BY: NADEEM SHEIKH, STATE CHIEF( MAHARASHTRA)
In the year 1993-94, Sterling Tree Magnum India Limited (STM) located at 154, Eldams Road, Teynampet, Madras – 600018 had advertised through print, visual media and their agents inviting public to invest in Teak tree plantation schemes assuring 50 times return after 20 years along with land ownership rights.
This scheme included several offers like …
1. Buy teak trees and get interim returns after 6 and 12 years and then a ransom return at the end of 20 years.
2. Buy teak trees and get periodical returns (6, 12 & 20 years) along with ownership of the land. The investors were also provided with a copy of registered Sale Deed with schedule of property spread across the country. The original land title deeds were said to be deposited with Nationalised Banks.
3. Around 1.06 cubic meters of teak was assured to be yielded as returns against one tree. The then market value promised was about Rs. 62000/- per tree along with 1835 Sq. of land for each investor buying about 12 trees.
As per one of the pamphlets circulated then in the first phase itself 250 acres of land was acquired in Panangudi, Karuthapillaiyur in Thiruneliveli, Andhra Pradesh, Orissa, Madhya Pradesh, Maharashtra and other parts of India.
Gradually, more than 2.71 lakh investors most of them from middle class innocent youngsters invested their wages in this, with all dreams and aspirations to see their money grow, so that they can give bright future to their kids. They also hoped to reap the returns during their lifetime to meet their bigtime expenses like children higher education, marriage, medical emergencies or their retirement period livelihood.
In year 2000, STM issued Information Memorandum and informed that it had acquired around 9000 acres land. The Hon’ble Madras High Court in April 1999 appointed Forest expert, who confirmed plantation of 33 lakh trees in about 3,500 acres and out of the remaining 5,500 acres another 3,590 acres of land was ready for plantation. By year 2000, the Company had floated 6 different STM schemes and had received Rs 222.03 crores from Investors.
Periodically news articles were published in leading newspapers and colourful pamphlets were flown across India about the growth of business & teak trees accompanied with their promises about the safety of investment for next few years (with 100% buffer covering all consequential loss and emergencies).
In October 1996, STM issued newsletter and reported plantations in listed regions:
• Veeravanallur, Panagudi, Kalakkad, Kovilammalpuram, Veeravanallur, Nedungulam, Karuthapillaiyur & Ambasamudram in Tirunelveli, Tamil Nadu
• Kannavaipatti, Tharmathupatty, Chatrapatty, Vannathiparai, Kalayarmangalam, Ersakkanaickanur, Palacombai, Pottipuram & Thevaram in Maduarai, Tamil Nadu
• Gandharvakottai, Pisanathur, Manjapettai & Punalkulam in Thanjavur, Tamil Nadu
• Andipatti, Dhali, Silamalai, Alandurai, Theppampatti, Jallipatti, Annamalaiyenpatti, Sirumudikarai, Seelanaikenpatti & Thirumurthy in Coimbatore, Tamil Nadu
• Parvathipuram in Nagercoil, Tamil Nadu
• Venkatesapuram in Tiruchirappalli, Tamil Nadu
• Alamanda, Bandhgaon, Kuruppam & Darapalem in Visakhapatnam, Andhra Pradesh
• Yepinapi in Nellore, Andhra Pradesh
• Puthukiluvatchi in Thiruvananthapuram, Kerala
• Varadharajapuram, Khurania, Vitaneri, Sahajpatta, Shahpura Rampura, Badhgoan, Bikrampur, Mayagarh
Later by the year 2000, STM had totally acquired 9000 acres of land in different parts of India for plantation.
STM too was publishing their growth results with all publicity stating the growth of the trees in inches to feet, they also broadcasted that they provided employment to Indians in rural populations and bringing growth to the country by means of utilising Indian Agricultural resources and also assured to earn forex in terms of exporting Teak to other countries. They said their dream project is bringing ecological balance and supporting rain and environment of India, bringing growth to GDP, improvement in Rural infrastructure and what not.
But, at the end of 6th year during the year 2000 when the first interim return was due, The Investors did not get their promised 1st instalment of returns, they started slowly panicking and approached the company. They were aghast to know that the company promoters / directors looted large sums and have absconded. But the truth is that the looted sum from the poor Indian investors has already been invested in their other business. They diverted the funds and wiped away the proofs of such illegal activities. The Companies which they said as their group company initially in the pamphlets to gain the trust of the investors to grab the investments are later said to be not part of them anymore!!!
Since then investors have been resorting to various means to get back the investment which included:
• Writing letters and calling on the land line of the company’s registered address,
• Complained to SEBI
• Complained to Registrar of Companies
• Lodged FIRs in Chennai
• Complained to Chennai Economic Offence Wing
• Wrote to the Prime Minister
• Wrote to Official Liquidator
• Filed claim with the Official Liquidator
Meanwhile STM diverted funds to their sister concerns such as Sterling Holiday Resorts, Sterling Resorts Home Finance, Sterling Chancellor Homes and many more. Once these business developed and gained goodwill, they sold / merged these companies to well-known giants like Thomas Cook for higher market values and converted into white money and might have further transferred the property to other family members.
Some investors tried to check on the status of allotted land in their names but were surprised to know that there were no trees is some site, some land has been converted to buildings and some have been transferred and sold to others. Is this land transfer possible without the support of local political power, Government authorities, land developers and Registrars.
STM Board of Directors were Chartered Accountants, Lawyers, Legal Advisors and Consultants, who are well-versed with such manipulation and fraud business. The Directors were all time big cheaters who conceptualised this business and had well planned their exist as well, they had pre-planned and hired rowdies and bouncers in all corners to support them from Registrar of Land to Registrar of Companies, Nationalised Bankers, Insurers, Judiciary board backed with their political influences too.
Investors are clue-less now – how can a company run by 200 Agricultural experts, diverse professionals, 1,550 employees with 35 offices across India can ran away with investments from over 2.71 lakh investors and claim it as LOSS!!!.
While this project was also insured, even in case of any natural calamity or drought if trees did not grow to the extent promised, the insurers would have compensated for the loss. Has the genius Board of Director claimed insurance as well and eloped?
On 11th February 2014, the Madras High Court ordered compulsory liquidation of STM.
To a RTI request, on 1st June 2018 the Official Liquidator reported a meagre receipt of Rs 10,042.15 from STM in over 4.4 years of liquidation process. As per response to RTI request, till date no action has been taken to prosecute ex-management of the Company.
Following were STM Board of Directors in April 1994.
Name Then designation
N.N.Pai Chairman JDBJ, corporation Bank
Dr. G. Rangaswamy- Ph.D., D.Sc. Agriculture advisor to planning commission, Vice Chancellor – Tamil Nadu university, International Agricultural Consultant.
P.Vaidyanathan-ACA,ACS Director for Sterling group of Companies
Rajan Chief Trustee(to protect Investors)
As per update available on Internet, STM relocated their office to Old no.21, New no.2, 1st street Viswanathapuram, Rangarajapuram, Kodambakkam, Chennai, Tamil Nadu – 600024 and listed are the directors as per the lasted report:
DIN Director Name Designation Appointment Date
01761109 Rajeswara Rao Hanumanthu Director 28 April 2010
00159020 Rathinam Subramanian Director 02 August 2000
02524450 Mohanraj Sundaram Additional Director 01 March 2013
If our Government can rescue investors from fraudsters like Sahara and Mallaya, why cannot our Government help low and middle class victims from this financial fraud of such a large sale? Affected investors are running from pillars to post to bring these fraudsters to light and to get justice by spending their own time and money. While those who looted these funds are roaming free and living lavishly and peacefully in the same country, where we pay tax from our hard earned wages to build a government which will safeguard our interests and protect us.
Most of the investors are now retired and they badly need the return on their investments which they had invested earlier for their rainy days, but they are not getting any guidance or support from any source nor justice for their 2 decades of patience waiting to penalise the cheaters and put them behind bars. Now they want to cautions the current generation on this kind of fraud business opportunities permitted by Indian Government and also vouched by media and guiding agencies.
This was called as 21st Century investment for 21st Century Generation, we STM investors Association hereby call upon the 21st generation youngsters to bring to light on this mass scam to media and get justice for the 2 decade old case and also caution the future generation from such false promises to grab investments.
These schemes were approved by RBI and also insured for all unforeseen damages or natural calamities. Agriculture Finance Corporation (AFC) had cited this scheme as “model teak plantations” and a benchmark for other plantation companies. Common Wealth forestry Association (CFA) at Oxford, London had acknowledged and approved the paper from STM in 1996 and accepted STM as valued member of their Board. Inspector General of Forest, Union Ministry of Environment and Forest was also said to have been approached to set up a regulatory body for teak plantation industry during the launch. The leading News Papers like “Times of India” and “The Hindu” also kept publishing the advertisement and articles about fortune of the STM investors for about a decade. But where are these vouching authorities and media hiding today from the investors! Isn’t’ it there turn to enlighten India about this scam and protect the investors?? Will there not be suicide cases if we probe in depth on this scam??
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