Law enforcers have yet to say where the money went
With the arrest of Evaly founder and CEO Mohammad Rassel and his wife Shamima Nasrin, its consumers, most of whom are owed a lot of money, are asking if they’ll ever get their money back.
Most of them have unfulfilled deliveries and unpaid refunds despite making 100% advanced payments.
But like most ponzi schemes, once the money is gone, it is usually very hard to retrieve it, mainly because it gets transferred abroad or it’s just spent.
Law enforcers have yet to say where the money went. Former employees allege the company spent huge amounts on gifts, trips, events and sponsorship.
They said the platform would spend “excessively without any regard for sustainability.”
They also said the organization incurred huge losses just in branding and incentivizing employees.
Evaly had allegedly spent huge amounts of money on luxury office tours and gifts on several occasions, but that ultimately led the company to bleed so much money that it can no longer pay back customers or pay its employees.
RAB spokesperson Commander Khandaker Al Moin told a press conference that Rassel acknowledged that his tactics of taking money from new customers to clear debts owed to old customers was bad.
“During primary interrogation, Rassel said it was difficult to return the money to his customers in line with the recently formulated government rule regarding ecommerce business,” he added.
Though Rassel wanted to create Evaly’s brand value to sell the platform to some foreign company, the supply chain could not be maintained and liabilities kept growing, he said.
Where’s the money?
Hafizur Rahman, a Supreme Court lawyer, said: “There is legal scope to get back the money. But that would take a long time and collaboration of other agencies. It is a lengthy process. In the past some MLM companies took money from people, but most of the victims are yet to get their money back.”
Much like a ponzi scheme - a fraudulent investing scam promising high rates of return with little risk to investors, according to Investopedia.
And high rates of return is what Evaly seems to be all about. It offers consumers all sorts of lucrative deals, with “cashback” offers going up to 100 to 150%. Then there are massive discounts, gift cards and a whole plethora of offers which make shopping from the platform very attractive.
The risk in this case, at least the one that Evaly hints to customers, is that deliveries might take longer than usual — about 45 days, officially.
Very quickly did the allegations of undelivered products begin to pour in. It is learned that more than 5,000 complaints have been lodged against Evaly with the National Consumer Rights Protection Directorate.
Most of these complaints were lodged for "not getting the products for a long time despite paying full money." Bangladesh Bank has also brought charges of embezzlement and money laundering against the company.
Miftah Zaman, a private banker, said that his dire need of a motorcycle forced him to order one from Evaly in January earlier this year.
Even as of yesterday, his product status showed pending. With the owners of the company behind bars, he sighed that there was no way to get either his motorcycle, or his advanced payment back ever again.
"At the same, taking legal steps against them (Evaly) is not possible. If I file a case, they will definitely not deliver my bike," he lamented.
Another Evaly customer, Rashidul Hasan Pritom, has Tk1.6 lakh worth of products yet to be delivered by the controversial e-commerce platform.
"After 45 days, I went to their office. They assured me that it will take some time due to the Covid-19 pandemic," he added.
A section of consumers and merchants are demanding Rassel's release, so that he could pay off their dues.
Another aggrieved customer, seeking anonymity, said: “I want Rassel Bhai to be immediately released. If he returns, maybe the customers will get back either their products or money. Otherwise it is not possible. I urge the government to delicately handle this matter. My investment worth Tk6.75 lakh is stuck with Evaly.”
"Scores of other e-commerce platforms have done similar things but they are still operational. I hope the authorities will release Rassel to pay back his customers," he added.
Company law expert Barrister Tanjib Ul Alam told Dhaka Tribune: “People will get their money or goods only when Evaly has the capacity to pay. But it does not have that capacity at the moment. In the absence of a viable amount of working capital, there is no possibility that Evaly will be able to pay their dues.”
In addition to the above, a victim can also lodge a complaint under section 420 of the Penal Code.
It states that: "Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable to being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine."
Apart from criminal action, a buyer can also file a civil case for recovery of money and damages.
But if every buyer files cases against Evaly, it will cause catastrophic impact in the system and the whole process will take ages, he added.
According to the Ministry of Commerce and the National Committee for the Management of Digital E-Commerce, Evaly owes Tk543 crore to customers, merchants and other companies.
The company has more than 200,000 customers.
However, the company has less than Tk100 crore in its accounts.
Even the employees of Evaly have salaries due for a substantial period of time.
Seeking anonymity, a senior police official said: “If anyone cheats, we will take action according to the law. Platforms like Evaly and other e-commerce companies have been brought under surveillance. Law enforcement agencies are monitoring their movements.”
"We are preparing to grill them (Rassel and Nasrin) in the interest of investigation. We are analyzing all the documents and victims' testimonies," he added.
About the case filed against the couple, he said that recent cases are filed under Sections 420, 406, and 506 of the Bangladesh Penal Code 1860.
Evaly began operations in 2018. The company quickly gathered traction by offering lucrative discounts and cashback.
Experts weigh in
Prof Muhammad Shahadat Hossain Siddiquee, who teaches economics at the University of Dhaka, said: “For e-commerce, a sustainable growth is inevitable. But there are problems with our monitoring and evaluation processes. Both demand and supply curves are high for the e-commerce industry.”
"The key problem with our e-commerce sector includes absence of proper monitoring. Unfortunately, our ministerial workforce and mechanism do not seem too efficient to handle this matter," he also said.
Transparency International Bangladesh (TIB) Executive Director Iftekharuzzaman told Dhaka Tribune that strict monitoring, accountability and transparency are mandatory for smoothly running an e-commerce platform. To cure a headache, chopping off the head will not be a solution.
Citing legal framework, he said that technically it appears possible to get back the money, but that also requires swift actions from authorities and is a lengthy process.
The prevalence of corruption and mismanagement took over the private sector too, he lamented.
As it is a growing sector, necessary support should be enhanced by eliminating irregularities. The existing regulators have to play a big role. Customers also need to be careful before investing money in any e-commerce platform, the TIB executive director suggested.
According to Evaly, the company has Tk543 crore in liabilities — much higher than the amount found by an initial probe of Bangladesh Bank.
Of this, it owes Tk311 crore to customers and Tk206 crore to merchants.
Following the central bank’s report, the Commerce Ministry asked the Home Ministry to file a case against Evaly over the alleged embezzlement of Tk338 crore taken as advance from customers.
On September 16, after the arrest of Evaly’s CEO Rassel and Chairperson Shamima Nasrin, his wife, RAB revealed that the platform counts liabilities over Tk1,000 crore.