investment opportunities. Do research on the company and do not be blinded by the promise of fortune in return for minimal work and investment.

Anoop Rai