Pic used for representational purposes ( Google)

In these ‘Halal’ offers,  even more attractive than the Halal factor was the ridiculously-high returns they promised to their investors. This, coupled with religious scholars who were too happy to promote such companies, meant that Muslim investors came in hundreds. Such smart marketing embedded with lies and deceit meant that these companies were easily able to fool people.

In this five-part series, TwoCircles.net will look at how companies like Heera Gold, now at the centre of a confirmed Ponzi scheme, used a combination of religious symbolism, Ulemas, fake propaganda and political tools to attract investors in Hyderabad.  

In the last of the five-part series, certified Islamic Finance expert Syed Mohammed Abud Asif explains why it is easy for Muslims to fall for such fraudulent companies and how the Indian government passively encourages such companies by not providing adequate Shariah-compliant banking avenues for the country’s Muslims. He also lists the basic mandatory checks that Muslim investors must make before investing in any company that claims to be Shariah compliant.

I have watched in part amazement and part despair as over the past year, thousands of Muslims have lost their hard-earned money at the hands of fraudulent companies who promise ridiculously high returns in the name of ‘Halal’ investments. I sometimes wonder why people would willingly walk into such traps without double-checking on the companies, their ‘Halal’ label, their books and accounts etc. But then I also realise that the answer is right in front of me.

Take, for example, a student who gets recruited to, say, a software company through campus recruitment and is able to save Rs 25,000 per month. A year later, he/she is able to save Rs 3 lakh per year. At different stages, all his classmates manage to get started with business or secure a decent job and continues to invest in some form or the other through mainstream banking routes. Meanwhile, the Muslim student remains confused because as a pious Muslim, he is not encouraged to invest and/or earn interest. When he/she thinks of an investment options, depositing with the conventional bank or insurance with insurers would not be an option.

It is also important to point out that over the past few years, a certain image of Shariah-related investment has developed which makes it sound like Shariah is anti-profit. However, this is an utter myth. A huge number of companies in India are Shariah-compliant and equity is the preferred mode of investment in Shariah. Hence, stocks should wide acceptance among Muslim investors as long as these stocks follow Shariah rules. In fact, even the National Stock Exchange and the Bombay Stock Exchange have a Shariah index which allows you to keep track of investments and companies that follow Shariah principles. The moot point, however, is this: how do you encourage a population that is economically and socially backward to invest in something as technical as equity investing? Plus, talks of stock investments ring premature when seen in context of the large-scale marginalisation of Muslims when it comes to having access to Shariah-compliant banking.

The only option left, then, is to either to start new business with the help of relative or friend or invest in real estate. And we know that starting a business is neither possible for everyone nor ideal. In the case of real estate, the investment amount is high and it is illiquid (cannot be converted into cash immediately).

Where then, does the money saved by Muslims go? Either it lies unattended in banks (which banks use to further the loan-anti Shariah business) or the money lies at home losing value). Who is to be blamed for this? Our savings are not used by ours and not used for our cause – either business, education, insurance or any needs. And despite several proposals, suggestions and ideas, the Reserve Bank of India and the Government are not in favor to allow full-fledged interest free banks and Takaful (insurance) companies to operate. And when even the ‘pro-Muslim’ Congress/UPA government did not allow it, do we honestly expect this NDA government to do so?

As a result, India finds itself in a rather unenviable position. The world’s third-largest Muslim population has less than 3% representation in financial system. This is even less than their representation in the Indian bureaucracy (4.7%) which itself is hardly a number to feel good about.
 

Pic: Google

No wonder then, that the cases of Bangalore and Hyderabad have become common these days. Companies which claim to do business in terms of Islamic rules of transactions have failed miserably in terms of performance and hence couldn’t sustain over period of time. They pool investment from small savers, business organization and retired individuals and promise an expected return which they can’t provide for. The Ponzi schemes played the same game, only adding to the image that interest-free financial institutions are not to be trusted. What we need is a an interest free financial model which is legally sound, financially robust, commercially viable, socially inclusive and shariah compliant.

It is true that many companies have tried to do that due to many internal and external factors. Mismanagement of funds, Excessive exposure to real estate and dubious financing practice are just a few of the problems. The massive rise and the subsequent fall of ponzi companies have once again necessitated the task of reformation of real alternative. In this context, companies like Rehbar, Mount Judi, Secura, Cheraman and TASIS (shariah indexes) are some of the ground breaking efforts furthering the alternative option.

In the cooperative societies level, there are institutions like Janaseva, Sanghamaum, Al khair, Bait un Nas, Sahulat Microfinance and Islamic Welfare Society which have earmarked trust in the public in terms of their performance and sustainability. On the stock exchange, there are Tata Ethical Fund and Taurus Ethical Fund which will appeal to the faith-based investor. There are no capital market instruments (stock and bonds, debentures, treasury bills, fixed deposits) available so far that claim to be Shariah-compliant.

Any business/finance or investment in accordance with Islamic Principles is called Shariah-compliant. There are research reports, books and many speeches available on the issue, but essentially there are four principal rules/criteria to check the Shariah permissibility:
The first and foremost is the business activity screening. Before investing, make sure that the company doesn’t violate any shariah prohibition. Accordingly, any involvement or investment in business of alcohol, pork, gambling, tobacco, and any interest-bearing transaction and all those that are prohibited under Islamic law are to be avoided.

Second, all the business undertaking or investment commitment needs to be thoroughly written down between the parties and the witnesses are sought to form a contract. While contracting, all terms and condition should be in clear guideline so that no disputes arise in the future. Any uncertainty as to the subject matter, price, delivery date etc shouldn’t jeopardize the true and actual performance of the contract.

Third, any partnership or co-venture between parties must have equal chances of profit or loss. Any investments that claims to make a fixed sum of money as returns are void under Islamic law. As with any investment, there is a chance of making losses the same applies to Shariah-compliant business/ investments as well.  Reporting losses doesn’t mean non compliance with Shariah.

Fourth, any investment that doesn’t disclose their business in terms of nature and accordingly their accounting fails the test of compliance. This demands the accounting and auditing of the whole business.

These are the prerequisite notes that can be controlled if external body legitimately have supervision both from commercial and legal (including Shariah) point of view. And this is where the fraudulent companies were able to get away. Insurance companies have the Insurance Regulatory and Development Authority of India (IRDAI); the stock market has the Securities and Exchange Board of India (SEBI); banks have the Reserve Bank of India (RBI) and Halal-compliant companies? There is Ministry of Corporate Affairs and the Registrar of Companies but that is for all registered companies. However, there is no single body or authority that investors who have lost money in these companies can approach. This was most visible when complaints against Heera Gold surfaced; it was between the Crime Branch, the Economic Offences Wing, the Enforcement Directorate and the Serious Frauds Office of India to decide. No wonder then, that the people who have lost money have little hope of ever getting their money back.

pic used for representational purposes only

The most fundamental yardsticks to consider is the shariah-compliant actual business performance, growth and development and its impact in the economy and its future course of business. It is becoming increasingly clear that in the absence of a regulatory authority and any offering of an alternative from the government regarding investments and banking, Muslims are caught between the devil and the deep sea. And these fraudulent companies are making millions by acting like saviours.

(The author is a Certified Islamic Finance professional based out of Bhatkal, Karnataka)

Courtesy: Two Circles

The post Why Muslims make the wrong investment choices and how to avoid it appeared first on SabrangIndia.

Picture from Facebook Zirva Business solutions

In these ‘Halal’ offers,  even more attractive than the Halal factor was the ridiculously-high returns they promised to their investors. This, coupled with religious scholars who were too happy to promote such companies, meant that Muslim investors came in hundreds. Such smart marketing embedded with lies and deceit meant that these companies were easily able to fool people.

In this five-part series, TwoCircles.net will look at how companies like Heera Gold, now at the centre of a confirmed Ponzi scheme, used a combination of religious symbolism, Ulemas, fake propaganda and political tools to attract investors in Hyderabad.  
So far, we have looked at how investors fell for schemes that were too good to be true in Bangalore and Hyderabad. However, in the fourth of the five-part series, Najiya O looks how Muslims of Kerala have largely escaped such fraudulent companies and why they are unlikely to suffer the same in the coming days too.

Even as Andhra Pradesh, Telangana and Karnataka Muslims reel from financial scams of thousands of crore over the past year, Muslims of one southern state seems to have avoided this trend. The Muslims of Kerala have managed to invest in Shariah-compliant companies even as other state’s Muslims have floundered.

To begin with, one reason for this is that unlike, say, Kerala and Telangana, there are just a few halal and/or shariah-compliant investment institutions in Kerala. This is also because Muslims who refrain from investing in mainstream institutions prefer to invest their money in various businesses or in land or gold. Kerala’s love for gold is well-known, but few are aware as to exactly how much Malayalis love the yellow metal: this 2014 ToI report shows that three Kerala gold companies have more gold than Sweden, Singapore and Australia. This Mint report from 2017 notes that “not only does rural Kerala top the rankings for spending on gold ornaments, its per capita spending is six times higher than the state that ranks number 2—Goa. Indeed, rural Kerala’s per capita spending on gold ornaments is far ahead of the total per capita spending of all the other six top states by gold consumption.” Add real estate and India’s general love for the land, and the fact that Shariah allows for investment in both gold and land and the truth is that even the Malayali Muslims have little appetite for other investments.

picture from google

However, for Muslims who do wish to invest in Shariah-compliant companies, there are a few options available. The Zirva Business Solutions based in Perinthalmanna in Malappuram was begun in 2011, with stock brokering, a course in Islamic finance and consultation services. Later they stopped the course and began to focus on stock brokering and selective consultation. The company is going well, with around 200 clients in share-trading and assets worth Rs 2.5 crore under our management, said Mr Shameem Sajjad, CEO of the company which has been registered as a limited liability partnership. “The returns that clients get depends on the stocks that they have selected, the time they entered the market, the general trend of the market etc. We cannot say that clients get this much returns uniformly. But on an average they get 10-15% returns per annum,” Sajjad said in a conversation with TwoCircles.net.

An investor at the Alternate Investments and Credits Limited (AICL) opined that companies which are Shariah-compliant cannot make big profits.  A well-established businessman who refused to be named said he invested Rs 1 lakh in AICL when it began back in 2001 in Kochi. “I invested in it in the name of his close relationship with those running it and support a novel venture”, he said while talking to TwoCircles.net. He added that he got only nominal returns annually as he had expected and that the company too never claimed to deliver big returns.

AICL registered as a Non-Banking Financial Company in 2002.  It was the first interest-free venture of this kind in the country.  The company has been working well since the beginning, providing loans for small business ventures etc but has suffered some setbacks after its NBFC license was cancelled by the Reserve Bank of India in 2012. The license was cancelled because it couldn’t present ‘its documents related to interest’, according to reports.  The company then questioned the RBI move in the Bombay High Court and is waiting for the proceedings. The AICL is studying what it can do as a public limited company without the NBFC license, said PM Salih, director-cum-CEO of the company. But more importantly, the company has no investor complaints against it.

pic used for representational purposes only

Apart from these companies, there have been several local ventures, which provide interest-free loans for persons and small start-ups, based on halal and shariah-compliance.  They have been started in association with local masjids, various Muslim organisations in the state or interested individuals coming together.

“Many Muslims in Kerala invest their money in banks, but write to the banks their preference not to receive any interest,” informed Dr AI Rahmatullah who is associated with the Indian Centre for Islamic Finance. But that interest amount could be collected and used to help those who have to pay back interest to banks, or can even be used for helping the poor and needy, he added.

The Sanghamam Multi-State Cooperative Credit Society Limited is a novel venture working on interest-free microfinance principle. The Society is currently running in Kerala, Tamil Nadu and Pondicherry.  It aims to mobilise the savings of its members through ‘Ayalkoottams’ (grouping of people in neighbourhoods) and the capital is then redistributed among the members as interest-free micro-credits which can be used for self-employment ventures and social enterprises. It works on a participatory profit-loss sharing basis. As of June 30, 2016, it had over 5,100 members with a share capital of Rs 2,23 crore.

In 2017, Kerala also the launch of Halal Fayidah, the first of its kind interest-free cooperative bank modelled on the lines of the Islamic banking system. Halal Fayidah hopes to attract investments from Muslims who had kept away from the formal interest-based banking system as it went against their religious laws.

The Kerala state government has time and again tried to begin a banking institution based on Islamic banking which could be used for infrastructure development in the state.  The plan was to collect capital from the NRIs in the Gulf countries and invest it in the construction of roads, for which toll can be levied. However, the plan did not work as Islamic banking was not approved in the country.  Now there is another plan for ‘halal chit funds’ under the Kerala State Financial Enterprises Limited. This also plans to collect funds from NRIs and use it for infrastructure development and would function based on Shariah-compliance, according to reports.

pic used for representational purposes( courtsey- social media)

While the above-mentioned ideas are likely to take time, it shows that a sound understanding of investments combined with honest expectations and returns have meant that while Kerala moves forward albeit slowly on the path to Islamic banking, Muslim investors in Karnataka and Andhra Pradesh and Telangana remain in lurch over when and if they will get their money.

Courtesy: Two Circles
 

The post Why Halal investments in Kerala do not make news for the wrong reasons appeared first on SabrangIndia.

courtsey: Social media

In these ‘Halal’ offers,  even more attractive than the Halal factor was the ridiculously-high returns they promised to their investors. This, coupled with religious scholars who were too happy to promote such companies, meant that Muslim investors came in hundreds. Such smart marketing embedded with lies and deceit meant that these companies were easily able to fool people.

In this five-part series, TwoCircles.net will look at how companies like Heera Gold, now at the centre of a confirmed Ponzi scheme, used a combination of religious symbolism, Ulemas, fake propaganda and political tools to attract investors in Hyderabad.  

We will also look at successful examples of Shariah-compliant investments especially from the state of Kerala. We also get an expert to help us understand how to avoid such fraudulent companies, understand the basic concepts of Shariah investment to ensure that investors do not fall into the trap of Haram in the name of Halal. In the third of the five-part series, Shaik Zakeer Hussain looks at the curious case of Bangalore and how over a dozen fake companies have mushroomed all over the city and manged to fool people in the name of Islam and Shariah.

Probably there is something in the Bangalore water.
Nothing else explains how someone as world-famous, and seemingly-knowledgeable like Indian cricket legend Rahul Dravid fell for a scam by Vikram Investments, which promised ridiculously high returns. This same fraudulent company company, also managed to fool Badminton star Saina Nehwal among other celebrities.

This news might be of little solace to thousands of Muslim investors who have, in just one year, collectively lost hundreds of crore in a dozen companies, all promising to conduct business as per Shariah standards. In Hyderabad, most of the attention has been diverted to Heera Gold, but in the case of Bangalore, the condition is far worse. Here, it seems every month there is one company which is emerging as a cheat. And to make matters worse, there is no way to ascertain how bad the condition might actually be. Companies like Burraqh, Capital First, Morgenall, IMA, Ambidant, Aala, Injaz, Muzariba, Flawless might very well be the tip of the iceberg when it comes to the long list of companies that use Islam as a front to fool investors.

Burraqh Groups, a Bengaluru-based investment company, which runs a slew of businesses, became the most recent company that allegedly duped hundreds of investors using a Ponzi scheme. Investors, mostly from the city’s Muslim community, had been lured in the name of halal income and the company promised them hefty monthly fixed returns. However, three months ago the company shut down its office and the directors have allegedly absconded.

According to the investors, Burraqh Groups collected deposits from people for investment in their construction projects, supermarkets, and other businesses.

Syed Jameel Ahmed, a realtor said he had invested Rs. 1 crore in the firm in March this year, but the company closed operations after taking the money. He said he trusted the company because the director of the company was his friend.

“I have worked with him on many construction projects in the past. I never thought he would cheat people this way,” said Ahmed.

Mohammed Ashraf, another person said he had invested Rs. 1 lakh and also helped several others from his family make investments.

The investors allege that the company has duped hundreds of people in Bengaluru and other parts of Karnataka and the amount could run into several hundred crores.

We have lodged several complaints with the police, but there has been no progress in the case so far,” said Ashraf.

Fayaz M.D, one of the investor says, when he had requested a refund of his deposit amount couple of months ago, the company, gave him a post-dated cheque, which got rejected for insufficient funds.

According to the information gathered from the website of Ministry of Corporate Affairs (MCA), and from the web archive of the company, Burraqh was started by father-son duo Syed Niyaz and Syed Mohsin Pasha. The investment section of the Group, Burraqh Unity LLP was started on December 12, 2017. Its now-defunct website shows that prior to this, the company operated under different entities.

The investors allege that both Syed Niyaz and Syed Mohsin are still in Bengaluru, and have even contacted some of them, with promises to return their money.

In a video message sent to investors in July, Syed Niyaz said he has not run away with their money and he needs more time to return their payments.

“Some of us have sold our houses, and some have even borrowed money from others, to invest in this company. It’s been more than three months since we received our payments. They have shut down their office and there is no trace of the directors,” said Ashraf.

In the past six months alone, a number of such companies in Bengaluru have systematically targeted the city’s Muslim community and lured them to invest in their firms, inducing them in the name of halal investment.

In January this year, Capital Plus and Capital Infrastructure, a firm promising similar high returns on investment duped over 200 investors of over Rs. 300 crore. On September 24, Morgenall another so-called ‘halal’ investment company shut down its office, and the owners went untraceable. They join Ajmera, Injaz International, Aleef, Aala Ventures, Ambidant, and several other companies in the list of allegedly syphoned off large sums of money.

Each of these companies has its own story of how they lured the investors into believing they were making a smart choice, but of particular interest is the story of Morgenall.

Many former employees and investors reached out to us, revealing some startling details about the disgraced firm and its promoters. The details they provided are all in bits and pieces, considering that none of them was fully privy to the actual functioning of the firm. However, when these pieces are put together, what comes out is a story which is just incredible to believe.

According to the information provided by these employees and according to the details gathered from the company’s now-defunct website, Morgenall began its operations as a consulting firm in 2004, facilitating recruitments in the Middle East. The company was headquartered in Dubai, UAE, where it still functions out of an office.

It’s unclear, how and when a relatively-unknown and shady job consulting agency transitioned into a financial company, promising to double people’s money, but somewhere around late 2016 or early 2017, Irfan Pasha, the CEO, and Founder of the company is believed to have started contacting many known and some unknown small companies, through mutual friends, promising to invest money in their establishments. And that is where the trouble began for the investors.

“He projected himself as a devout Muslim, who had made a large fortune for himself through his company in the Middle East”, said one former employee, who wished to conceal his identity.

A smooth talker, Pasha told these company owners to think large. For instance, he convinced the owner of a small-time design company to expand his agency from 4 employees to 50 employees and financed the expansion too. He invested in pharmacies, a fertility and birthing centre, a hearing aid clinic, and a green tech company, among others. He even asked an Islamic bookshop owner to convert his store into what he called a ‘Global Islamic Megastore’, where besides books, Muslims could buy perfumes, cosmetics, and clothes, all halal certified.

“The only thing he wanted in return, was the logo of Morgenall, next to the logos of all these companies, which they all happily obliged,” says the anonymous employee.

It’s yet to be ascertained the exact amount Morgenall invested in these companies, but a quick search on the financial information website zaubacorp.com reveals that Irfan Pasha, his wife Fathima Maqdooma, and in some cases the CA of the firm Aslam Pasha, are themselves supposed to be the directors of many of these companies, along with the original founding members.

A new Halal investment company
Within the next few months, in 2017, large hoardings of these companies, along with the name of Morgenall started coming up across Bengaluru, especially in areas predominantly resided by Muslims. The billboards were laced with verses of the Qur’an, with pictures of people wearing skull caps.

Morgenall had started to apply the age-old rule of marketing. It went from teaser to preview to launch.

The company started hiring new employees, mostly for its call centre and marketing team. The employees were told that they will be working for a multinational company, which was starting a credit co-operative society in India, to empower people from economically backward communities.
The employees, naturally brought into the claims, without any reasons to doubt the company’s veracity.

“The company first announced the start of Morgenall Ventures LLP, and came up with many investment plans, which was too good to believe,” said one of the former employee, who too wished to be anonymous.

One such was plan was, what they called P+P or Principal + Profit.

For instance, the ones who invested Rs. 1 lakh received the principal amount of Rs. 25,000 in return and an additional 5% profit on the remaining Rs. 75,000. The second month, they received another Rs. 25,000 and 5% profit on the remaining Rs. 50,000 and it continued this way, till on the 4th month, the investors were returned their entire principal amount of Rs. 1 lakh, 20% profits on that amount, and an additional Rs. 25,000, a 2-gram gold coin, and Rs. 2000 worth gift vouchers from Big Bazaar.

When some of the employees questioned the management, about the outright dubiousness of such a plan, they were asked to just do their jobs.

Initially, the company is said to have smoothly paid investors their promised returns every month, gaining their trust, and adding more investors to accounts. And a few months later, it even announced the starting of a co-operative society.

According to the employees, the launch of the co-operative society was promoted heavily. “It was advertised in newspapers, hoardings were put up in petrol bunks, and other public spaces and leaflets were distributed in front of mosques”.

The minimum deposit to open an account was fixed at Rs. 50,000 for men, and Rs. 25,000 for women. They even had a term to explain the special consideration for women depositors. “It was called Women Empowerment,” said one of the employees, sarcastically.

According to this employee, around 5,000 people had made investments in Morgenall Ventures LLP, and an even higher number of people had invested in the co-operative society. The exact number can be learned only after looking into the company’s records.

Although the co-operative society was registered in Karnataka, and by law was supposed to only operate and collect deposits in Karnataka, the company promoted their plans in Andhra Pradesh and Tamil Nadu and started collecting deposits in those states as well. One investor, from Andhra Pradesh, who wrote to us, says that she had invested Rs. 1 lakh in the company, and has not received her monthly returns for the past two months.

Tumbling Down
Everything seemed to be going fine for Morgenall. Within a short period of time, it had established itself as a big financial company, with thousands of investors. It had made a name for itself in the Muslim community, and that despite many similar companies shutting down, and its promoters absconding with millions of investor money.

There was no reason for either its investors or its employees to believe that the company, which had promised them the stars, was systematically planning to trick them all.

About four months before the company shut down its office and scooted off with millions of rupees, it abruptly stopped paying investors their monthly returns. For some, the payments stopped coming in the month of June, and for some, it was in July.

When panicked investors contacted the company’s office, they were told that all their accounts were being linked to ICICI Bank and were asked to wait for the process to complete. To gain investor trust, they even installed an ICICI bank kiosk in their office.

According to the employees, they too stopped receiving salaries three months ago.

In fact, around a month ago, messages on WhatsApp started getting circulated warning people to withdraw their deposits from Morgenall. The message even warned that Irfan Pasha had run away to a different country or planning to run away, according to another message.

One suspicious employee, whom we spoke to tried tracing the source of the messages. “Along with Irfan Pasha’s name, the message contained the name of the CEO of the design agency, who had no involvement in the day to day activities of Morgenall LLC or Morgenall Society. I knew that there was something fishy about it, and wanted to get to the root of it”.

His search landed him to a bulk SMS providing company in Chandigarh, whose call centre confirmed that the message was sent through them. But to his surprise, the very same day, Irfan Pasha’s wife Fathima Maqdooma confronted him about the call he made to the SMS company. “In retrospect, I believe there was a planned effort to divert the attention of people from Irfan Pasha, his wife, and the core inner circle of the company to other people, right from the beginning”.

According to the employee, Irfan Pasha sold his house in HBR Layout at a throwaway price a month ago and rented an independent villa in Hennur Road. His passport copy shows it was renewed on December 20, 2017, and will expire on December 12, 2027.

These employees also accuse other senior management members, to be hand in gloves with Irfan Pasha and his wife. They accuse Azeezullah Khan, whom the company had appointed as a ‘Halal Advisor’ of brainwashing people to invest money, saying it was all halal. “He used to quote the verses of the Qur’an and the sayings of the Prophet (Peace be upon him), and persuade people to invest”. They also point fingers at the company’s manager Sibgatullah Baig, and its Chief Communication Officer Lokesh Raj, and accuse them of being the “brains behind the scam”.
“Catch hold of these people, and you’ll get the whole truth,” the employees say.

According to them, Morgenall used to accept deposits from investors in cash, without even ascertaining the source of it. This practice lasted for several months, until a fraud detection officer appointed by them, cautioned the company of legal consequences. “That’s when they began doing the KYC of customers“.

The extent of the scam, the people involved, and the nexus they had, can be wholly ascertained, only after Irfan Pasha, his wife Fathima Maqdooma, or any of the alleged core members of the company will be arrested. However, the story of Morgenall paints a sorry state of affairs of a community, which continues to be fooled in investing in Ponzi schemes, all in the name of religion.

As one employee told us, “If today, some company announces they are offering 10 or 20% return on investment, and they say the money is halal, I can assure you that the Muslim community will again fall for that trap”. And this explains why such companies continue to flourish and mushroom.

*PONZI SCHEMES STATUS AS OF 30.09.2018*
*IMA*- Still running.
*Injaz*- payments stopped since 2017.
Investors are crying and Cursing.
*Ambidant*- Closed.
Owners ran away duping 38,000 investors, mostly the poorest of poor people.
*Burraq*- Absconding.
*Aala* – Profit delayed
*Muzariba* – Absconding.
*Capital plus* – Absconding.
*Morgenall* – owners ran away. In news nowadays.
*Flawless Bangalore (Bhatkallys Nawayath)* office closed, owner n their associate brothers run away by duping 7000+ hard earner investors
*Ajmera* – Closed.

Courtesy: Two Circles

The post Everything but Halal: How Bangalore Muslims fell prey to ‘high’ returns in the name of Islam appeared first on SabrangIndia.

Photo: Social Media

In these ‘Halal’ offers,  even more attractive than the Halal factor was the ridiculously high returns they promised to their investors. This, coupled with religious scholars who were too happy to promote such companies, meant that Muslim investors came in hundreds. Such smart marketing embedded with lies and deceit meant that these companies were easily able to fool people.

In this five-part series, TwoCircles.net will look at how companies like Heera Gold, now at the centre of a confirmed Ponzi scheme, used a combination of religious symbolism, Ulemas, fake propaganda and political tools to attract investors in Hyderabad.  

Parallelly, in Bangalore, similar stories are emerging on a monthly basis, with over 10 companies having been exposed as either Ponzi schemes or fraudulent companies so far .

We will also look at successful examples of Shariah-compliant investments especially from the state of Kerala. We also get an expert to help us understand how to avoid such fraudulent companies, understand the basic concepts of Shariah investment to ensure that investors do not fall into the trap of Haram in the name of Halal. In the second of the five-part series, Nikhat Fatima looks at how the investors in Heera Gold have been left divided on whether they will recover their money or not and why the wait for them to see their money might just turn out to be very long.

Haram in the name of Halal (Part one)

The SEBI announcement calling Heera Gold a Ponzi Scheme had an immediate impact: by September, people started complaining of not receiving the monthly profits.

This was followed by the establishment of ‘Heera Victims Association’ by Shahbaz Khan of AIMIM . Over 200 victims came out in the open to protest and demand their money back from Heera Gold.

victims association ( Photo: social media)

And the second FIR was filed soon on 10th September by Farzanaunissa Mohammed Khaja, whose husband had invested Rs. 25 lakh in Heera Retail Hyderabad Pvt Ltd. The case was transferred to the crime branch.

Subsequently, Nowhera was arrested in Delhi and brought to Hyderabad on 16th October and granted bail on 25th October by the High Court of Hyderabad.

As soon as the news of the arrest of the CEO came out investors’ panic increased and people came out to give their statements against her.

But many also saw it as a political game by the rival party AIMIM.

One lady advocate who has been actively following the case told TwoCircles.net on the condition of anonymity that back in 2012, Asaduddin Owaisi had purchased government land worth Rs. 200 crore for a mere Rs. 4 crore. And Dr. Nowhera Shaikh had filed a PIL against the Government of Telangana. To avenge this, the people from MIM began instigating investors to file complaints with the police.

“ I know for sure that the investor who has invested Rs. 25 lakh and filed a FIR is a MIM person,” she said.

Photo: Social Media

And the reaction of many an investor and non-investor was that this was a AIMIM conspiracy because Nowhera Sheikh was contesting from Hyderabad in the coming elections as can been seen by their statements of support on social media.

Khalid Hassan, General Secretary, Awami Insaaf Movement and financial advisor told TwoCircles.net, “Heera Gold is running ponzi schemes which has become more clear now because as soon as the campaign was initiated by Shahbaz Khan for the victims of Heera Gold, all potential new customers stopped their investments. And Heera Gold did not have enough money to give ‘profits’ which is why the investors stopped getting their monthly profits.”

A conditional bail was granted to Nowhera after three days of argument despite the Central Crime Station police asking for her custody for further questioning in different cases registered against her by the Economic Offences Wing.

Nowhera was asked to surrender her passport and submit Rs. 5 crore to the court. She was released after giving a surety of Rs. 5 lakh. The metropolitan sessions court wanted to know why the police wanted to investigate when the Serious Fraud Investigation Office was already on the job. The court also asked the prosecution to produce proof that dividends were not paid from the last one year to which the DCP responded that they have no record of the investors as the company has not cooperated with the police.

Dr. Shaikh’s release sent a wave of joy among those investors who still trust her and believe that she will return the money soon.

The reason for this is the charity and humanitarian work done by Dr. Shaikh. She has established two residential schools that are run  free of cost for poor girls from Andhra Pradesh, as well as facilities for free medical services serving lakhs of villagers across Andhra Pradesh. During the recent floods in Kerala, Dr. Shaikh donated Rs. 1 crore to the CM Relief fund.

One investor, Abdul Majeed Imran, who is involved in Islamic activities in Hyderabad, told TwoCircles.net, “If we have invested in a business, we have to be prepared for both profits and losses. And now that we are not getting the dividends , we must accept it as a loss in business. How can we demand profits when there is a loss in the business? We invested in a business that is halal and asking for dividends when there is a crisis is wrong.”

Inauguration of Heera Mart in Kukatpally ( Photo Social Media)

Imran had invested Rs. 1 lakh after one of his friends who had invested Rs. 15 lakh and had regularly got profits from the last few years told him about Heera Gold. Imran says with Rs. 1 lakh it is not really possible start a business of our own so the best option was investing in Heera Gold. And he says he received profits every month between Rs. 3,500 to Rs. 3,900. The amount that was deposited in his account was never the same. It kept varying which is why his belief that this is not interest but definitely profit was strengthened. He believed if it was interest then the amount would be fixed.

Imran is happy that he has received so far Rs. 80,000 of the Rs. 1 lakh he invested. In his circle, he knows someone who sold his house for Rs. 50 lakh and invested in Heera Gold, eight years ago and ultimately got Rs. 1 crore back.

He said only once there was a delay in getting the profit and the company had sent a SMS apologising for the delay and asking to wait. And true to their words they deposited the profit after a few days. “Even a few days before her arrest, I got a SMS from the company asking me to wait as I had not got the dividend from the last two months. I am confident that once things gets sorted out, she (Dr. Shaikh) will give back our money. She is not a swindler as people would like us to believe”.

He feels had the people not been carried away by the protest campaign  of Heera Victims association, Dr. Shaikh would have somehow managed to repay the capital amount invested. Now after her arrest, with the offices closed and accounts frozen there will only be delay.

There are others who sold their properties and invested in Heera Gold in the recent times in the hope that their money will be doubled and are now waiting anxiously. They have neither joined the victims association nor complained because they have been told by the company officials that if they complain their payments will be delayed.

One woman, Sajida, residing in Red Hills had invested Rs. 10 lakh with the hope that by the time her daughter turns of marriageable age she will have enough money to perform a lavish wedding. She did it without the knowledge of her husband who works abroad. She said she believes Allah will help her and did not want to discuss further.

Ismail Khan, a resident of Yakutpura who returned from Saudi Arabia, invested Rs. 3 lakh also because a friend of his told about the huge success of Heera Gold company and added that it is 100% halal. “ I went to the Heera Gold office in Banjara Hills, saw the ambience where every employee was Muslim and I was convinced. I invested in February and got profits around Rs. 9,000 to Rs. 9,500 for about three months after which the profits stopped coming,” he informed TwoCircles.net.

Office of Heera Gold with customers swarming in the heydays ( Photo: Social media)

On a sad note he mentioned about another acquaintance of his who had invested Rs. 10 lakh which was his settlement when he came away from Saudi Arabia along with him. “Anwar Bhai had just invested and the dividends had not even begun that news of the company being fraud and the arrest of the CEO came to light. He lost everything he had earned in Saudi,” he says with sadness.

Investors are also now organising. The investors of Heera gold have formed an association called “Heera Group Investors Welfare Association”. Investors met in Retibowli which Ismail Khan had also attended. There, they decided to collectively complain to the police. So every person’s investment details and details of the certificates issued to them by Heera Gold were taken. Ismail now awaits for the next meeting of the investors through which he will be informed of the next step. He says, “I am with all the investors. We will decide jointly and take action together,” he added.

Syed Sayeed Ahmed Ishaqi who was about to invest but changed his mind after recalling another similar halal investment venture in Hyderabad called “ Al Fullah” which is an Arabic word meaning  ‘sharing goodness’ run by Saeed Bahi, told TwoCircles.net, “Saeed bhai also gave halal profits to his investors 10 years back. And ran his company successfully till it closed down three years back when he said there are losses and stopped giving profits. The people bayed for his blood but he cleverly surrendered himself to the police to escape from the furious crowd.” He said Muslims are very gullible when people tell us that it is halal trading and we will be avoiding haram and pleasing Allah in the process. He gave the example of Charminar Urban Cooperative bank where people embezzled millions of rupees ultimately driving the  chairman Syed Alamdar Hussain Sajjad Agha to commit suicide.

Coming back to Heera Gold , Dr. Shaikh’s luck was short lived because hours after coming out of the Chanchalguda jail, Hyderabad, she was arrested by the Mumbai police who were waiting for her in a Rs. 500 crore fraud case. At the time of filing this report, Dr. Shaikh was in custody and the investigation continues.

It will be quite a while now for all those have pinned hopes on her to get back their investments.

The third part will look at how a similar financial ‘epidemic’ has spread in Bengaluru and what options the people have to recover their money.

Courtesy: Two Circles
 

The post Confused, hopeful, angry, worried: The many emotions being felt by Heera Gold investors right now appeared first on SabrangIndia.

Photo courtsey: social media
 

In these ‘Halal’ offers,  even more attractive than the Halal factor was the ridiculously high returns they promised to their investors. This, coupled with religious scholars who were too happy to promote such companies, meant that Muslim investors came in hundreds. Such smart marketing embedded with lies and deceit meant that these companies were easily able to fool people.

In this five-part series, TwoCircles.net will look at how companies like Heera Gold, now at the centre of a confirmed Ponzi scheme, used a combination of religious symbolism, Ulemas, fake propaganda and political tools to attract investors in Hyderabad.  

Parallely, in Bangalore, similar stories are emerging on a monthly basis, with over 10 companies having been exposed as either Ponzi schemes or fraudulent companies so far .

We will also look at successful examples of Shariah-compliant investments especially from the state of Kerala. We also get an expert to help us understand how to avoid such fraudulent companies, understand the basic concepts of Shariah investment to ensure that investors do not fall into the trap of Haram in the name of Halal. In the first part, Nikhat Fatima, TwoCircles.net, looks at the elaborate lie that was built by Heera Gold and how it unravelled in front of everyone over the past few years.

There is a mini war going on in Hyderabad spreading across social media: YouTube, Facebook, Twitter and of course, WhatsApp. Just type ‘Heera Gold’ in the YouTube search bar and unless you are one of the thousands of investors in Heera Gold, you are in for a treat.
From angry people shouting the choicest abuse at Heera Gold, lawyers enjoying their time in limelight by promising justice to confused investors, and still others expressing unbroken confidence in Heera Gold, it is fair to say that there is something for everyone to watch and listen.

The online noise is in line with the buzz that Dr Nowhera Shaikh tried to create in the past and even though her stars in doldrums right now, the key for her supporters is to ensure that she never falls out of news. Her USP has been the public image she has built over the past many years; an image that has both created a lasting impression among people as well as help her reach thousands of investors. And the added label of ‘Halal’ made her work easier and since Heera, a number of other companies have adopted similar policies. Like Heera, they too are now being accused of defrauding people.

But this issue is not just about Heera Gold. Muslims in India have  always been in a dilemma when it comes to investing money in any scheme/ venture, especially if they consider themselves ‘God-fearing’. Muslims are taught that ‘riba’ or usury  is haram (prohibited) in Islam. And while thousands of Muslims continue to save and invest via traditional systems like banks and stock market, there are many Muslims who are both left out or stay out of the mainstream banking methods. Muslims who are cautious and keen to invest in halal (permitted) schemes find themselves with plenty of options these days, but often the legitimacy of these options is assessed more  on blind faith than sound reasoning.

Heera Gold Trading started in the late 90s by founder Dr. ‘Aalima’ Nowhera Shaikh  and by 2010 the Heera Islamic Business Group encompassed established with more than 15 companies. Heera Islamic Business group projected to be every Muslim investor’s dream: earning halal income. But they never explained much about how they worked, and for many, this company was a red flag from the beginning.

The different companies owned by Heera Islamic business group

Others, however, were smitten by promises of annual returns of upto 40% on investments. The investor could choose from a bouquet of options: Gold, where the returns would be monthly, Textile, where returns would be yearly and Food, where returns were promised biannually.
The fraud is elaborate but can be easily understood if one knows the history of Ponzi scheme. Named after a famous Western swindler of the 1920s, Ponzi schemes, in very simple terms, has been defined as  “robbing Peter to pay Paul”. Once an investor puts down an investment in the promise of high returns, other investors follow. So, say, a person called Ahmed invests Rs 1 lakh in the hope of getting Rs 36,000 as yearly returns. He is then paid Rs 3,000 per month, every month, (to make up Rs.36,000 for the year) from the money invested by another person called Imran, who also invested a similar amount based on the same promises. Investors are happy with the interest money they see. This continues and and more investors arrive, more money is diverted to other investors. But investors are not paid from profits from a product, only money is changed around. This can only work until people begin to ask for their full investments back. So it continues for a certain period till the lies begin to crumble. This is what happened with Heera Gold. But as important as the scheme and the returns was the persona built by Dr. Shaikh.

Photo: social media

Aalima: The halal image of Dr Nowhera Shaikh
Apart from the halal income which other shariah-compliant schemes also promise, what set Heera Gold apart was its CEO Dr Shaikh. By adding ‘Aalima’ to her name, dressing in traditional Islamic attire and invoking the name of Allah in almost every second sentence in the videos she released, she convinced many Muslims, even the most staunch ones, that Heera Islamic group is genuine and hence can be fully trusted.

The Muslim men especially were bowled over by the fact that a woman so rich and intelligent, an Aalima and a doctorate scholar was so modest that she was clad in hijab and running such a large business empire.  Some even went to the extent of comparing her to the prophet’s first wife Bibi Khadija who was a successful business woman.

Adding to all these scheming were the Ulema from different states that attended her grand public meetings and shared the dais with her. And in their speeches repeatedly affirmed the fact that Heera Islamic Business group (Heera Gold for short) was totally on Islamic rules and every rupee earned is halal, that added weight to the whole concept of halal trading.

Photo: Social media

And then of course, there were the returns. Once people started investing, they began to get the promised returns which was beyond their expectations. Soon, Heera Gold business started expanding solely through word of mouth. Most of the people opted for the Gold scheme because of its monthly returns, hence the company gained its ‘Heera Gold’ name which was also the first venture of Dr Shaikh.

Those who invested in the first few years not only got back what they had invested but also 10 times more, say investors. So it was only natural that they advertise freely for the company that was not only genuine but making huge profits.

End of acche din and the beginning of trouble:
The past one year has especially been troubling for Heera Gold, but trouble first appeared for the Group in 2012 when the police received the first complaint and that too from a Hyderabad VIP. Member of Parliament Asaduddin Owaisi claimed that a large number of investors from his constituency were cheated. Subsequently, the police investigated the matter but did not find enough evidence to take any action against Dr Shaikh.

In 2014, the company came under the scanner for illegal transfer of money  through ‘havala’ . And in 2016, Dr Shaikh had filed a case against her husband for stealing 10 kgs of gold. But upon enquiry the police were told that the 10 Kg of gold was not stolen but it was his commission for bringing 200 kgs gold. Investigations were on in this case too to find out whether the gold was brought in the country through legal means or smuggled.

“I personally do not recommend investing in Heera Group. I am also not accusing them of being a scam…if a business is giving you around 200% return and there is scope of expansion. Would you stop its expansion?…if they are earning 200% profit on mineral water (Heera pure drops) as they are returning 100% to investor and keeping 100% for themselves as per bond…why they have closed down the investment?”

Back in 2015, this was the answer given by Quora user Gufran Khan when asked “Is it safe to invest in Heera Gold.

Three years later, in July 2018, this report by MoneyLife pointed out that the Securities and Exchange Board of India (SEBI) has officially clarified that activities of Heera Islamic Business Group, better known as Heera Gold, are in the nature of Ponzi or multilevel marketing  (MLM) scheme. Since these activities are beyond the ambit of SEBI and Reserve Bank of India (RBI), the case has been referred to CID- Economic Offences Wing (EOW), Enforcement Directorate (ED) and Commissioner of Police in Hyderabad, SEBI said. Subsequently, the Economic Offences Wing took the case in their hands.

Picture: Social Media

What has followed since has left many people confused, many more angry and worse, shattered the image of a successful Muslim woman entrepreneur who had inspired many other women in the past. The company and Shaikh remains defiant and many people have come in its support in the past.

In part two, we will look at how despite police action, many investors continue to have faith in Heera Gold and the concerns of people who believe they were duped.
 

Courtesy: Two Circles
 

The post Haram in the name of Halal: How Heera Gold promised Acche Din and delivered the opposite appeared first on SabrangIndia.