Corporate Social Responsibility of

Banks in

Bangladesh

________________________
A brief report about CSR activities of different ____________________

Commercial Banks
Business Introduction (BUS 101)

REPORT ON
Corporate Social Responsibility of Different Commercial Banks of Bangladesh

SUBMITTED TO
PROF . M AH ABU B RAH MAN
COURSE INSTRUCTOR GONO UNIVERSITY OF BANGLADESH

SUBMITTED BY
NAME TANJINA ISLAM NYEEMA ISLAM RAIHAN PARVEZ AYESHA AKTER ROLL NO.

42 32 45 06

BUSINESS INTRODUCTION BUS 101 BBA PROGRAM | DEPARTMENT OF BUSINESS ADMINISTRATION GONO UNIVERSITY OF BANGLADESH, DHAKA

- FEBRUARY 01, 2014 -

Letter of Transmittal
February 01, 2014 PROF. MAHABUB RAHAMAN
Course Instructor, BBA Program, Gono University, Dhaka, Bangladesh.

Subject: Submission of the report on "Corporate Social Responsibility"

Dear Sir,
It gives us immense pleasure to submit the report on Corporate Social Responsibility of Banks in Bangladesh as a requirement of the regular BBA course called Business Introduction of the Department of Business Administration, Gono University. Apart from the academic knowledge, we have got the golden opportunity to acquaint ourselves with the business mix, CSR concerns, social impact, ethical and unethical practices on the business. We believe that the experience we have acquired from this study will be an invaluable asset throughout our lives. It expresses our gratitude to you for providing me desired chance to learn about the fundamentals, detailed procedure, and critical terms of the business ethics & related variables. In spite of various shortcomings, we have been devoted to find out the core information from the research. We hope you will appreciate our Endeavour and find the report up to your expectation. It has to be mentioned further that without your expert advice and guidance and the contribution of our classmates and group members it would not have been possible to complete this research paper. We will be pleased to answer any sort of query you may have regarding this report.

Thanking you,

TANJINA ISLAM NYEEMA ISLAM RAIHAN PARVEZ AYESHA AKTER

ID : 42 ID : 32 ID : 45 ID : 06

ACKNOWLEDGEMENT Our work on preparing a research paper on Corporate Social Responsibility was
a great experience for us in light of the course Business Introduction. We strongly believe works like this will surely help me to have a clear concept about CSR activities over the Banks and Business, analysis the current business structure of Bangladesh and so on. We would like to thank Almighty Allah, the all knower & best of the helpers to make our research paper a practical one by providing us the mental & physical toughness in course of its preparation. Our next honest & heartiest gratitude goes to Prof. Mahabub Rahman, Lecturer & our honorable course teacher for his sincere and utmost guidance to prepare this research paper & to gather huge practical and realistic knowledge, to make us understand the topics, terms & make us familiar with this course.

Executive Summary
After visibly looting at least 55 thousand crores of Taka from the innocent people by offering them shares of the fraudulent projects such as Destiny Tree Plantation Limited, Best Air, Destiny Life Insurance Company Limited, Destiny Hospital & Medical College Limited, Destiny Multipurpose Cooperatives Society Limited, Destiny Bank Limited and dozens of fictitious enterprises of the biggest fraudulent multilevel marketing company in Bangladesh led by former chief of Bangladesh Army Lieutenant General Harun Ur Rashid and internationally branded fraud Mohammed Rafiqul Amin, it has been recently found in an inter-ministerial investigation that almost 99 percent of the collected funds have already been illegally trafficked abroad by the owners and promoters of Destiny 2000 Limited. It is already apprehended by the intelligence agencies in Bangladesh that this fraud MLM Company will soon go into hiding thus cheating at least 4 million small investors. It may be mentioned here that a high power investigation team formed with Ministry of Home Affairs, Ministry of Commerce, Ministry of Social Welfare, Ministry of Finance, Bangladesh Bank and Security Exchange Commission with the registrar of Joint Stock Companies as the coordinator has already started investigating series of allegations against Destiny 2000 Limited. The team is initially focusing on serious financial irregularities inside Destiny Multipurpose Cooperative Society Limited, which is operating as a financial institution and Destiny 2000 Limited authorities are already making public statements terming Destiny Multipurpose Cooperative Society Limited as a "financial institution" being "licensed by the government". It is publicly claimed endorsed by Destiny authorities that their "sister concern' Destiny Multipurpose Cooperative Society Limited is investing TK. 100 crore [one billion Taka] year. According to the sources, Destiny Multipurpose Cooperative Society Limited takes 5-7 percent monthly interest on its invested amount. Furthermore, shares of this organ of the Destiny Group has already been sold to the members of Destiny 2000 Limited, wherefrom more than TK. 300 crore [three billion Taka] has already been collected. Such public offering of shares, without the written permission of the Security Exchange Commission is totally illegal and punishable offense.

Table of Contents

CHAPTER 01

Business Ethics and Unethical Business Practice

Business Ethics : Introduction Unethical Practice in Business Effects and Reasons Conducting Unethical Business Consequences of Unethical Business Practices

CHAPTER 02

Unethical Business Practices in Bangladesh

Dumping Labor union opposition Discriminating employees Copying the style of packaging Deception on size and content of a product Omitting to provide side effect information Incomplete or inaccurate testing of products

CHAPTER 03 CHAPTER 04

Destiny 2000 Ltd - A Name of Fraudsters?

Study and Analysis

Destiny 2000 Ltd. : Company Overview Destiny 2000 Ltd. : Unethical Practices

CHAPTER 05

Recommendations, Conclusion and Appendix

CHAPTER ONE
BUSINESS ETHICS AND UNETHICAL PRACTICE

Business Ethics
Social responsibility requires individuals engaging in business endeavors to behave in an ethical manner. Ethics are principles of behavior that distinguish between right and wrong. Ethical conduct conforms to what a group or society as a whole considers right behavior. People working in business frequently face ethical questions. Business ethics is the evaluation of business activities and behavior as right or wrong. Ethical standards in business are based on commonly accepted principles of behavior established by the expectations of society, the firm, the industry, and an individuals personal values. With unethical business practices often receiving publicity, the public sometimes believe that people in business are less ethical than others in society. But ethical problems challenge all segments of our society, including government, churches, and higher education.

Unethical Practice in Business:

Unethical business practices are not conforming to approved standards. Many businesses promote their products and services with unethical practices. This is a wrong practice and may lead to mistrust. Business owners of all over the world from similar trade meet together and discuss this problem of unethical practices in business. Unethical practices include creative accounting, earnings management, misleading financial analysis insider trading, securities fraud, bribery, kickbacks, facilitation payment, manipulation of business practices and process falls under unethical practices. Unfortunately, being unethical does not always mean that it is illegal.

Effects of Unethical practices

Because of some businesses practicing these unethical behavior, the reputation of many other business of similar trade are affected. Business ethics reflects the philosophy of business and the aim is to determine the purpose of the company. For example, if a company intends to give maximum returns to its shareholders then the company has to sacrifice its profits, to avoid that organizations give statements of more costs and reduce income in their statements.

Reasons for conducting unethical practice:

Unethical practices are more likely when businesses focus solely of profit and intense competition, top management gives lip service only to ethical behavior and fails to establish clear policies and adequate controls and when they are insensitive to the customer best interests and public concerns about ethics.

Reasons
Focuses on Profit Maximize Intense Competition Ambiguous Policies Inadequate Control Insensitive to customers best interest

Consequence of Unethical business practice:

The sad truth is that almost every company has individuals that partake in unethical behavior for their personal benefit or supported by the company. Unethical behavior might be as simple as using company property and time for personal benefit to inside trading and financial fraud. Many companies sadly make it part of their operational policy to cut corners, accept and give kick-backs in order to get juicy contracts and maximize profit. In todays business environment, the line between right and wrong is f ade. Workers with high moral standard are helpless against unethical behavior they notice in their colleagues, and to make it worse, many unethical conducts go unpunished because of legal insignificance. An employee working for an employer or company with unethical, deceptive, and dishonest conduct will be directly affected physically and mentally, and may even come down with emotional and health related problems because of it.

Dissatisfied Customer Loss Qualified Employee

Bad Publicity

Consequence

Legal Action

Lack Of Trust

Lost Business

Figure: Unethical Business Practices Consequences.

Workers involved in unethical practices are almost always directly or indirectly held accountable for their actions. Even though they may not be found guilty by any court of law, the physiological impact of immoral acts leads to intense mental and physical stress. When a company is found guilty of financial improprieties, the workers undergo a series of questions from investigators and if they were found to be involved, they may be blacklisted or their professional license revoked. Many workers involved in immoral behavior may not know the source of anxiety or other health issues, but the human conscience has a strong effect on our physical and mental stability.

CHAPTER TWO
UNETHICAL BUSINESS PRACTICES IN BANGLADESH

Unethical Practices on Business

Most business leaders realize their firms cannot succeed without the trust of customers and the goodwill of society. A violation of ethics makes trust and goodwill difficult to maintain. In thousands of companies, executives and employees act according to the highest ethical standards. Unfortunately managers in some firms behave unethically, and these instances are often highly publicized. Personnel executive say the major reason managers behave unethically is to obtain power and money. There are a lot of examples of unethical business practices. Especially in the World we are living in today, every company, be it big or small, is looking for ways of making larger profits, and for this purpose they dont always play fair. The economic crisis is taking its to ll on every kind of business, creating a huge pressure for quick remedies and ideas that can assure a fast profit. Some business practices that were considered unethical in the past seem to have become legitimate ways of attracting new customers, of or creating bigger profits; all this because of the shock the economy has sustained during the crisis. Although the cause and effect can also be considered reverse in this case, because one of the main reasons of the economic crisis is exactly the use of unethical business practices. So, here is a list of business practices that are considered unethical, although the line between ethical and unethical seems to get blurrier every day: Dumping. This is an unfair business practice that sometimes big companies employ in order to destroy the local competition and obtain a monopole of that certain product in that specific market. This is done by flooding the market with the big companys product, which are sold at loss, but at much lower price than the competition. Therefore, if the big company can afford to sell at a loss for a long time, the competitors will lose their market, and eventually will go bankrupt. In the aftermath of this operation, only the big company will remain as a provider of that certain product, with every competitor wiped out, and so they can increase the price, as much as they want, and thus recuperate their losses, and make a substantial profit as well until another competitor appears a on the market to challenge their position. Labor union opposition. This is one of the classic examples of unethical business practices. Employees are prevented from forming a labor union that can represent their interests. One of the biggest companies in the world that has this policy is Wal-Mart. They instead have the open doors policy which allows and encourages every employee the right to take their complaints beyond management level. But this is in no way an effective form of protecting workers rights. Most Wall-Mart employees end up quitting during the first year. The employees that are considered too out spoken can be easily fired. This way the company can take care of every employee individually, rather than dealing with an organization that would have bigger power. Discriminating employees on the basis of sex, race, or religion; Discrimination is still a big issue in many countries. Even in the most developed ones, such as the United States it is still a delicate issue. Equality in the work place is now guaranteed by law, but the actual acceptance of people, who have different skin color, or opinions, is a long way away for almost all societies.

Copying the style of packaging in order to mislead the consumer. This is usually done by smaller companies who produce lesser quality products and try to pass them off as high quality goods by using a brand name for example that can mislead the consumer in thinking its a much more famous brand name. For example shoes that are at a very low price and have the brand name BATA, can mislead a costumer into buying them, because of the resemblance to the much more famous brand name BATA. Deception on size and content of a product. This is one of the most often seen examples of unethical business practices. It refers to deception in advertising. A product can be made out to appear much bigger, or have a much more significant content, than it really does. Omitting to provide side effect information. This is another example of unethical business practices. Of course this is sanctioned by law, but if a product can somehow get around testing by the authorities, it can be sold, without the mentioning of these side-effects. Incomplete or inaccurate testing of products. This is the domain of the public authorities who have the obligation to ensure that every product that goes out in the market is tested beforehand. There are many other examples of unethical business practices, but these are the ones that stick out in the crowd. Lets take one example of mango juice. The mango juice produced in Denmark, Germany, USA contains nearly 99.9% mango. But the mango juice produced in Bangladesh basically contains Pumpkin and only the essence of mango which is a chemical. This is not a sign of goodwill. This chemical may by harmful to health. So the businesses are earning profit by means of cheating.
120% 100% 80% 60% 40% 20% 0%

Denmark

USA

Germany

Bangladesh

Figure : Purity of Mango Juice in Different Countries

Of course, some, like the bait and switch have almost crossed that thin line towards legitimacy. It doesnt mean that it is necessarily ethical, but it is getting to be more and more accepted. This tactic of getting a consumer hooked on a product and than thru aggressive high pressure sales techniques, trying to get him to buy a more expensive product, cant really be called ethical, especially if we are talking about consumers who cant always look after their best interests such as the elderly. So, the thin line between ethical and unethical isnt any clearer.

CHAPTER THREE
DESTINY 2000 LTD. - A NAME OF FRAUDSTERS?

While Bangladesh Bank has already submitted report stating that the fraudulent multi level marketing [MLM] company Destiny Group comprising Destiny 2000 Limited , Destiny Multiple Cooperative Society Limited, Destiny Tree Plantation Limited, Best Air Limited, Diamond Builders Limited etc has committed specific crimes under the existing Money Laundering Act of the country, according to various sources, now the same racket is attempting to influence the current government in Bangladesh, with the target of escaping severe legal consequences by alluring the government of investing the construction of the Padma Bridge from Malaysia. The Bangladesh Bank report said, the directors of the MLM fraudsters namely Lt. Gen Harunur Rashid, Mohammad Rafiqul Amin, Alhaj Mohammed Hussain, Gofranul Hoque, Sayeedur Rahman, Mesbah Uddin Swapan, Farah Diba, Sheikh Tayebur Rahman, Jamshed Ara Chowdhury, Irfan Ahmed Sunny, Sajjad Hossain, Nepal Chandra Biswas, Zakir Hossain, Lt. Col (Retired) Didarul Alam and Akbar Ali Sumon shifted thousands of crores of Taka from various account of the enterprises of Destiny Group to their personal accounts , thus leaving only TK. 18 crore 51 lakh, which is even not a small fraction of the amount this multi level marketing racket has collected from various individuals by selling trees from its non-existing projects, shares of subsidiaries [mostly non existing companies] as well as collecting huge amount of money from the innocent investors by giving false promise of high interests. Meanwhile Anti Corruption Commission has also submitted its investigation report stating the above named directors of Destiny Group comprising Destiny 2000 Limited, Destiny Multiple Cooperative Society Limited, Destiny Tree Plantation Limited, Best Air Limited, and Diamond Builders Limited etc have swindled more than TK. 2400 crores from various accounts which is a serious offense under Act 4(2) of the Money Laundering Act of 2012. The ACC source indicated that, on submission of the report, cases under the Money Laundering Act shall be lodged against Lt. Gen Harunur Rashid, Mohammad Rafiqul Amin, Alhaj Mohammed Hussain, Gofranul Hoque, Sayeedur Rahman, Mesbah Uddin Swapan, Farah Diba, Sheikh Tayebur Rahman, Jamshed Ara Chowdhury, Irfan Ahmed Sunny, Sajjad Hossain, Nepal Chandra Biswas, Zakir Hossain, Lt. Col (Retired) Didarul Alam and Akbar Ali Sumon within end of July. It is also learnt that, out of TK. 2335, collected by Destiny Tree Plantation Limited, major segment of the money were already transferred to various account by keeping only TK. 180 in the account of Destiny Tree Plantation Limited, which is one of the biggest fake ventures of the fraudulent multi level marketing company. Bangladesh Bank investigation team has also tracked smuggling of US$ 5.8 million by Destiny Group to Hong Kong through 53 letters of credits. The amounts were sent to Soft Online HK Limited, which is owned by Noel J Carey, who also is the "Overseas Director" of Destiny Group. It is easily understood that Noel J Carey worked as one of the collaborators of Destiny Group and its gang named Lt. Gen Harunur Rashid, Mohammad Rafiqul Amin, Alhaj Mohammed Hussain, Gofranul Hoque, Sayeedur Rahman, Mesbah Uddin Swapan, Farah Diba, Sheikh Tayebur Rahman, Jamshed Ara Chowdhury, Irfan Ahmed Sunny, Sajjad Hossain, Nepal Chandra Biswas, Zakir Hossain, Lt. Col (Retired) Didarul Alam and Akbar Ali Sumon in smuggling out huge

amount of money into various bank accounts in Hong Kong, Singapore, Malaysia, UAE, United States and Canada. Bangladesh Bank sources further confirmed that allegation of money laundering by Destiny Group directors namely Lt. Gen Harunur Rashid, Mohammad Rafiqul Amin, Alhaj Mohammed Hussain, Gofranul Hoque, Sayeedur Rahman, Mesbah Uddin Swapan, Farah Diba, Sheikh Tayebur Rahman, Jamshed Ara Chowdhury, Irfan Ahmed Sunny, Zakir Hossain, Lt. Col (Retired) Didarul Alam and Akbar Ali Sumon has already been proved in initial investigation. For this reason, bank accounts of the directors as well as the enterprises of the fraudulent multi level marketing company had been freezed by the central bank. Meanwhile, the Ministry of Home Affairs has already alerted all immigration points in Bangladesh to keep close watch on Lt. Gen Harunur Rashid, Mohammad Rafiqul Amin, Alhaj Mohammed Hussain, Gofranul Hoque, Sayeedur Rahman, Mesbah Uddin Swapan, Farah Diba, Sheikh Tayebur Rahman, Jamshed Ara Chowdhury, Irfan Ahmed Sunny, Sajjad Hossain, Nepal Chandra Biswas, Zakir Hossain, Lt. Col (Retired) Didarul Alam and Akbar Ali Sumon to ensure none of them flee the country by stealing thousands of crores of Taka from the people. Financial experts say, the current government needs to immediately publish circular notice in all major dailies in Bangladesh alerting the immigration check-points and the citizen to keep vigilant watch on the movements of Lt. Gen Harunur Rashid, Mohammad Rafiqul Amin, Alhaj Mohammed Hussain, Gofranul Hoque, Sayeedur Rahman, Mesbah Uddin Swapan, Farah Diba, Sheikh Tayebur Rahman, Jamshed Ara Chowdhury, Irfan Ahmed Sunny, Sajjad Hossain, Nepal Chandra Biswas, Zakir Hossain, Lt. Col (Retired) Didarul Alam and Akbar Ali Sumon. It also suggested that the Prime Minister needs to personally look into this matter and instruct the law enforcing agencies to put severe restrictions and close monitoring on the movements of Lt. Gen Harunur Rashid, Mohammad Rafiqul Amin, Alhaj Mohammed Hussain, Gofranul Hoque, Sayeedur Rahman, Mesbah Uddin Swapan, Farah Diba, Sheikh Tayebur Rahman, Jamshed Ara Chowdhury, Irfan Ahmed Sunny, Sajjad Hossain, Nepal Chandra Biswas, Zakir Hossain, Lt. Col (Retired) Didarul Alam and Akbar Ali Sumon of the Destiny Group fraud gang. After sensing stern legal actions and severe consequences, the masterminds of Destiny Group at the tips of Lt. Gen. Harunur Rashid, its mastermind and managing director Mohammad Rafiqul Amin is now actively trying influencing the government by offering loans for constructing the Padma Bridge under Malaysian investment. It may be mentioned here that, Lt. Gen Harunur Rashid, Mohammad Rafiqul Amin, Alhaj Mohammed Hussain, Gofranul Hoque, Sayeedur Rahman, Mesbah Uddin Swapan, Farah Diba, Sheikh Tayebur Rahman, Jamshed Ara Chowdhury, Irfan Ahmed Sunny, Sajjad Hossain, Nepal Chandra Biswas, Zakir Hossain, Lt. Col (Retired) Didarul Alam and Akbar Ali Sumon had reportedly smuggled out huge amount of money in various countries, while they have investment significant amount in various business ventures in Malaysia. It may be mentioned here that, Bangladesh Bank, Anti Corruption Commission and intelligence agencies in Bangladesh started investigating the cases of massive fraud by Destiny Group following publication of series of reports and editorial comments in Weekly Blitz since last year.

CHAPTER FOUR
STUDY & ANALYSIS

Company overview
Destiny-2000 Ltd. is one of the largest Direct Selling companies of the world. About 4.3 million distributors have joined the company since its inception in December 2000. Having its corporate office in Dhaka Bangladesh, it has branches all over the country. The marketing concept was new in Bangladesh. Many people misunderstood the concept, even by government agencies. With 2350 employees at present and with the 36 sister concerns the company is one of the biggest organization of Bangladesh now. Some major businesses are:

Multipurpose Co-operative Society Ltd. Tree Plantation Ltd. Diamond Builders Ltd. The Dainik Destiny Printing & Packaging Ltd. Medical College & Hospital Ltd. Media & Publications Ltd. Agro Industries Ltd.

Tea Limited. Air Destiny Ltd. Boishakhi Media Ltd. Shopping Center Ltd. Builders Ltd. Hitachi Electric Industries Ltd. Developers Ltd. Electric & Electronic Industries Ltd.

Company Details (Destiny 2000 Ltd.)

Name of the Company : Nature of Business : Date of Registration : Registration Number : Trade License No. : Tax Identification Number (TIN) : VAT Registration No. : Membership : DESTINY-2000 LTD. Direct selling 14 December 2000 C-42075 (1434)/2000 1227, Dhaka City Corporation, Area-36 1412009196, Tax area: 04, Dhaka (South) 9021057474 Dhaka Chamber 0f Commerce & Industries (DCCI) (Registration No- 10756, Date: 11/11/2001)

Chairman : Managing Director : Employees : Total Number of Consumer-Distributors : Yearly Turn over :

Mohammad Hossain Mohammad Rafiqul Amin 2800 4.3 Million US$ 70 million

"Unethical business practices of Destiny"

When the current 'Grand Alliance' government led by Bangladesh Awami League is clearly in trouble centering massive scam with 3.5 million small investors at the stock markets, at least 4.8 million [Forty Eight Lakh] people are about to be robbed off by a fraudulent Multi Level Marketing [MLM] company named Destiny 2000 Limited and a number of its enterprises, which includes a new front of fraud of this MLM racket, named 'Destination'. While an investigation is underway, the alleged fraudulent activities of the multilevel marketing (MLM) company Destiny 2000 Limited have stirred the whole nation recently. The case has brought the poorly understood practice of MLM to the fore and has posed serious questions regarding how a possible scam of this extent could be sustained for so long. Inadequate understanding on part of the investors, lack of social awareness, corruption, a weak regulatory framework and even weaker implementation are mainly to be blamed for this debacle. Many more scandals like this might be imminent, if immediate actions are not taken. With millions of investment dollars and the fate of thousands of investors at stake, the effects of the problem dig deep into Bangladeshi society. This analysis will try to explore the basic problem, causes and ramifications of the MLM issue in Bangladesh in light of a case study of the Destiny group. Report of Bangladesh Bank Bangladesh Bank report reveals that Destiny 2000 LTD has seen an astronomical rise in its capital, shareholders, profit and investment since 2009. 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 of 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.

Different Media Publications Different newspapers, magazines, journals, of Bangladesh publishing regular features on Destiny 2000 ltd for last few months about their irregularities. TV channels have different programs like talk shows or crime shows with the analysis of Destiny 2000 ltd business. Moreover some seminars and leaflets are also distributed among people for beware from that type of business. All of the organizations are find different irregularities and misrepresentation of information then reality. Now let us discuss the unethical practices of Destiny 2000 Ltd. It is understood that by the end of 2012, Destiny 2000 Limited and all of its fake projects will blow in the air, thus leaving 4.8 million people being completely cheated.

"Why Destiny's MLM Project is fraud?"

What is MLM? Multilevel or network marketing (MLM) is one of the most complicated of business models. Traditional MLM emerged as an innovative tool to sell consumer goods to a large market without going through traditional retail shops. Instead, MLM based companies sell their products through a large network of selfemployed distributors. The United States based multinational Amway is perhaps the best known example. MLM works in the following manner: Company X will recruit Vender A to sell its products. For each unit that Vender A sells, he gets a commission. To encourage the growth of the distribution network, however, Company X tells Vender A that he can earn a lot more money if he recruits other vendors to sell products. So Vender A recruits Vender B and five other friends to sell products. Now, rather than spend as much time selling products directly to consumers, Vender A becomes Distributor A and supplies products to Vender B and others, earning a commission for everything sold. After gaining some experience, Vender B might recruit and sell to Vender C and five other friends. If he does, Distributor A will earn commissions from what both B and C sell. As long as the rewards are based on selling products to consumers, MLM is a legitimate business model, particularly if Company X buys back unsold goods from its vendors. The problem occurs when the product gets lost and the commissions become based solely on recruiting new members. Then MLM becomes what is known as a pyramid scheme. What is a pyramid scheme? As its name indicates, the pyramid scheme is structured like a pyramid. It starts with one person or company the initial recruiter who is on top, at the apex of the pyramid. This person or company recruits investor A, who is required to "invest" say $100, which is paid to the company. In order to make his or her money back, the new recruit must recruit investor B and other investors, each of whom will also have to invest $100. Investor A earns a commission on each investment he brings in, and, as long as the pyramid continues to grow, he will make his money back and a handsome profit.

Figure : The unsustainable exponential progression of a classic pyramid scheme

- Source: http://en.wikipedia.org/wiki/Pyramid_scheme

The problem is that the pyramid scheme cannot go on forever because there are a finite number of people who can join the scheme. As Figure 1 illustrates, if each layer of the pyramid entails six investors, by the 13th layer there are no more potential investors even if all the people in the world join! People are deceived into believing that by giving money they will make more money, but they can only do so by taking money from others. No wealth is created and no product/service is sold. So, all pyramid schemes eventually collapse and fail.

"How destiny practice unethical business"

Here are some of the illegal activities of Destiny 2000 Limited and its sisters concerns:
Multi-level Marketing (MLM): MLM is a marketing strategy in which members benefit not only from the sales they generate, but also from the sales of others, they recruit. It creates a pyramid structure of distributors. Though Destiny Multipurpose Cooperative Society is registered with the Department of Cooperatives, it has been running on MLM concept that goes against cooperative laws. By using MLM concept negatively, Destiny gives offer to the people that they will rich quickly they can ever imagine.

Illegal Banking activities: The Bangladesh Bank survey found that Destiny has been illegally running banking activities and has nearly 70 lakh members. It has set a target of registering 1 crore members by this year. As of December 31, 2011, the organization collected nearly Tk 2,000 crore as deposits and share capital from people. Of the deposits, over 94 percent are long-term. Illegal share sell: Though destiny is not a listed company in stock market, they sell share illegally to their member. After become a member of Destiny, they provide two numbers to their member. This two number are Distributors Identification Number (DIN) and Customers Identification Number (CIN). This DIN number holder sell share by TK 20000. Illegally collect fund for tree plantation: With out permission of government, they plant tree in government owned land. Destiny illegally collect fund from their member for tree plantation. In tree plantation program, there are two packages. One is Super Silver Package for 12 years period another is Powlonea Root Package. For first package they have to invest TK 10000 in exchange they will get 31 year old tree. This Package only applies for new member. After maturity, they will get 60000 TK with 50000 TK profit. For second package, they have to invest 7500 TK for eight years in exchange they will get 15 trees. Illegal insurance company: Destiny Life Insurance Company Limited is shown as one of the sister concerns of Destiny 2000 Limited at their website. It is learnt that, shares of this company have already been sold amongst the members of Destiny 2000 Limited and Muhammed Rafiqul Amin and his gangs have cashed at least TK. 300 crore from selling of the shares of this life insurance company. On investigation it was revealed that, Destiny Life Insurance Company Limited does not have any license issued by the Bangladesh government for operating as an insurance company, while this MLM Company is allowed to publicly publicize this illegal company. Tax dodging: The National Board of Revenue (NBR) scrutinizes the tax files of Destiny to see if the company has evaded tax. Currently, the NBR has tax and audit reports of 12 entities of Destiny Group, which, according to its website, has 42 sister concerns. Md. Alauddin, said Destiny has raised hundreds of crores of taka from people through its cooperative window, which enjoys tax exemption. Not sharing profit with their member: Destiny 2000 ltd has 70 lakh members, who contribute their money to various activities of this company and according to the policy of destiny after maturity of various project, member will get profit. But destiny does not utilize this money properly, so it is very difficult for destiny to

generate profit and also destiny have lack of morality for profit distributing among their member. Illegally involve construction activity & Raise land price 10 times: Diamond Builder Ltd is a sister concern of Destiny, who participate construction business. They illegally start five star hotel constructions & a nine-storey structure in Cox's Bazar. They have a plan to build many other high rises building in Dhaka and other divisional city. For that reason, they purchase many land and properties with very high prices in the last 10 months. As a result, prices of land have gone up by 10 times. Ahsan H Mansur, executive director of PRI said Destiny is a land-based cooperative. "There are many such cooperatives scattered across the country. Their activities need to be clamped down." "If we cannot clamp down on them, the prices of land will continue to shoot up, and one day it will collapse. Although the country's banking system is not directly linked with land, 80 to 90 percent collaterals are land-based." "If the quality of the collaterals is damaged then the banks' fundamentals will be shaken" Very frequent visit abroad: In past six months, the frequency of foreign tours of the members of the board of directors of Destiny 2000 Limited has significantly increased. It is learnt that during such foreign trips, the owners of this MLM Company are not only shifting funds but also are trying to locate a safe country for them as well their family members of settle in near future, when the fraudulent activities of this company will get busted. Trap for catching new client: For increasing new member, Destiny provides training to their member in every Friday at Mirpur indoor stadium. These types of training also costs money. In training secession, they try to inform that come with us and build our country of destiny. Start with TK 10,000 and take opportunity to earn TK 50,000 in a month. With their eye-catching advertisement, they try to attract people. Most members are student, lower income people, hopeless & unemployed person. Not transparent Accounting system: As a cooperative society, Destiny are not oblige to audit by a chartered account firm. They are monitored by Department of cooperatives. They have no information about branch wise savings collection, share capital, revenue and expense in the monetary year 2009-2010. In this year, they have incurred TK. 212 crore 55 lac which is totally illicit. Destiny earned Tk.200 crore as a commission from savings and share capital, but they showed it as research and development expense. They have not any match in their earning and expense and the balance sheet does not show the actual scenario of the company. They have not announced the actual amount of share capital and savings get from the public but the real number is the larger amounts compare what they announced.

Money laundering and illegal banking: Destiny Multipurpose Cooperative Society Limited [DMCSL] proclaims to be "a financial institution and registered on April 23, 2005 as a financial institution to provide new financial assistances of total tk. 100.00 crore every year from 2011 to the Distributors of Destiny-2000 Ltd. to expand direct selling business and attain respectable earning capabilities." It was categorically mentioned by sources in the Ministry of Finance and Bangladesh Bank that, no such license to operate as financial institution or bank was ever issued in favor of Destiny Multipurpose Cooperative Society Limited on April 23, 2005 or even till November 21, 2011. It is easily understood that, Destiny Multipurpose Cooperative Society Limited is illegally continuing to operate as a financial institution, while the matter has never been investigated either by the Ministry of Finance, Bangladesh Bank or the Anti Corruption Commission in Bangladesh. It is learnt from number of sources that, Destiny 2000 Limited maintains cadre of their own lobbyists within the Ministry of Finance and Bangladesh Bank and a number of Assistant Secretaries and Deputy Secretaries in the Ministry of Finance as well as some Deputy Governors and General Managers at Bangladesh Bank are under monthly payroll of this MLM fraud racket. It is also learnt from various sources that, the Secretary of the Ministry of Finance as well as the Governor of Bangladesh Bank are mostly put into dark on such illegal activities of Destiny 2000 Limited and its illegal financial institution of bank named Destiny Multipurpose Cooperative Society Limited, as a number of personal staffs of the Secretary of Ministry of Finance as well as the Governor of Bangladesh Bank are under permanent payroll of Muhammed Rafiqul Amin and his gang. -----------------

A look into the Destiny Case

Actions so far
It is not clear why Destiny was able to grow to five million members without any governmental intervention. As reported, the entity had already collected about BDT two billion from the public as early as March 2000. One hypothesis is that the groups well connected leadership kept regulators at bay. Another is that as the company was technically considered a nonfinancial institution, it fell through the regulatory cracks. A third is that it undertook a successful public relations campaign. Destiny started a vernacular daily newspaper and a satellite based television channel. Both of these are money losing endeavors it is estimated that Destiny is losing at least BDT 10 million a month from its newspaper venture and BDT 30 million per month for its TV channel nonetheless, these media outlets have offered the company a mouthpiece to defend its reputation. Finally, the long neglected issue came to the publics full attention following a Bangladesh Bank (BB) report sent to the financ e ministry, revealing evidence of illegal banking by Destiny Multipurpose Cooperative Society.6 This was

followed by a number of investigative media reports that prompted the government to initiate investigation into the activities of the group. Following the BB report, the Department of Cooperatives, which is the principal regulator of cooperative societies, and the Anti Corruption Commission have already started investigations into a series of allegations of corruption, fraud and irregularities inside Destiny 2000 Limited and its sister concerns. The National Board of Revenue has also moved to probe possible tax dodging and money laundering by the group and has already instructed banks to freeze accounts of Destiny 2000 and those of several of the groups officials.7 Meanwhile, after hearing the news of the BB investigation report, several offices of the group were found shut down while the employees went into hiding.8

Looking ahead
There are about 62 socalled MLM companies in the country and it appears t hat most of them are Pyramid Schemes in disguise of legitimate MLM businesses.9 It has recently been reported that at least two other companies have defrauded public by billions: Unipay2 and Jubok.10 Nonetheless, because there is no government monitoring of the activities of the MLM companies in Bangladesh, no one really knows how much money any MLM company is collecting from the people and how much they are either investing or simply spending in bad projects. It is therefore important to make it mandatory for MLM companies in Bangladesh to publish their annual report with specific information on how much money they collected from people and under which project; how and where this investment was used, along with profitability, expenditure and asset details. The government is already moving towards greater regulation. The commerce ministry has recently sent a letter to the Securities and Exchange Commission and other stakeholder agencies, asking for their opinion on an MLM act Direct Sales Law2011 in a bid to increase accountability of the MLM business. The ministry has assured that the MLM (Control) Act 2011 will soon be enacted. A draft law on the marketing strategy has already been formulated with provisions of prison, fines and cancellation of licenses if the MLM companies are found engaged in 21 types of businesses. In line with the draft proposal, the government will form a department, which will be known as 'Direct Sales Directorate' and a secretary will be appointed to regulate the businesses. 11 -----------------

CHAPTER FIVE

RECOMMENDATIONS AND CONCLUSION

Recommendations
Ethical issues in communications about MLM strategy relate to advertising messages and information about product safety, pollution, and employee work conditions, as well as other situations. Communications that are false or misleading can destroy customers trust in an organization. Lying, a major ethical issue within communications may be a significant problem in the business. Therefore, Destiny 2000 Ltd. should give the pure results, feedbacks, and public who do not understand that much must need proper information and safety regulation for all the people. Banking services are always done under the rules and regulations of Bangladesh Bank. Therefore, the illegal banking activities cannot be stopped because many people already invested in that. Therefore, Destiny 2000 ltd should get their permission for banking activities from central bank with penalty and the illegal sectors investors should shift them to other sectors as substitute. Destiny should register themselves under DSE (Dhaka Stock Exchange), CHE (Chittagong Stock Exchange) and SEC(Security Exchange Commission) and the vague system of DIN and CIN should be changed with preferred stock and common stock. The tree plantation program of Destiny 2000 Ltd is totally bullshit. The investors who invested into that project must refund of their money along with interest amount and government should also charge penalty for the plantation in the lands of government. Destiny 2000 Ltd is enjoying too much tax exemption with false identification. NBR should file a case against destiny for these false identifications and charge proper tax on each project in which it is not only named rather invested. According to the annual report of Destiny 2000 Ltd, it is earning imaginary profit every year. If that is true, they should distribute their profit to its distributors or members as per rules. The rules are also written in their marketing strategies. So for avoiding their own rules they should get penalty and according to company laws they must judged under courts supervision. The real estate business by diamond builders is eyewash for its investors. To make it legal Destiny 2000 Ltd should get permission from (MOHPW) Ministry of Housing and Public Works for constructions and purchase of land and the land they have already purchased requires proper valuation and adjust in their financial statements. The random visit of abroad must be properly inquired. Before permitting the visa, they should submit enough documents to embassy and government also monitor their personal accounts changes because of these trips. The training ceremony of Destiny 2000 Ltd should submit a proper document about their training layout and to justify their program some spy can be used in their seminars. Make people aware that contributing on training must not need money. Most

remarkable thing is that make it confirm that Destiny 2000 Ltd should not practice their eye-catching advertisements anymore for lower earning or unemployed persons.

CONCLUSION
The main objective of business is to serve people with their every need for the well-being of human being and to ensure that, there is no alternative of following business ethics. Only time shall tell whether the 'mistakes" made in the Destiny case were willful or otherwise. As for future, we can only hope that proper rules and regulations are developed as promised, and more importantly, followed. Furthermore, the whole society should work in unison to create public awareness and cautiousness on the issue. Otherwise the consequences will be enormous and millions of investors will continue to be cheated out of billions of Taka every year.
- - - - - End of Research Paper - - - - -

APPENDIX ___________________________________
References:
1) Ethics In Marketing On Bangladesh Perspective: Study on Few Companies of Bangladeshcollected from World Journal of Management | Volume 2. Number 2. September 2010, the direct link- http://wbiaus.org/10.%20Tajmeela-FINAL.pdf 2) Ethical theory and business (8th ed.) BEAUCHAMP Tom, BOWIE Norman. 3) Ferrell, O. C. Fraedrich, John. Ferrell, Linda. 2008. "Business Ethics-Ethical decisions making and cases", Houghton Mifflin Co, USA. 4) News Paper : The Daily Prothom Alo, March 30 to April 04, April 8 (front page), April 9 (page 2), April 10 (last page), 2012. 5) News Paper : Jayjay din. June 26, 1212 (front Page) 6) Journal : "Methodology in business ethics research: A review and critical assessment", D. M. Randall and A. M. Gibson. 7) Website : http://www.businessethics.ca/definitions/business-ethics.html 8) Website: http://www.destiny-2000.com 9) Destiny 2000 Limited clients cheated. News Desk. Weekly Blitz. March 30, 2012. URL : http://www.weeklyblitz.net/2216/destiny2000limitedclientscheated 10) Jon M. Taylor.'s Speech | "When Should an MLM or Network Marketing Program Be Considered an Illegal Pyramid Scheme?" - Consumer Awareness Institute at 2000. URL : http://www.pyramidschemealert.org/PSAMain/regulators/PPSdefined.pdf 11) Shamsher Chowdhury.- "Whose Destiny is it anyway?" - The Financial Express. April 7 2012. URL : http://www.thefinancialexpressbd.com/more.php?news_id=125897&date=20120407