Probe Evaly couple for money laundering

The court-appointed board for Evaly called for an investigation of money laundering as vast sums of cash remain traceless in the controversial e-commerce platform's accounts.

"No clear reason could be found for the large amount of cash withdrawn by the company on daily basis from the bank, which begs the question as to where the huge amount of cash raised went," said the five-member board in their report to the court.

The report draws on the special audit conducted by leading chartered accountancy firm Hoda Hoda Vasi Chowdhury & Co.

On September 21, the five-member board turned in the 4,000-page audit report to the court as well as their resignations and their own report on the company. The Daily Star has a copy of the audit report and the board's report.

"Huge amount of money was handled in cash and huge amount of money is traceless that leads to the obvious question as to money laundering, which is a matter for the state functionaries to scan," the report said.

For instance, Evaly staff withdrew a total of Tk 79.1 crore, with some taking out cash repeatedly, the audit found. But only four names could be identified from the employee list provided by the management.

"We could not verify the authenticity of these cash withdrawals whether these are essentially required for the company's operation," the audit said.

Evaly, which began its journey on December 16, 2018 with a paid-up capital of Tk 1 crore, did not have a chief financial officer (CFO) or followed any accounting rules, the audit found.

Mohammad Rassel, who founded Evaly with his wife Shamima Nasrin, served as the managing director, chief executive officer and CFO. The roles of CFO and CEO cannot be held by the same person for checks and balances.

"Evaly is a family company comprising of husband and wife and the board was accountable to none."

Whenever the board asked Evaly's officers and employees anything about the company, their reply was: "Rassel sir knows everything. We know nothing."

Rassel has been in jail since September 16 last year after the Rapid Action Battalion arrested him and Nasrin in a case filed by a customer over an undelivered order.

Subsequently, the auditors were not provided with the material needed -- such as bank books, cash books, relevant ledgers and documents -- to conduct a comprehensive assessment.

When all business-related user IDs and passwords were sought, Rassel said he had earlier handed over a diary containing the information to one Salauddin, who is the landowner of Wins Court, where Evaly's office is housed, said the audit report that was handed to the board on September 8.

But Salauddin did not have any such information.

Mahbub Kabir Milon, the HC-appointed MD, opened the drawer with the help of security personnel and did not find any such diary except some unused chequebooks.

"However, this is not a convincing statement that user IDs and passwords of the company's IT software and systems are lying with the former managing director and without his intervention, no access to the systems is possible."

In the absence of important books and documents, the auditors then adopted an alternative method of verification based on bank statements.

They ran into a brick wall through that method, too.

The auditors found Evaly made more than Tk 6,000 crore transactions with "very poor, unreliable, unorganised, incomplete books and records".

Neither the list of customers who paid the advances to the company could be obtained nor the list of merchants.

The auditors were not provided with a system-generated inventory report, inventory verification report, list of obsolescence items, delivery and order closing report and voucher report among others.

So it was not possible to determine the amount the customers and suppliers were owed. No financial position except the balances on various bank accounts could be worked out, the audit report said.

Most of the money coming into Evaly was through bKash, Nagad and Rocket: Tk 4,867.8 crore was deposited in its accounts with the mobile financial service providers until June 30 last year.

No sales invoice, order, receipt, voucher or other statement could be found that the auditors would be able to establish from where the amounts came.

"The source and purpose of these deposits are vague," the audit report said.

Of the sum, Tk 4,702.5 crore was transferred to Evaly's 13 bank accounts, with Tk 37.1 crore remaining unidentified.

The auditors were furnished with bank statements of 11 of the accounts, which had deposits of Tk 6,052.6 crore.

But in the absence of documentation, it was not possible to reconcile the majority of the balances or confirm the sources of the deposited money.

Of the amount, 38 percent (Tk 2,307.8 crore) was withdrawn. But no documentation could be found, making it impossible for the auditors to work out whether the amount was withdrawn for the company's day-to-day running.

"It is apparent that the sponsors' intention for running the business was improper and malafide," the board said in its report.

They were enabled by unwitting low-income people.

"The company and the owners took advantage of the simplicity of these innocent helpless customers who were lured by the company to a mousetrap and bring the company to the brink of destruction."

Evaly did not take any loans; just with the advance payments of customer orders, it paid its employees generously, appointed celebrities as brand ambassadors, sponsored cricket tournaments and advertised aggressively.

"Since inception, the company has been spending the customers' and the product suppliers' money according to their own whim. While considering the business transaction of Evaly it transpires that the main objective of the company was to make money from the customers at any technique. That means, cheating the customers, which is completely illegal."

The board went on to term Evaly's business model a Ponzi scheme.

"The sponsors of Evaly knew it from the very beginning that the business is destined to be closed at one point of time within which the sponsors would be able to make their fortune."

Rassel and his wife, who maintained a luxurious lifestyle, were out of their depth in running an e-commerce platform.

Without a minimum understanding of the basic business management issues, the two were destined to run the company to the ground, the board added.

"We can safely come to conclusion that we do not find any visibility for reviving the company until the sponsor, shareholders, or any potential investors either local or foreign inject sufficient required cash for bringing the company in an operating condition," the audit report said.

That scenario is unlikely, according to AKM Fahim Mashroor, the CEO of Bdjobs.com and AjkerDeal.

"No rational investor will be willing to invest in such a company that has no proper financial statement."