PACL Scam: The Australian connection
Moneylife Digital Team 08 February 2016
PACL not only roped in Brett Lee as its brand ambassador, but also invested millions of dollars in Australia. Also, the Ponzi company's directors, including promoter Bhangoo's daughter and son-in-law, were seen living in lavish properties in Australia
PACL Ltd, formerly known as Pearl Agrotech, which has been asked to repay about Rs55,000 crore by the regulators, not only used services of cricketer Brett Lee as its brand ambassador, but also invested millions of dollars in Australia, reveals a report from The Australian.
Pearls promised generous returns to investors by supposedly rehabilitating degraded agricultural land and turning it into prime productive farming country and collected around Rs49,000 crore from investors. "Instead, the money went into the pockets of the directors, who lived lavish lifestyles and bought television stations, Indian cricket teams and invested the money in assets for themselves, including hotels and properties in Australia," the report says.
The Justice RM Lodha Committee appointed by market regulator Securities and Exchange Board of India’s (SEBI) is also looking into investment made by PACL in Australia. The report says, "Their investigations will include the 2009 purchase of the Sheraton Mirage on the Gold Coast. Mr (Nirmal Singh Bhangoo, founder of PACL) Bhangoo spent $62 million buying the resort and $20 million more renovating it. The Sheraton, of course, is Christopher Skase's old haunt."
According to the report, in Australia, Mr Bhangoo and several of his family members teamed up with Gold Coast property developers Paul Brinsmead and Peter Madrers. The two Australians had operated the company Resort Corp, which developed large tracts of coastal land in the Tweed Shire in northern NSW before its group of 14 companies collapsed in March 2009, owing about $300 million, it said.
"Six months later, while administrators were still sorting through the wreckage of Resort Corp, Mr Brinsmead and Mr Madrers founded Pearls Australasia with Mr Bhangoo, his son Harvinder Singh Bhangoo and son-in-law Gurpartap Singh. Later Mr Bhangoo's other daughter Barinder Kaur and her husband, Harsatinder Singh Hayer, also joined the company as directors." 
"In September 2014, Pearls Australasia changed its name to MiiGroup Holdings and refers to itself collectively as the MiiGroup of companies. These companies are all based in a waterfront office at Bundall on the Gold Coast. Also, operating from the same address is Shac Communications, the public relations firm that represents MiiGroup Holdings and undertook the "full rebrand for the group" in 2014. The managing director and owner of Shac Communications is Simone Holzapfel, who was Tony Abbott's chief political adviser for six years during the Howard government," the report from The Australian says.
MiiGroup, however, has distanced itself from the PACL scam and investigation going on in India. In a statement, it called itself as an Australian company with diverse business with Pearls Infrastructure Projects (PIPL) as a passive investor in some of its businesses. "...the individuals and companies associated with PIPL in India have no control and do not take part in any day-to-day operations of the independent and separately owned Australian MiiGroup. Any allegation that MiiGroup Australia is an Indian company or a subsidiary of an Indian company is false. Any allegation that any events in India are related to individuals or companies associated with PIPL are in any way relevant to or connected with MiiGroup, or that Mii Group is controlled or managed by any of these entities, is false," the statement reads.
In its report, the newspaper said, based on company searches, Mr Bhangoo's daughter Barinder and her husband Mr Hayer, live in a multimillion-dollar Gold Coast mansion. The property in the suburb of Hope Island boasts six bathrooms and five garages and was bought, along with an adjacent vacant block, for $4.95 million in 2011 by a company called Pearls Infrastructure Projects.
Quoting P Venugopal, senior counsel for SEBI, the report said, "I do not think we will ever be able to recover much. Because basically, according to us, the entire operation was just a money laundering exercise. The Central Bureau of Investigation (CBI) is investigating celebrities who were involved with the (Pearls) schemes and yes, (cricketers) Harbhajan Singh and Yuvraj Singh are under investigation with respect to the plots at Mohali (in Punjab) received by them from the company."
In 2010, PACL roped in Australian speedster Brett Lee as its brand ambassador. During a press conference announcing his appointment, Lee had reportedly said, "It's not about only being a brand ambassador, but I am proud to be a family member of Pearls Group. I feel every person is being touched by Pearls around the world. I certainly believe that Pearls is the best."
In the advertising campaign, Lee was filmed building sandcastles with kids and jogging on a beach in Goa. "He stood in front of a camera dressed in a white sports coat and recited the firm's mantra: 'Touching hearts, building confidence. Pearls Infrastructure', the news report says.

"What he should have said was "touching wallets, breaking hearts", for while there is no suggestion that Lee had any knowledge of this at the time, the company he was spiking was allegedly engaged in a monumental fraud," it added.
While Lee's manager at that time, Neil Maxwell, who negotiated the deal with PACL, and current manager, Jake Elder have denied any wrongdoing on part of the cricketer. The fast bowler's website, still lists Pearls India as one of the brands represented by him. It says, "(Lee is) a brand ambassador across the Pearls group, representing Pearls Infrastructure Group, P7 News, Pearls Tourism & Pearls Spices." 
SEBI's counsel Venupgopal told the newspaper that officials from the Australasian Consumer Fraud Taskforce, an umbrella body whose members include the Australian Federal Police and the Attorney-General's Department, had recently contacted him to discuss the alleged fraud and its implications in Australia. 
He also told the newspaper that directors of PACL used Russian banks to send money (collected from investors) overseas, including Australia and it would be very difficult to follow the trail.
According to the newspaper report, the Australian arm of Pearls was adept at working political connections. In October 2010, as part of a trade mission and Australia's 2018 Commonwealth Games bid, a delegation led by then Queensland premier Anna Bligh and including then high commissioner to India Peter Varghese met with the Pearls Group, it said.
"A record of the meeting shows that in attendance were Pearls Group directors; Mr Bhangoo's other daughter Sukhwinder Singh and her husband Gurpartap Singh; 'group general manager' of Pearls Group Rikhab Jai; and 'Pearls Australia joint managing directors' Mr Brinsmead and Mr Madrers. Records show the meeting was 'designed to encourage the Pearls Group to increase its investment portfolio in Queensland' and Pearls Group was stated as having '1.6 million employees across its various entities'. The records show Ms Bligh directly dealt with requests from members of the Bhangoo family to obtain 'state-sponsored' visas," the report from The Australian says.
Earlier, SEBI, as part of its recovery proceedings, attached all bank and demat accounts, mutual fund portfolios of PACL and it eight directors and promoters. In a release, SEBI said, the recovery proceedings have been initiated for their failure to comply with its order issued on 22 August 2014 directing, PACL and its directors and promoters to wind up the schemes, and refund Rs49,100 crore to the investors within three months from the date of the order. This amount is excluding further interest and all costs, charges and expenses incurred in the recovery proceedings.
According to SEBI, the amount due to investors of PACL would be over Rs55,000 crore. This  includes promised returns, further interest, all costs, charges and expenses incurred in respect of all the proceedings taken for recovery of Rs49,100 crore from PACL. 
The mobilisation of funds by PACL traces back prior to 1997. Upon receipt of a complaint, SEBI on 30 November 1999 and 10 December 1999 issued letters asking PACL to comply with the provisions of the collective investment scheme (CIS) Regulations. 
PACL challenged these letters before the High Court of Rajasthan in December 1999, claiming that its scheme does not fall under the definition of CIS as defined under the CIS Regulation and SEBI Act. PACL also challenged the constitutional validity of the CIS Regulations. 
The Rajasthan High Court on 28 November 2003, held that PACL's schemes were not CIS as defined under Section 11AA of the SEBI Act. The HC also quashed SEBI's letters issued to PACL. 
SEBI filed an appeal before the Supreme Court against the order of Rajasthan HC. The SC on 25 February 2013, while allowing the appeal upheld the constitutional validity of CIS Regulations, and directed SEBI to investigate the matter and take appropriate actions. 
After conducting an inquiry, SEBI on 22 August 2014, issued an order directing PACL, its promoters and directors to wind up all the existing CIS and refund the monies collected by the company to investors as per the terms of offer within a period of three months from the date of the Order. 
PACL filed an appeal before the Securities Appellate Tribunal (SAT), which was dismissed on 12 August 2015. The SAT directed PACL and its promoters-directors to refund the money within three months. Since the company and its promoters-directors failed to refund the money to the investors as per the directions of SEBI and SAT, the market regulator said it has initiated the recovery proceedings.
Shibnath Chakladar
6 years ago

I had invested Rs.70,000.00 with Amrit Projects Ltd. through their Asansol branch in 2013-14. Now all their offices are closed and no trace of their agents and officials.
I had also sent all documents to their address via speed post as per their notice, but no feed back nor any kind of information from the company is available. Please help.
Senthil Vel A. Mylathal
8 years ago
For the safety of Investors in PACL the government Regulators could have suggested a proper procedure to get refund of the Invested amount through TV Channel, Newspaper etc. while they are holding PACL business with Legal actions. Still they will give awareness to the Investors not to loose amount Invested and making compliants with all Documents of Investment.
Meenal Mamdani
8 years ago
Shocking. I guess as one of the comments says people are greedy, gullible and fall for scams of all sorts from spurious sales in retail stores to too-good-to-be-true schemes.
Yes, a fast track court is a good idea. It may be a good idea to set up special courts strictly for financial matters as I wonder how many judges themselves understand these convoluted deals. Wonder if Rajasthan HC would have ruled differently if it had judges more knowledgeable in financial dealings.
Not just confiscating the personal assets of these scammers but also putting their names on an international financial criminal list would prevent them from continuing to float more companies. If we have an Interpol for other kinds of crime, why not one for financial crime? Preventing them from ever returning to India would also set a precedent and deter other Indians from joining these rogue groups.
Raja Laks
Replied to Meenal Mamdani comment 8 years ago
Our lazy and arrogant judges are more greedy than these scamsters.
Until that is fixed, nothing can be done.
8 years ago
I don't know when I will get money back
Raja Laks
Replied to Alwin JAMESVIRGIN comment 8 years ago
I don't mean to rub salt in your wound but my sincere advise is move on. Don't waste your time and remaining money and peace by chasing after these scamsters.

How it worked in Tamilnadu in mid 1990s. Finance companies collected 1000s of crores. Never paid interest. People formed a group, filed a criminal case. They spent a lot on advocate fees apart from Govt prosecutor. Economic offence wing TN Police collected all the evidence and money trail (collected by journalists and investors themselves). Case was filed in lower courts. Scamsters arrested and put in jail. Case went for some time. Journalists lost interest. Scamsters got bail. Came out. Big alliance was formed between Govt prosecutor, Judges, Police. Loose money was split among themselves. Scamsters made off with money invested in property whose documents disappeared from case files. Judges made sure case dragged. Prosecutors gave away all files to Scamsters. Police directed all queries to advocates.
It took nearly 20 years to recover 35 lakhs (yes lakhs). By then most of the investors (usually retirees) passed away in heartbreak. Police, Judges retired. Case forgotten.
8 years ago
There is an urgent need to put brake on Companies/Institutions which collect money from public (other than banks) through enhanced regulation and also amending CPC to provide for stricter punishments for economic offences besides confiscating properties acquired through fraud. special courts should be established for fast trial of cases like PACL. Otherwise gullible investors would be tempted by fraudsters by floating alluring schemes which offer unrealistic returns. SEBI should also set up a intelligence wing to collect information on activities of such entities and act in time.

8 years ago
Thanks for the information. Please keep me updated with further news about the PACL. Thanks....
8 years ago
PACL, it would seem, is another typical Indian scam comparable to any carried out by India's post-1947 kleptocracy in the sense that none of the stolen wealth is recoverable:
Vaibhav Dhoka
8 years ago
India is most fertile ground for SCAMS to happen,due to greed of people to get FREE.Even sales are many times fraud played on public only on very small space,knowing well they rush to shop and in fact shop in excess and not needed things are piled up.And even though the scam bursts the culprits know that in India no one can touch their ill gotten assets as investigation and later on prosecution takes decades and public memory is short lived and they can come out with new scheme a Fresh.
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