Multi-level marketing concept posts astronomical growth in 3 years
Destiny Multipurpose Cooperative Society, a concern of controversial multilevel marketing (MLM) company Destiny 2000, has seen an astronomic rise in its capital, shareholders, profit and investment since 2009, a central bank report reveals.
The company’s paid-up capital has increased to nearly Tk 300 crore in 2009-10 from Tk 5.53 crore a year ago. The figure jumped to nearly Tk 1,200 crore in 2010-11.
Loans and investments grew to Tk 569 crore in 2010-11 from less than Tk 23 crore in 2008-09; they rose over 213 percent between 2009-10 and 2010-11.
Destiny posted a staggering 354 percent increase in its net profit in 2010-11 from that a year ago. These figures, however, are not certified by any chartered accountant and can easily misguide people, says the Bangladesh Bank report.
As of June 30, 2011, the firm showed Tk 656 crore in assets whereas it actually spent the amount for research and development. Had it shown the amount as expenses for research and development, the balance sheet would have been negative, said the central bank.
The Bangladesh Bank probed the activities of Destiny Multipurpose Cooperative Society on instructions from the finance ministry.
Though Destiny Multipurpose Cooperative Society is registered with the Department of Cooperatives, it has been running on MLM concept that goes against cooperative laws, said the central bank.
MLM is a marketing strategy in which members benefit not only from sales they generate, but also from the sales of others they recruit. It creates a pyramid structure of distributors. MLM is also known as network marketing and referral marketing.
Since there are no laws or policies for MLM in Bangladesh, a vested group has been swindling people out of crores of taka by offering them huge returns on their investment. Earlier, ITCL, Jubok and Unipay2 pocketed several thousand crores through MLM programmes.
The latest name is Destiny 2000, which is known to many for sponsoring high-profile programmes such as Bangladesh Premier League (BPL) and the World Marketing Summit.
The BB probe found that Destiny has been illegally running banking activities and has nearly 70 lakh members. It has set a target to take the number to 1 crore by this year.
As of December 31 2011, the organisation collected nearly Tk 2,000 crore as deposits and share capital from people. Of the deposits, over 94 percent are long-term, said the BB report.
-With The Daily Star input