Destiny Multipurpose Cooperative Society Ltd (DMCSL), the cash cow of controversial Destiny Group, enrolled at least 30 percent fictitious members in the shareholders’ list to show a massive growth rate to its existing and would-be members.
The Department of Cooperatives (DoC), principal government organisation to facilitate and regulate cooperative societies, has detected this in an investigation that took over three months to complete.
The investigation report is to be submitted to the Ministry of Local Government, Rural Development and Cooperatives in a week.
The DoC probe committee detected massive irregularities — from recruitment of members to investment, spending and overvaluation of assets — in DMCSL activities.
“We are puzzled. We have found irregularities everywhere in DMCSL and all these were done to cheat people,” Amiya Kumer Chattapadhay, additional registrar and head of the probe committee, told The Daily Star yesterday.
“We found 30 percent of 8.5 lakh DMCSL members fictitious. They have no real addresses,” said Amiya.
The management of Destiny has also violated laws by investing in other companies without the prior approval of the DoC, he said.
According to laws, a cooperative society must take approval from the DoC for an investment worth over Tk 5 lakh.
But DoC documents show, DMCSL applied to the cooperative authority seeking permission for an investment of over Tk 356 crore in 34 entities in 2011-12.
“When we reviewed Destiny’s audit report for 2010-11, we found it had already invested in 27 entities which is a gross violation of laws,” said Amiya.
DoC investigation also found that most of these entities exist only on paper.
Over the past few months, Destiny Group came under the spotlight following a Bangladesh Bank enquiry that found proof of illegal banking by DMCSL.
Illegal banking by the co-operative was creating disorder in the country’s financial sector, said the BB probe report, which prompted different government agencies, including the DoC, to carry out investigation against Destiny Group.
The controversial cooperative firm has seen an astronomical rise in its capital, shareholders, profit and investment since 2009. It obtained registration from the DoC in 2005.
The company’s paid-up capital increased to nearly Tk 300 crore in 2009-10 from Tk 5.53 crore a year ago. The figure jumped to nearly Tk 1,200 crore in 2010-11. DMCSL’s paid up capital was Tk 1.62 crore in 2006-07.
Loans and investments grew to Tk 569 crore in 2010-11 from less than Tk 23 crore in 2008-09; they rose by over 213 percent between 2009-10 and 2010-11.
Also, the number of shareholders grew to more than 6.4 lakh in 2010-11 from mere 167 in 2006-07. The number was shown as 8.5 lakh in 2011-12, said DoC officials.
“We picked some names from the members’ list to verify and later found at least 30 percent of the total shareholder fake,” said the head of the DoC probe committee, adding that Destiny might had fuelled the number of members intentionally so that people would feel encouraged to become a member.
Amiya said as of June 30, 2011, the firm showed Tk 656 crore in assets whereas it actually spent the amount for research and development.
“Most of the Tk 656 crore was spent on paying commission to its existing members, but the sum has been shown as asset. It is not acceptable to any accounting explanation,” he said.
The report found that Destiny had overvalued its assets to fuel its books of account. An asset, which had been bought with Tk 55 crore, was shown worth Tk 77 crore after a year.
The top management of Destiny also cheated people with its tree plantation programme. The DoC report found that a package for tree plantation programme had been offered at Tk 10,000 saying that half the amount would be paid by customers while the other half by DMCSL.
“In reality DMCSL paid nothing,” said Amiya.
The probe report also found a huge gap between collection of money and investment. The additional registrar gave an instance saying that suppose, it had collected Tk 50, but invested only Tk 10.
“The remaining amount was spent for commissions, purchase of expensive cars, air conditioner and office decoration etc,” found the report.
Rafiqul Amin, chairman of DMCSL, could not be reached for comments.
After a two-month investigation, the Anti Corruption Commission on Tuesday sued 22 top officials of Destiny Group, including its chairman Rafiqul Amin and director Lt Gen (rtd) M Harunur Rashid for money laundering.
The Anti-Corruption Commission yesterday sued 22 officials of Destiny Group for laundering Tk 3,285.26 crore by cheating investors.
The ACC filed two cases against the company officials, including its Managing Director Mohammad Rafiqul Amin and Director Lt Gen (rtd) M Harunur Rashid.
In its month-long enquiry, the commission had found evidence that these officials embezzled investors’ money by cheating them through company projects and illegally transferred the money to their bank accounts, said ACC officials.
ACC Deputy Director Mozahar Ali Sarder filed a case with the capital’s Kalabagan Police Station against 12 Destiny Group officials for laundering about Tk 2106.64 crore out of Destiny Tree Plantation Ltd project.
Apart from Rafiqul and Rashid, 10 other company officials were accused in the case. They are Destiny 2000 Chairman Mohammad Hossain, its nine directors Gofranul Huq, Sayed-ur Rahman, Mejbah Uddin Swapan, Syed Sazzad Hossain, Irfan Ahmed Sunny, Farha Diba, Jamsed Ara Chowdhury, Sheikh Tayebur Rahman and Nepal Chandra Biswas.
ACC Assistant Director Towfiqul Islam filed another case against 22 top officials of the company, including the 12 accused in the first case, for laundering Tk 1178.61 crore from Destiny Multipurpose Cooperative Society Ltd (DMCSL).
Other 10 accused are Zakir Hossain, former general secretary of DMCSL, Azad Rahman, former joint secretary of DMCSL, Akbar Hossain Sumon, former treasurer of DMCSL, Shirin Akhter, Lt Col (retd) Didarul Alam, a director of Destiny 2000, and six former DMCSL members Rafiqul Islam Sarkar, Majibur Rahman, Sumon Ali Khan, Saidul Islam Khan Rubel and Abul Kalam Azad.
At a press briefing at ACC’s Segunbagicha office in the afternoon, ACC Deputy Director Mozahar Ali Sardar said the DTPL authorities illegally collected Tk 2335.74 crore from people by selling 6.18 crore trees through multilevel marketing between March, 2006 and April this year.
In its probe, the ACC found that Tk 2106.64 crore were laundered from the DTPL project in the name of salary, honorarium, dividend, commission, incentive and promotional cost, he said.
The DMCSL authorities embezzled Tk 1178.61 crore by cheating people and transferred the money to other non-profitable and non-operational companies of Destiny Group, said ACC Assistant Director Towfiqul.
He said the commission filed the second case against the Destiny officials for violating the Cooperatives Act by transferring money to other non-profitable and non-operational companies.
The ACC officials said only Tk 56 lakh and another Tk 4.87 crore were left with the two bank accounts of the DMCSL and the DTPL after the company officials transferred the huge amount of money.
They said the Destiny officials tricked people into investing money in the DTPL project, saying if anyone invested Tk 8,000 under a “golden package,” the person would get Tk 20,000 after six years with a 72.46 percent interest.
And under the company’s “silver package”, the investor would get Tk 30,000 against an investment of Tk 5,000 after 12 years with a 195.74 percent interest.
The Destiny officials took a commission of Tk 4,260 to 4,300 from each investment of Tk 8,000 and a commission of Tk 3,775 from each investment of Tk 5,000.
According to the ACC law, if the Destiny officials are found guilty of money laundering, they will be sentenced to 12 years of imprisonment and have to pay a fine double the amount they had laundered. Their moveable and immoveable properties will also be confiscated.