Officials cite jurisdiction issues on Speak Asia

Jun 14, 2011

Amonth after the government
said, in response to an investigation by
television channel Headlines Today, that it
would investigateSpeak Asia Online,
another company with a get-rich-quick sales
line, it emerges that it has done nothing
because the company doesn’t fall under the
purview of any agency.
Last month, D.K. Mittal, secretary, ministry of
corporate affairs (MCA), had said that the
department would investigate Speak Asia
along with the Reserve Bank of India (RBI)
and market regulator Securities and
Exchange Board of India (Sebi). On
Wednesday, he said he was not aware of
the latest developments.
Another senior MCA official, who did not
want to be identified, said that the ministry
cannot do anything because Speak Asia is
not registered in India as a company under
the law.
RBI and Sebi have also said they cannot
investigate the company.
An RBI spokesperson said that Speak Asia
does not come under its purview because it
is a marketing-cum-chit fund company and
“gives users some kind of service in
exchange for money”.
A Sebi official said Speak Asia does not come
under its regulatory purview because it has
issued no securities till date.“This is a
marketing company which has just sold a
software through its website for a price.”
There is clearly confusion over what Speak
Asia does— its detractors claim it runs a
Ponzi scheme; its ads make it look like a
multi-level marketing company; and the
company describes itself otherwise. Manoj
Kumar, chief executive of Speak Asia Online
Pte Ltd, denied that Speak Asia is a multi-
level marketing company as being perceived.
“We are a referral marketing company
where our panellists (consumers) get
reward points for referring products sold by
Speak Asia to their peers or friends.”
The product itself involves the aggregation
of consumers who purchase goods online
and may get a price break because they are
buying goods in bulk.
The vagueness surrounding the company’s
product proposition and a slick advertising
campaign have caused activists to take
notice of it.
Last month, Kirit Somaiya, president of the
Investors’ Grievances Forum in Mumbai, filed
a complaint with the economic offences
wing (EOW) of Mumbai Police against Speak
Asia, claiming to have received several
complaints from consumers across the
“It is the duty of government authorities to
investigate this issue. However, it seems
they are not taking any action and I am
upset by the authorities,” said Somaiya.
Somaiya has also filed an application under
the Right to Information Act with MCA, RBI,
EOW and Sebi enquiring about the current
status of investigation in the case.
Mint couldn’t independently ascertain
whether there were any complaints. Phone
calls and a text message sent to Himanshu
Roy, joint police commissioner of Mumbai,
did not get any response.
Speak Asia has close to two million
customers (it calls them members) in India
and has clocked a revenue of $80.5 million
(R 360 crore today) over the last three
quarters according to a company
The company has not taken any approval
from the Registrar of Companies or from the
Foreign Investment Promotion Board, FIPB,
necessary for any overseas company
establishing a business in the country. In
fact, the company is not registered
anywhere in India.
“Since there is no need for a Web-based
company to be registered in India we
entered India without registering. Now we
are moving to RoC (Registrar of Companies)
Mumbai to register three companies. One
will be a content company, Speak Asia India
will be another one and a third one may be
called Precision Marketing,” said Manoj
Kumar, speaking on the sidelines of a press
briefing in Delhi on Wednesday.
The company will complete the registration
formalities with the Mumbai office of RoC
next week, according to Narayanan
Rajagopalan, director, emerging markets,
Speak Asia Online Pte Ltd.
Kumar also added that the company would
approach regulators such as the Reserve
Bank of India and Foreign Investment
Promotion Board and ministry of corporate
affairs for various clearances, and to clear
doubts about its business model.
The unnamed MCA official confirmed that
the the Companies Act 1956 does not have
provisions for registering online companies,
“which is a problem in this case”.
Speak Asia, which has been in India since
2010 and which has so far not released an
authenticated list of its corporate clients, has
been paying service tax in India although
the tax department is now reviewing the
business model of the firm to check for tax
discrepancies, according to a senior service
tax official who did not want to be
identified.“Last year the company paid
service tax but we feel the company has
been making short payments (suppression
of value of services),” this person added.
The official said that Speak Asia has collected
around R 1,200 crore in the last four
months, out of which R 1,000 crore has
been transferred to Singapore to its parent
company through Indian banking channels.
Mint has no way of confirming these
Speak Asia’s Kumar said that the company
had paid service tax of R 68 crore levied for
distribution of an online magazine that
customers buy.“To the best of my
knowledge, everything that was charged
has been paid and the service tax
department should have no issues with
Speak Asia. However, if there are doubts, we
are willing to talk (to it).”
A partner with a law firm based in Mumbai
said that the company should come under
RBI’s purview because the company is using
Indian banking channels to remit money
abroad.“This company has listed bank
account details with names of the banks.
Money is going out of the country, which
means the RBI has to look at it,” added this
person who did not want to be identified.
Speak Asia said that its parent company,
Speak Asia Online Pte Ltd, was regulated in
Singapore. But according to the Accounting
and Corporate Regulatory Authority of
Singapore, the parent currently does not
have a certificate of compliance. According
to Speak Asia, this is because of a delay of
about 10 days in providing minutes of the
AGM (annual general meeting) for the last
accreditation cycle.
According to a press release issued by the
company, 1.2 million of its customers here
have received over $52 million over since
last year through bank transfers via Reserve
Bank of India-authorized foreign exchange
This income has been generated by filling
up surveys, giving online opinions on
advertisements watched and income
accrued from referring other panellists. The
firm has, to date, since its entry into India,
invested over $9 million in various
marketing, training and business
development programmes.
The unnamed MCA official said the ministry
will soon issue an“ad warning the public to
check things like whether any company is
registered with MCA through its portal
MCA21 before making investments.” He
clarified that the ad will be generic and is
not aimed at warning customers about
Speak Asia.