Former Karnataka Chief Minister and senior Congress leader Siddaramaiah has had his fair share of controversies.
In the run-up to the Karnataka Assembly elections, merely days before the state went to polls, Sambit Patra of the Bharatiya Janata Party alleged that Siddaramaiah had received an expensive Hublot watch, alleged to be worth Rs. 70 lakhs, from Vijay Eswaran of QNet.
QNet, formerly known as QuestNet, GoldQuest and QI Limited, is a Hong Kong-based multi-level marketing (MLM) company founded in 1998 by Vijay Eswaran and owned by the QI Group. It has been banned in several countries and under investigation for alleged financial fraud.
In India, as well, the Bombay High Court made some scathing observations on the matter. While rejecting the anticipatory bail of five accused in the QNet scam, Justice Mridula Bhatkar observed, “The motto of the company ‘sell more, earn more’ appears very attractive and innocuous. However, this motto is fully camouflaged. The company stands on a basic statement that people can be fooled. Thus, the true motto is ‘sell more earn more’ by fooling people. In fact, it is a chain where a person is fooled and then he is trained to fool others to earn money. For that purpose, workshops are conducted where study and business material is provided with jugglery of words, promises and dreams. Thus, the deceit and fraud are camouflaged under the name of e-marketing and business.”
The High Court stated further, “It has very grave and serious impact on the economic status and mental health of the people on a large scale. On considering parameters of section 438 of the Code of Criminal Procedure, I am not inclined to protect the accused. It won’t be out of place to mention that such circulation is required to be stopped. It is necessary for the prosecution to take injunctive steps against this business activity, which is prima facie, illegal. Though by stopping this business, a large group of people may get financially affected, however, it will save larger groups of people from becoming prey of this activity.”
MoneyLife reported that in a detailed secret report in 2012, the Serious Frauds Investigation Office (SFIO) on QNet, the agency has called such MLM schemes run by overseas operators as “a potential threat to national security.”
The Economic Offences Wing (EOW) of Mumbai Police made its first arrest in the case in the August of 2013. The agency was probing a case of suspected fraud. Later, the same month, the EOW froze 6 bank accounts of the company which had a balance of Rs. 46 crores. It had registered a case of cheating against the company and its office bearers on the 16th of August.
However, the firm has been under the scanner of Indian police since at least 2008. It was reported in 2008 by Times of India that the Chennai Police was looking for the extradition of Eswaran from Malaysia to India and there were at least 7 cases filed against the company.
Tamil Nadu Police had, in fact, registered a case against the company in 2009 for cheating people by selling gold coins and other articles at exorbitant prices claiming that they are limited edition products.
Earlier this month, the Minister of State for Corporate Affairs, P.P. Chaudhary told the Lok Sabha that 12 complaints received by the SFIO against QNet were forwarded to the Registrar of Companies for necessary action. He further asserted that the ministry had ordered an investigation into the company in 2010. He said, “The ministry had ordered an investigation into the affairs of Goldquest International and Questnet Enterprises India (now known as QNet) and assigned the same to the SFIO on July 28, 2010.”
Siddaramaiah met Eswaran in September 2013, at the World Economic Forum in China. He was one of the many investors that Siddaramaiah met to woo investments into the state. Therefore, the Congress leader met Eswaran at a time when his company was being investigated by various Indian law enforcement agencies for alleged fraud. He was the prime accused in the case as well. The whistleblower in the case, Gurpreet Singh, has also accused Siddaramaiah of shielding Eswaran. Gurpreet had alleged that his wife had been defrauded of Rs. 30,000.
The former Karnataka CM is not the only Congress leader who is associated with the company. Nalini Chidambaram, the wife of former Union Finance Minister P Chidambaram, was a legal adviser to Goldquest International Limited. Recently, the CBI had filed a chargesheet against Nalini Chidambaram in the Saradha Chit Fund Scam.
It’s not just politicians that QNet has been linked to. In September last year, Newslaundry reported that the company became one of the sponsors for multiple primetime shows on Times Now, Mirror Now and ET Now—all English channels owned by the Times Group.
The company has been accused of committing a fraud of hundreds and hundreds of crores. In 2016, a chargesheet was filed against Padma Bhushan recipient Michael Ferreira and 30 others in connection with the case involving a Rs. 425 crore fraud by the EOW of the Mumbai Police. In 2014, Pushpam Appalanaidu, the Managing Director of QNet, was arrested at the Chennai International Airport following a lookout notice from Andhra Pradesh Police.
Numerous other people have been arrested in connection with the alleged fraud. As of 2019, however, the matter is sub-judice. QNet, for its part, has denied all allegations of wrongdoing.