Inside the murky world of Heera Gold and a finance scheme which makes no sense

Here’s a good deal. What if I can finally stop complaining about the size of my portfolio? What if I can kiss goodbye to my plain Jane demat account?

What. If. Allah. Has. Plans. For. Me?

Hence, this deep dive into infinite riches.

Once you are convinced, you get a few brochures and a membership application form. Logo, serial number, applicant details, space for photo, alphabet codes to pick the right investment scheme, T&Cs in fine print legalese, ‘For Office Use Only’. You also provide details of your bank account in which you want your profits to be remitted. On submitting your application you get a signed, stamped receipt. Within a few days your application is processed and Heera’s Hyderabad office sends you a ‘Unit Purchase Receipt’ or ‘Shareholder Agreement’ or similar sounding documents which have many barcodes and membership numbers printed on colourful bond paper with watermarks. In about 30 days, your deposit gets rolled over into the business and your monthly profits start rolling in.

Ka-ching!

A business of the Muslims, by the Muslims, for the Muslims?

Let’s clear this Muslim business first. What is halal and why is it so important for Muslims? Simply put, in Islam most acts neatly fall into two main buckets: Halal (permitted) or Haram (prohibited). This is a guiding philosophy in most matters of life. Marriage, divorce, inheritance, business, contracts, almost everything.

Goat butchered in a specific way? Halal. Pork? Haram. Rooh Afza? Halal. Alcohol? Haram. Alok Nath? Halal. Prem Chopra? Haram.

In finance and investment matters usury, interest or other instrument like debt funds, corporate bonds – anything that promises a fixed rate of return is Haram. An equity investment with an exposure to both profits and losses resulting from such business activity is halal. Of course the business itself should be halal. So, investment in an alcohol manufacturer like United Breweries? Haram. Investment in auto (Maruti Suzuki) or paints (Asian Paints) manufacturers? Halal.

This is germane because many Muslims, even those who are not overly pious, do observe this code. Many Muslims donate interest received in their bank’s savings accounts to charities. That leaves a large slice of the community’s investable-income pie waiting on the sidelines; constantly on the hunt for such ‘halal businesses’ with lucrative returns.

Trading in gold, silver and other commodities? Halal, of course.

Enter Heera Gold Exim Ltd.

Or Heera Gold Exports & Imports.

Or Heera Gold Exports & Imports Pvt. Ltd.

Or Heera Group of Companies.

There are a whole host of names of companies and it is not quite clear what would be apt to call this shape shifting entity. For narrative simplicity, let’s call it Heera Gold.

What is Heera Gold?

There are no easy answers. It is a maze. Let’s start with the flagship: Heera Gold Exim Pvt Ltd which was incorporated in September, 2010. On 11 August, 2011, it was converted into a public company and its name changed to Heera Gold Exim Ltd, with its headquarters in Hyderabad. This is the entity that exists today.

Heera Gold Exports & Imports (note the missing ‘Ltd’) is a firm registered in Andhra Pradesh, with a Tirupati address. It is most likely a partnership firm. And since it’s not a company, there are no public filings. We don’t know if Shaik is even the owner or partner in this firm. This shroud of mystery is important because at least some investors in 2010, have deposited their cheques in this firm. On paper, nothing connects Heera Exim Ltd to Heera Gold Exports & Imports.

What about Heera Group of Companies and Heera Gold Exports & Imports Pvt Ltd, then? These are not companies or firms as far as we looked up. We care about them because there are receipts and stamps on some documents with these names. Again, there’s no explanation about their formation or any relation to the registered entities.

Let’s just look at FY11. Despite the loss, all investors claim of receiving their monthly profits. Shaik never explained how. Even in subsequent years as the company seems to be making a steady Rs 20 lakh jump in profits, it’s still a fraction of the claims made by agents and Shaik, of thousands of investors with crores of investments. These numbers don’t jive together with the story on the ground.

 

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