Where has all the money gone?

Evaly was known for its mega discounts and 150 percent cashback offers. The company—once the second-largest e-commerce platform in Bangladesh—is now recognised as a front for a massive Ponzi scheme, which lured unsuspecting customers in with promises that were impossible to keep. Today, the company is mired in multiple allegations of fraud, irregularities and embezzlement, among other crimes. It has, thus, essentially committed major financial crimes. The company's CEO Mohammad Rassel and his wife Shamima Nasrin, who is Evaly's chairman, have admitted that their company's liabilities stand at more than Tk 1,000 crore.

Now the question is: Where has all the money gone? Why is the company not being able to pay back its customers?

The risk of money laundering here cannot be overlooked. It is highly likely that the owners internally laundered the money, or siphoned it off abroad. There can be other possibilities that we are not aware of yet. Whatever the case is, the whereabouts of the money may continue to elude us, in a "fitting" tribute to the mystery surrounding the extraordinary rise and fall of Evaly. The authorities would like to have us believe that both Evaly and its customers are responsible for the current debacle. But if we follow the trajectory of this case, the blame goes both ways.

One may recall that it was on August 28, 2020 when the media reported that the Bangladesh Bank would investigate the financial transactions of Evaly. The Bangladesh Financial Intelligence Unit (BFIU) then informed us that bank accounts belonging to Evaly and its top management had been frozen for investigation.

On September 9, 2020, it was reported that various agencies would be engaged in investigating the activities of Evaly. The agencies included BFIU, the National Board of Revenue (NBR), and the Anti-Corruption Commission (ACC), among others. This happened as a result of a directive from the Ministry of Commerce to these agencies.

Fast forward to February 25, 2021, it was reported that the central bank was in charge of investigating the financial irregularities of the e-commerce company. To that effect, the commerce ministry reportedly wrote to Bangladesh Bank Governor Fazle Kabir, along with the Ministry of Home Affairs' Senior Secretary of Public Security Division Mostafa Kamal Uddin, on February 18. The ministry also wrote letters to other bodies to investigate Evaly's misadventures.

Then, on September 2, the High Court issued an injunction order restraining Evaly from selling and transferring its assets, as a distressed customer filed an application seeking directives to liquidate the company and pay off the creditors.

On September 14, 2021, it was estimated by the e-commerce platform itself that its dues to the customers stood at about Tk 311 crore, while its dues to the merchants were around Tk 206 crore. But the recent revelation by the company's chairman and CEO that it owes Tk 1,000 crore overshadows the previous estimates.

Finally, in a shattering blow to the creditors and customers of Evaly, Commerce Minister Tipu Munshi said on Wednesday: "I don't think Evaly has any money—there is not much scope to recover any money from them." He further added: "It seems Evaly will not be able to return the money to customers. Because, either Evaly has moved the amount or it has spent most of it on advertisements. It sponsored sports and many other events."

These statements, coupled with the earlier developments in the case, raise certain questions: Why was this sorry state of affairs allowed to come to this point? Why was the company allowed to continue its operations and ensnare many more customers and vendors, even after allegations against it surfaced last year? Which mechanism did Evaly use to move the money that slipped the radar of the financial intelligence unit? How much did Evaly use in advertisement, because Evaly's campaigns alone certainly cannot account for such a huge amount of money? And most importantly, will the customers and vendors get their money back, and who will take responsibility for that?

Evaly's transgressions have been in the news for quite some time now. As early as mid-2020, customers started lodging complaints against Evaly for not delivering products on time. And one can safely assume that this scam of Tk 1,000 crore has not happened overnight. So, how did Evaly conduct such financial mismanagement and fraud under the nose of the authorities?

"When such unrealistic advertisements and aggressive marketing offers were being offered by Evaly, they did it in public, and the relevant authorities should have looked into it back then," said Dr Iftekharuzzaman, executive director of Transparency International, Bangladesh (TIB). "Now, the BFIU should look into the money laundering aspect of it, to trace the money of the customers who have paid Evaly for undelivered products. If the money is not in the bank, then where is it? BFIU has both preventative and curative roles to play here. It needs to follow the money. The Anti-Corruption Commission, along with other relevant bodies, should also seriously investigate this."

Despite the host of challenges in this situation, the authorities now need to focus on finding the money in order to be able to pay back the customers, and they must also ask themselves why this was allowed to happen in the first place. Dr Iftekharuzzaman suggests that this could have happened due to two factors: a) The lack of responsibility and professionalism of the various bodies who should have investigated this earlier; and b) The inability of the regulators and relevant authorities in perceiving this situation. "This could also have been due to their lack of capacity, in the sense that perhaps the regulatory bodies were unable to sniff out the irregularities in the business model of these e-commerce platforms. Jubok, Destiny have committed similar multi-level marketing crimes in the past, although not in the e-commerce space. Therefore, it surprises me that the authorities could not identify the issues earlier," he said.

In failing to address this situation at the right time, the authorities have not only given Evaly a free run, but they have also enabled a conducive environment for other such e-commerce platforms to take advantage of the booming industry.

Right now, the government and the authorities should take a two-pronged approach to address the situation. First, the government needs to assess the gaps within the system that allowed a platform like Evaly to rob the common people of their money, and to establish a separate independent commission to regulate the e-commerce space and empower it to bring all such businesses under an accountable process to ensure transparency, good governance, and integrity. The commerce minister's statement that the government is considering forming a regulatory body for the e-commerce sector, along with a Digital Commerce Act, indicates a positive—if long overdue—move. However, two factors are important here: independence and empowerment, and the timely application of the act, so that rogue e-commerce platforms cannot take advantage of the people or the loopholes in the system. Other rogue players have already penetrated the e-commerce space, and are applying similar unrealistic marketing tactics to entrap customers. It is essential that these e-commerce sites are brought under regulations, irrespective of who are running them.

Second, the BFIU needs to take a closer look at the money trail of Evaly and its top executives, so that the victims can be repaid. A source from BFIU confirmed to this writer that they were investigating the financial irregularities committed by the company and its management. One can only hope that the BFIU investigation will yield results. There have been multiple cases of financial irregularities and capital flight by influential individuals that still remain unresolved. The Evaly case must not be one of those.

The e-commerce industry has incredible potential in Bangladesh, but it is at risk of being manipulated because of the malpractices of a few e-commerce sites. It has become a pressing need to identify the rotten apples and pluck them out of the system, so that the e-commerce industry can flourish in a healthy way. There are those who are playing by the book, ensuring transparency in their transactions, but because of the unhealthy practices of a few, these compliant platforms are losing the advantage of a level-playing field. This cannot be allowed to happen.

The government also needs to ensure justice for the criminals—by meting out adequate punishment to them—and for the victims—by making sure they get back their hard-earned money—which the government can by tracing the money and bringing it back from wherever it is now. Otherwise, the e-commerce industry will suffer from a serious lack of public trust, which will hinder its growth. According to a report by The Daily Star, e-commerce sales have already seen a five-month low in July, when online transactions fell to Tk 740 crore. The July figure is also 42 percent lower than that of June, when customers spent Tk 1,277 crore. For the sake of this industry and all those people who are relying on it, we cannot allow the downtrend trajectory to continue.

Tasneem Tayeb is a columnist for The Daily Star.

Her Twitter handle: @tasneem_tayeb