Is Speak Asia Online to be trusted?

Despite being the home of software programmers and large scale IT out-sourcing companies, the Indian public has not been exposed to internet sensations, rumours and intrigue to the same extent as countries such as the USA.

Until now.

The online opinion company Speak Asia Online is a Singapore-based company which is now being investigated by Indian authorities for alleged financial fraud and conducting business in India without a licence. Some claim that Speak Asia Online has all the hallmarks of a classic internet Ponzi scheme whilst its supporters claim that it is a legitimate business venture which is being criticised for its own rapid success.

Speak Asia Online claims that it is a legitimate company which pays its’ subscribers a small sum each time they complete an online questionnaire regarding a product or service. Speak Asia Online claims that it is engaged by various companies to conduct market research with Indian households.

Speak Asia Online claims to have attracted nearly two million members in India since it started operations in January 2010. A company statement says it has paid out more than $50 million to survey takers and reported revenue of $80 million in the past nine months.

But there is a catch. Of course there is.

To become a subscriber, you must first pay fees of around Rs10,000 which provides a ‘Surveys Today’ e-zine, an online magazine, for one year and the opportunity to enrol as s panellist. A panellist can be paid up to Rs900 to fill up two surveys of about 12 lines each.

Therefore, after completing around eleven surveys a panellist would start to earn an income from Speak Asia Online. Panellists can also earn money by recruiting other panellists to join and thus receive a commission.

This has left some detractors to conclude that Speak Asia Online is some sort of fraud, scam or Ponzi scheme and should be investigated or shut down by the Indian government. Speak Asia Online protests that it is genuine business and has broken no laws, offering to co-operate with the authorities if need be.

Supporters also point out that they are earning an income from Speak Asia Online as panellists and those complainants should mind their own businesses.

In order to assess whether Speak Asia Online is a genuine business, fraud experts would recommend assessing the following points in relation to Speak Asia Online:

Business model – does the model itself make sense?
This is hard to answer directly. Certainly there are genuine businesses which have operated for decades conducting surveys. But the surveys are focused, relatively small and usually conducted face to face to ensure quality. Speak Asia Online does not follow this path.

People can also earn money by recruiting other subscribers. This has generated a group or recruiters seeking to find new subscribers to continue their income stream.

Analysts have seen this as the trait of a classic Ponzi scheme, sucking in new cash to pay out to earlier subscribers. Speak Asia Online needs to demonstrate that this is not the case.

Does the subscriber need to pay?
Definitely and it is paid upfront. This can be viewed as a definite red flag for a possible scam. It has been noted that Speak Asia Online charges subscribers to be a panellist and receive an e-zine – smartly declining to promise that later payments will be made or else that this is an investment scheme.

Location of the business – does this make sense?
Not at first blush. Though Speak Asia Online is only active in India it has few employees or offices there. Instead, it is a registered company in Singapore. It could be argued that it makes sense for taxation but this doesn’t make business sense.

It has been noted that reporters from Star TV are said to have visited the business address in Singapore and found that there were few people present who claimed they were not involved with Speak Asia Online. This certainly raises more red flag concerns.

Business history – how long has it been running?
Not very long; about 18 months according to the registered documents held by ACRA in Singapore. It should be noted that the business has changed its’ name two times; from Haren Technology Pte Ltd to Pan Automotives Pte Ltd. Neither of these former names suggests that the previous business incarnations were internet based opinion operations.

A cause for concern.

What do the top people of Speak Asia Online say about the business?
Not much and not very convincing.

Speak Asia Online CEO (India) Manoj Kumar claimed during an interview that Speak Asia Online was engaged by ICICI Bank. Following a refutation by ICIICI Bank they there were not a client, Kumar back tracked and said that his earlier claim was a mistake. Kumar allegedly claimed a number of other prominent clients which were later found not to have any relationship with Speak Asia Online. Commentators stated that the CEO ought to know who his own clients are.

At a press conference in Mumbai, Kumar struggled to define exactly what Speak Asia Online does. He denied that they are a direct seller or a company that makes money based on referrals.

Is the company properly regulated?
Not really. It operates in an economic area which has been overlooked so far.

The Indian Direct Selling Association (IDSA) has asked the government to come up with a regulatory framework that will define direct selling, stipulate how it should operate and pass laws to protect consumers.

Meanwhile the Ministry of Corporate Affairs (MCA), Economic Offences Wing, market regulator Sebi and bank regulator Reserve Bank of India are reviewing different aspects of Speak Asia Online’s operations.

What other bad news has Speak Asia Online experienced?
The Singapore bankers of Speak Asia Online, United Overseas Bank, are reported to have declined to continue to be their bankers. Speak Asia Online claimed that they elected to change banks but the confusion suggests that United Overseas Bank no longer wanted to be associated with Speak Asia Online. Does United Overseas Bank know something we don’t?

 

Speak Asia Online may prove it’s detractors wrong and thrive in a new business sector in the budding Indian market. If it can be more transparent about the operations and exactly who its’ clients are, then it should be able to save the day.

Watch this space.

 

Do you need to know more about our services and how Regents can assist you with preventing fraud and money laundering? Simply go to our Fraud Investigation page for further details and us send an email to contactus@regentsriskadvisory.com with your contact details and we will respond at once.

Tips for better use of Due Diligence

It is all too common to hear about the business that went broke or lost millions following a decision to enter in an investment, joint venture or merger with another company that turned terribly sour. All that glitters is not gold. The usual reaction is to query how on earth such bad mistakes were made and why the warning signs and red flags went unheeded. “Didn’t these people know how to do Due Diligence?” is the common refrain.

That’s a valid comment — proper Due Diligence can certainly prevent such business fatalities. But that’s not where Due Diligence starts and stops. Whatever the type of the business relationship; whether it is with a local family company or a multinational group, you are electing to engage in a multi-year relationship with a business, organisational culture and people you barely know.

As the business progresses and the business cycle moves, relations will be strained due to many factors including; difficult clients, dropping revenue, slim profit margins or loss of key agents. How will this affect the relationship and what will it need from your side to keep things on an even keel?  What procedures and agreements can be implemented to resolve issues before they become points of conflict?

The employment of proper Due Diligence can address these issues in a systematic and methodical way prior to them occurring. Due Diligence in business should not be the preserve of upscale law firms or PE [Private Equity] firms; any business or corporation seeking to undertake a major business or financial transaction should employ some measure of Due Diligence.

Due Diligence means different things to different people. For accountants it usually relates to the P&L, asset register and balance sheet whilst a lawyer will be looking more at the IP, contract agreements and related clauses.

However, commercial Due Diligence seeks to identify any red flags or issues with the business in areas including:

  • Backgrounds of key personnel
  • Product or service – state of the current market
  • Key customers – what are the long term relationships, chance of deserting the firm
  • Litigation – have they been party to or subject of civil litigation
  • Intellectual Property – what do they possess, is it owned or licensed, registered, integral to their business
  • Suppliers – what are the relationships, are the suppliers being paid on time or any possible disputes
  • Government involvement – need for permits or licences, how may this affect business
  • Competitors – who are they, are they related, what threats do they pose
  • Agreements – what other parties hold a stake in the business [unions, NGOs etc]

As Due Diligence becomes better known among business people and executive teams, issues arise as to how it should be applied, what phase of the relationship and under what circumstances. Proponents of Due Diligence often come upon objections or queries.

We have summarised some of these objections below with corresponding rebuttals:

Issue 1
Only investor firms conduct Due Diligence such as banks, lenders and Private Equity firms.

Answer 1
Though investor firms have been the leading users of Due Diligence [often simply as a legal requirement written into the deal], Due Diligence should not be limited to these users solely. Any business or organisation seeking to enter an agreement which involves a risk or threat to the business should undertake some form of Due Diligence to identify and potential risks and seek to address and mitigate them. Why not do as the experts do?

Issue 2
Some people or businesses take offense when told that there will be a Due Diligence profile undertaken.

Answer 2
These are far fewer in number than you’d think. Anyone willing to benefit from an investment, contract or Joint Venture should expect to have some form of background check done on them and their business – they’ve filled in a credit card application before with no tears.

The nature and focus of Due Diligence will be adjusted to suit each particular transaction. Most participants will be impressed that you have your act together and are taking the relationship seriously and want it to be successful, where’s the harm in that?

Issue 3
We did a media search and it showed that the business was once mentioned in a Supreme Court case – that makes them unsuitable.

Answer 3
This piece of information has to be viewed in context. Was the business a defendant or litigant or possibly an uninterested party? When did this happen and what were the findings of the court? Or was the matter discontinued and may be considered frivolous? Is the same management in place or have there been material changes?

A proper Due Diligence exercise will seek to lay out the details of any court case and what implications this had on the business or the main parties. Jumping to conclusions based on one incident is impractical and doesn’t grant the exercise the patience that it deserves.

Issue 4
Due Diligence is all about looking for problems such as a lawsuit by a former employee or action by a government department

Answer 4
Though these can be important facts uncovered during Due Diligence, they should be properly reported in context and due weight given to the issue. [If the issue was toxic leaks from the plant poisoning local drinking water, that would merit serious attention. If it was a minor fine for an unregistered vehicle then that would be relegated down the list of importance and reporting].

As mentioned above, Due Diligence is usually engaged to identify threats or issues not disclosed in the normal business relationship exchange. These points may include criminal record checks, civil litigation checks in state or federal courts, product history, key markets, Intellectual Property and a review of each office or location. The onus is on the profiler to meticulously search and review databases, compile the results and conduct discreet interviews with human sources whilst knowing from experience what to look for and the significance of the results.

Issue 5
Due Diligence is too focused on talking to people who’ve dealt or worked with the subject company.

Answer 5
Human intelligence can be invaluable in providing timely and intricate information regarding a company or its senior personnel. However, caution has to be taken upon relying too heavily on their disclosures with cross referencing; is the source aggrieved or enamoured with the company to such an extent so that his information is polarised?

It takes an experienced investigator and profiler to obtain useful information in an unbiased manner and then seek to weigh up that information against what else is known or reports from other individuals. This takes time but does produce a well rounded and complete picture of the company at the time.

Issue 6
Due Diligence can make some people feel uncomfortable

Answer 6
Again, this is because they are unfamiliar with the Due Diligence process. We are all affected by Due Diligence processes in our working lives from applying for a bank loan [confirming our identity, ability to repay the loan etc] to obtaining a passport [divulging personal information to the government].

As long as the Due Diligence process is explained thoroughly along with the benefits and positives from seeking to get to know the other party better before becoming involved in a long term relationship there are few dissenters from our experience.
Do you need to know more about our services and how Regents can assist you with Due Diligence? Simply go to our Business Intelligence page for our phone numbers or else send an email to contactus@regentsriskadvisory.com with your contact details and we will respond at once.

Hacking of White House Gmail accounts

The recent announcement by Google that a number of users Gmail accounts have been hacked into has ratchet up the debate on cyber war between China and the US. The importance of this report relates to the fact that these Gmail accounts were held and sued by senior US and South Korean government officials as well as Chinese political activists.

Google claims that it had discovered and alerted hundreds of users who had been duped by a carefully targeted “phishing” scam. The method used – called spear phishing – is not new but can be particularly successful when targeted properly.

A spear phishing attack occurs when a victim receives an email from a familiar address of a close associate or a collaborating organisation/agency. However, the address has been spoofed [falsely generated] and the email comes from the hackers. Usually the email has some form of attachment which needs a viewer – when clicked on, the user is directed to a fake Gmail login page for harvesting login details of the user.

Once the hackers had the password details of the user, the hacker would log into the Gmail account and create rules to forward all incoming mail to another account without the user’s knowledge. Often the other Gmail account ID is made to closely resemble the victim’s ID so as to reduce suspicion. From that point on, the spurious Gmail account is frequently accessed remotely and all incoming emails downloaded to a central location and the emails deleted from the Gmail account.

By this method, the hacker(s) can begin to create a patchwork of communications between various users and organisations. It has been indicated that these hacking attempts originated from Jinan, the capital of Shandong province. While there is no direct evidence that the hackers are located in Jinan or are in the pay of the Chinese government, the dedication of the attacks and their highly targeted nature eliminates direct financial gain as a motive. Technology watchers haven’t ruled out the possibility of the attack being state-sponsored.

However, it should be noted that the main reason that the Gmail accounts were selected in the first place is that they were thought to have contained some useful information related to the users work. Though we don’t know the identity of the users, it has been suggested that elements within the White House and Senate have been users plus South Korean government officials.

It is a fact that many White house officials choose to use external email accounts rather than the government approved ones for certain emails. The users are aware that government emails are archived and my be the subject of later legal actions, investigations or being placed in public archives. For this reason, they have chosen to use Gmail addresses for certain subjects or contacts. This happened during the Bush presidency too so that many subjects are absent from official correspondence.

What does this mean for your business or organisation? We are all prone to hacking attempts though mainly for commercial gain for scammers seeking bank account numbers, credit cards, passwords etc.

You need to brief email users as to the perils of `spear phishing’ attacks and the spoofing of addresses. One negligent click on a smart phone could expose company details to the outside world.

And what are your corporate policies on people using Gmail, Yahoo etc accounts for business or organisation communications? Is this acceptable? What happens when a smart phone is lost or the user leaves the business? Those email may be lost with no auditable trace of what was agreed with clients, customers etc

It’s not just the White House that needs to review policy and security – these hackers may be targeting you.

Do you need to know more about our services and how Regents can assist you with computer forensics and data recovery? Simply go to our Contact Us page for our phone numbers or else send an email to contactus@regentsriskadvisory.com with your contact details and we will respond at once.

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