The cabinet approved the draft of the Multi-Level Marketing Act on Monday. The law, if passed in September’s parliament session, will hopefully prevent the rampant swindling that has so far been practiced by various MLM companies.
However, in the nine years since the practice was brought into the country, at least 100 large and small MLM companies across the country have cheated at least 30m people out of their savings. Department of Cooperatives officials said roughly Tk100bn had been collected from clients by MLM companies in the last four years.
Speaking to several victims, this correspondent found that many felt there was now little hope left for recovery of their investments in these companies. Many of the victims have lost everything they had.
Jubok, Unipay2U and Destiny were the big names in the MLM business.
“We have waited nine years to receive our deposited money from the now defunct MLM company Jubok, despite two commissions formed by the government in the last couple of years,” Nazma Begum told the Dhaka Tribune. Nazma used to be a coordinator for Jubok in Naraynganj.
“The MLM authority could return our deposited money from the fraud company,” she said.
Bangladesh Bank closed Jubok in 2005 for illegal banking.
Some MLM firms such as Maxim and Uttar Investment are now operating in the country.
The draft Multi-level Marketing Activities (Control) Act-2003, approved by the cabinet on Monday, decriminalises the business but authorises the government to appoint administrators for a company found guilty of fraud.
The draft includes a prison sentence of 5-10 years or a fine of Tk5m for conducting multilevel businesses without a license.
It also says those who are already operating their businesses, without licences, have to collect that within 90 days of the enactment of the law. If they do not, they will be sentenced to a minimum of six years to a maximum ten years in prison and a fine of Tk5m.
The punishment may be doubled for “further violation” of the law, it says.
Cabinet Secretary Mohammad Mosharraf Hossain Bhuiyan said the law would be enforced through an ordinance for the time being, as no parliament session is forthcoming.
“It will be tabled at the next parliament session,” he said.
A provision for appointment of one or more administrators has also been incorporated in the draft in case of an MLM company being found to be involved in cheating people.
But the cheated individuals do not see much to expect from the new act.
Ismail Hossain, who lives in Sylhet city, told the Dhaka Tribune he had sent a letter to the finance minister, asking that something be done about the 10 bhari gold he had deposited to the MLM company Unipay2U. The company’s high-ups went into hiding soon after.
“Unipay2U had several buildings and other wealth, but the government has not yet recovered the deposited gold from Unipay2U,” he said.
Former Jubok Commission chairman and Additional Secretary Rafiqul Islam told the Dhaka Tribune that without strong laws against fraud, the activities of MLM companies cannot be stopped.
“Criminal law should be amended to punish officials of MLM companies like Jubok,” he said.
Farhad Hossain, a government official, invested Tk120,000 in Destiny’s tree plantation project and a tower in Barisal district. “Destiny is now defunct, and I do not know whether I will ever get back my deposited money,” he said.
“The investigation into Destiny’s business has come to nothing,” he complained.
Sources in the Department of Cooperatives said the growth of the MLM company Destiny 2000 Limited was exponential, boasting an asset growth of 358.82% from Tk10.76bn to Tk26.19bn during the 2011-12 fiscal.
The Destiny chairman and the managing director are now in Dhaka Central Jail but high officials of Jubok and Unipay2U are out in the streets because of loopholes in the criminal law, officials at the Department of Cooperatives said.
