Investor alleges massive fraud at online education firm

February 26th, 2009 - 9:53 pm ICT by IANS  

Ghaziabad, Feb 26 (IANS) The country’s largest online education provider company Educomp Solutions has been accused of fraud worth millions of rupees by one of its investors. A police official said here Thursday that the allegations were being probed, while the firm denied them.
Gajendra Kumar from Ghaziabad - a satellite city of the national capital - lodged a complaint with the police Feb 13 alleging that the company has siphoned out millions of rupees into “fraudulently created” small firms.

Senior Superintendent of Police (Ghaziabad) Akhil Kumar said that on the complaint of Kumar a criminal case has been registered against eight people, including the company’s chief managing director (CMD) Shantanu Prakash, at Sihani Gate police station.

Kumar, in his complaint, alleged: “The company has transferred the investors’ money into small companies fraudulently generated by the management at national and international level.

“The company has shown the false figures of profit in its balance sheet and at the same time the company has shown a debt of Rs.367 crore (Rs.3.67 billion) from banks.

“These contradictory statements, of showing profits on one hand and availing loans from the bank on the other hand, shows that the company has not only cheated the investors but also has evaded the various types of taxes.”

Kumar also alleged that the company gained a loan of Rs.1 billion from Axis Bank to its sister concern Educomp Infra using these false balance sheets.

Educomp Solutions Ltd claims to be the leading e-education service providing company outsourcing to 21,000 government and private schools and having 10.99 million learners.

The company in 2005 was chosen as the company of the year in ITES sector at CNBC-ICICI Bank Emerging India awards.

The complainant also said that though the company has 3,955 employees, its salary sheet shows is just Rs.350 million which is quite low.

Educomp chief Prakash said: “People who do not understand our business make such false allegations.”

Talking about the firm’s salary sheet, Prakash said that at the entry level the company pays Rs.4,000 per month to people at government schools and Rs.7,000 per month at private schools, and around 70 percent of the employees are at such levels. “That’s why the salary sheets are low.”

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