Corporate Governance @ Finance: Fashion Gold Jewellery Group
The District Police Chief D. Shilpa
has transferred cases of cheating registered against Manjeswaram MLA, M.C. Kamaruddin
and Pookoya Thangal, Chairman and Managing Director respectively of Fashion
Gold jewellery, to the district Crime Branch on Sept 06, 2020. Earlier last
week the Chandera police registered three cases against the MLA and Pookoya
Thangal, based on a complaint lodged by three people who alleged that they were
cheated of ₹34 lakh deposited in the Fashion Gold jewellery shop at Cheruvathur.
Three branches of Fashion Gold
jewellery were closed in January last year following losses. Since August last
year, investors have not been paid dividends. Since then, 12 cases had been
registered in various police stations in the district, the decision to transfer
the cases to the district Crime Branch was taken as more cases emerged against
the duo.
Cheque bounce case
On Sunday, it came to light that the
Kanhangad magistrate court has issued notices to the MLA and Pookoya Thangal to
appear before it on December 2, 2020 based on a case filed by two who deposited
₹78 lakh in the jewellery group. They alleged that the cheque given by the MLA
and Thangal bounced for want of money in their accounts.
The petitioners, Zubair
and Ashraf of Kallar, said though the issue was brought to the notice of the
leaders of the Indian Union Muslim League, no steps were taken to help them.
Mr. Zubair said that he had demanded
to return ₹28 lakh he had invested after the closure of Fashion Gold jewellery
branches in October last year. The MLA and Pookoya Thangal signed and handed
over two cheques of ₹15 lakh and ₹13 lakh. But the cheques bounced as the
accounts had no money. Likewise, they also collected ₹50 lakh from Ashraf, an
expatriate businessman. He too was given cheques of ₹15 lakh and ₹20 lakh.
However the cheques bounced when he approached the bank to encash them.
Following which both approached the
Kanhangad Magistrate Court in March 2021.
MLA’s explanation
The MLA in his response to
the earlier cases had said that he was being targeted by political rivals.
Though he was the chairman of the Fashion Gold group, which raised money from
the public as investment and deposits, he was not running the day-to-day
affairs of the business, the MLA had said.
In the cheque bounce case, Mr.
Kamaruddin said that he did not directly give cheques to anyone. He said that
the cheques he had signed might have been taken by someone from the jewellery
shop. Some people were trying to create a problem when steps were being taken to
solve the issues, he told the media.
Akkarakkaran
Abdul Shukoor from Kerala’s Kanjangad did all kinds of jobs in Dubai for 30
years before he returned home in 2019 to live with his family. He invested his
lifetime savings of Rs 30 lakh in Fashion Gold Jewellery to become a
shareholder. Investors were promised a monthly or yearly interest payment of Rs
1,000 for Rs 1 lakh and a share of the profits. For the next four months, Shukoor got Rs 30,000
per month regularly. Then the payments stopped. Slowly, the three outlets
of the jewellery group in Kasaragod and Kannur districts shut down. He called TK Pookoya Thangal, the Managing
Director of the jewellery group, but his phone was off. When they visited his
house, it was locked.
Like Shukoor there are many who lost lakhs of rupees in the
jewellery deposit scam in which Indian Union Muslim League (IUML) leader
Pookoya Thangal as well as Manjeswaram MLA MC Kamarudheen, co-owner of the
jewellery group, are the accused. There are about 16 cases registered against
the IUML leaders in Chandera and Kasaragod police stations. Apart from that,
there are other cheque bouncing cases against them. Reports say investors have
lost more than Rs 1 crore as of now, but as per sources there is more money
involved in the scam.
“More
than 700 people have invested in the jewellery group. It’s not just a Rs 1
crore scam, at least Rs 100 crore is involved here. But many of the people who
were cheated will not complain as they have to give proof of the source of
money. Many of them have invested huge amounts, I know this personally. Only
people who can show the source of money have complained so far,” one of the
complainants alleged, seeking anonymity.
Abdulla
Moideen Kunji was also an investor. He returned from Dubai in 2013 and invested
Rs 10 lakh in Fashion Gold Jewellery. “They gave back Rs 7 lakh over the
years, Rs 3 lakh is still pending. Two years ago, I met with an accident and
now I can’t go for any work. I need another surgery on my legs. I have no
money, I’m not even able to continue my treatment,” Moideen says.
Another
investor, C Khalid, who is yet to file a complaint, lost around Rs 70 lakh. “I
have invested money in the firm since 2013. I had faith in them as they were
IUML leaders, I never expected them to cheat us. I worked for 30 years in the
Gulf to earn the money I had invested. That is all I had,” Khalid says.
Though
he gave a complaint a few weeks ago, it was not registered due to some
technical issue, so he is planning to give another complaint at the Chandera
police station. Meanwhile, the Crime Branch has taken up the case. Chandera
police on Tuesday (Sept 08 , 2020) raided the houses of Pookoya Thangal and
Kamarudheen. The team, led by Chadera Station House Officer P Narayanan,
couldn’t find any documents from their houses.
MLA
Kamarudheen told the media that the controversy was politically motivated and
that he will pay back every investor’s money at the earliest.
However,
once the jewellery showrooms in Kasaragod districts were closed down, the
depositors started filing complaints. By then, they realised that this was a
huge scam. Although there were a lot of discussions held to solve the issue,
nobody gave any clear answer regarding who would return the money to the
investors or how.
Fashion
Gold International was founded in 2006. Later, Omar Fashion Gold was registered
in 2008, Nooj Gold in 2009 and Fashion Ornaments in 2012. Around 750 people
deposited money in these institutions. The depositors were told that all 4 were
the same company.
Jewellery
management claimed that they could not return the money as their business
crashed. However, the depositors stated that the company collected money even
when the jewellery branches were being shut down. There are also allegations
that the shares of the company were sold without the knowledge of the
depositors.
A month after the Special Investigation Team (SIT)
arrested Manjeshwar MLA MC Kamaruddin for allegedly duping depositors in gold
jewellery businesses, the other key accused -- TK Pookoya Thangal, his son A
Hisham and nephew Zainul Abid -- continue to evade arrest. Officially,
they have been on the run since November 7, when Kamaruddin was arrested.
Thangal is a religious Sunni leader with considerable
influence among Muslims. He is also the managing director of four companies
which ran Fashion Gold jewellery stores. Hisham is a director and Zainul Abid
was the general manager of the four stores, closed between October and December
2019.
"Kamaruddin has been made a scapegoat by the LDF to
score brownie points during the local body election," said IUML leader
fromTrikaripur V Kunhibava. The MLA continues to be in judicial custody in
Kannur Central Jail.
The depositors alleged that the police were going slow on
the investigation after the arrest of Kamaruddin. Last week, they took out a
march to the office of the District Police Chief to demand the arrest of the
other accused. "The police are happy with the arrest of Kamaruddin. There
is no effort on their part to find the whereabouts of Thangal and family,"
said Hasheem, whose wife and mother-in-law have invested in Fashion Gold. The
police are also not looking at the role of the other directors in the
companies, he alleged. "We have named at least 10 directors but the police
have named only four accused," he said.
'Thangal will
be arrested by December end'
The special
investigation team's head assistant superintendent of police (ASP) Vivek Kumar
said on 08 Dec 2020, Thangal is the accused no. 1 in the case and he will be
arrested by the end of December 2020. He said the police were busy with the
election now. "But it is a matter of time before he is arrested,"
Kumar said.
He ruled out
that Thangal and company have escaped from the country because there were
lookout notices against them. He said that there were 116 cases registered
against the accused and Kamaruddin had been arrested in 76 cases. Thangal is
the accused no. 1 in all the cases.
Investigating
officers said that they had concrete evidence of Thangal and Kamaruddin
illegally amassing wealth from the company. "We have documentary evidence
of them collecting money from depositors but the money has not reflected in the
bank accounts of the companies," said an officer who is part of the SIT. On
booking other directors of the companies, the officers said that they were
working on finding evidence against them. "They were more like shareholders
than directors but we are looking at their role," he said.
By Jan
04, 2021, M C Kamarudheen got bail from High Court in 3 more cases on conditions
that he shall not enter the locality where cases are registered, not influence
the witnesses and execute Rs 1 lalh bond. There are further 82 cases in which
he has to get bail for free movement outside the jail. When the lawyers are
engaged in filing bail pleas for Kamaruddin, the SIT keeps registering more
cases against him and recording his arrest. This week (29 Jan 2021) SIT
registered two new cases against the MLA
The
Managing Director (MD) of Fashion Gold jewellery, Pookoya Thangal, who had been
absconding for 10 months after being accused in the jewellery investment fraud
case, surrendered before the Hosdurg First Class Judicial Magistrate court in
Kasaragod District, Kerala, on Wednesday (11 Aug 2021). Mr. Thangal arrived at
the court with his lawyer. More
than 150 cases have been registered in connection with the fraud. Kamaruddin
and other accused were slapped with charges of cheating, misappropriation of
funds, raising money from the public under an unregulated deposit scheme
(Section 3 of Banning of Unregulated Deposit Schemes Act) and Section 5 of the
Kerala Protection of Interests of Depositors in Financial Establishment Act
2013.
Questions
1. Define
a. Business Ethics
b. Corporate Governance
c. Stakeholder
2. List the stakeholders of Fashion Gold jewellery group
3. What investment alternatives are available for investors who does not want interest income. Substantiate
4. List payment alternatives available today in banking
References
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