In August, 2011, the Economic Offences Wing, Mumbai seized the complete operations of servers of SpeakAsia from Tulsient Information Systems Private Limited, a company which was providing BPO services to SpeakAsia and hence business came to a virtual standstill.
Once the police started the investigations against SpeakAsia, most of his company's employees and partners were harassed, he alleges. His own two companies, Tulsient Information Systems Pvt Ltd and Tulsient Consultancy Pvt Ltd, were shut down.
"These guys will not understand what is factoral organization," Sharma says. "Internationally, we work as a factoral organization. My dependency for example to make surveys was in Dubai. Production of the magazine was somewhere else. There was a poor small company which was doing html work for us. All the magazine pages that we had, they used to turn them into html, so that it was fast. And the poor company was paid Rs 1.35 lacs every month. Owner (of that company) was arrested for two months."
"Right now, my business is destroyed completely which had nothing to do with SpeakAsia. I have been in business for donkey's years. What has impacted me more is internationally. Internet news travels. It has impacted the image everywhere. People get worried. Bankers get worried. Clients get worried. Must be something wrong somewhere."
The nature of the crime
"We represented to RBI," Sharma says. "RBI's answer is very clear. It doesn't fall under money circulation."
In September 25, 2012, RBI did consider the validity of business model of SpeakAsia in India but eschewed to express a final opinion on the matter citing the reason that the police were still investigating the case.
On the question of SpeakAsia indulging in multilevel marketing (MLM), he says:
"You see multilevel (marketing) by itself, there is nothing wrong (in it). You are only distributing commissions at multiple levels. Money circulation means you pay the previous guy by taking the money from the next guy. So they are trying to declare the scheme as that, which is Ponzi. Now if you declare it as a Ponzi, it is money circulation. So every participant, poor guys, who is just a consumer is also a criminal because Chit fund and Money Circulation Act of India says that anyone even participating in it would be a criminal."
India's direct selling industry, however, welcomed the Speak Asia probe by the police. 'The Speak Asia controversy had raised doubts over the modus operandi of other direct and multi-level marketing companies that have been flourishing in India for 15-20 years,' reported the Business Standard. India Direct Selling Association (IDSA) secretary general Chavi Hemanth told the newspaper, "We have long been requesting the Ministry of Commerce to frame a clear definition of a direct selling company to bring out clarity in the industry. The way the Department of Industrial Policy and Promotion (DIPP) had formulated a detailed wholesale policy in 2010 and set FDI limits for retail in 2005, why can't we have a similar policy for the direct selling industry as well? We need the government to come out with a policy to regulate the industry."
Sign up for CIO Asia eNewsletters.