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A&A Construction scam: are the victims about to see justice?

15 août 2014, 00:31

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A&A Construction scam: are the victims about to see justice?

In 2013, the A&A Construction scam was brought to light by Weekly. The company was subsequently put under administration, with the legal administrators pushing through a compromise proposal in August 2013. So what has happened since then? How much more do the victims have to pay for the scam? And when will they get their bungalows?

 

“According to our schedule, we will complete all works by the end of October and start delivering the bungalows by the beginning of November this year.”

Yacoob RAMTOOLA, BDO.

 

Beginning in 2004, A&A Construction run by the Kessewnath family began selling bungalows across a number of real estate projects across the north of the island. The business model was simple: get money from buyers to start up sham real estate projects and shuffle that money to a financial company that the family also happened to own. Hoodwink investors in that company too and make a nice little bundle. After Weekly began writing a series of articles to expose the scam in April 2013, the Kessewnaths were arrested one by one and A&A Construction was put under administration in May 2013. Georges Chung and Yacoob Ramtoola of BDO were tapped in their personal capacity as administrators to deal with seething customers who paid for bungalows that they never received and work out a compromise. What they discovered was an elaborate real estate Ponzi scheme, with the company not just bamboozling its own customers, but also various creditors and contractors to whom it owed Rs142 million as well as Rs5 million in unpaid wages to its own employees. So in August, the two administrators put forward a plan stating that in six of the projects, the victims of the scam would have to pump in between 32 to 40 per cent over and above their agreed contract price to get the bungalows they were supposed to receive. The plan passed because the administrators warned victims that if their plan didn’t go through, the company would be liquidated and everybody would make a huge loss, getting just 15 cents for every rupee they put in. That was then. So, what has happened since then? How much did the victims finally have to fork out?

 

“There is no leeway between the 32 and 40 per cent anymore,” laments M.A., one of the victims of the scam. “Now it has definitely become 40 per cent.” Asked for an estimate of how much they are asking buyers to cough up for these six real estate projects, one of the administrators, Yacoob Ramtoola tells Weekly, “the extra cost will be approximately Rs750,000 based on increased costs of the project as we agreed with the buyers.” That rough estimate is a bit of an understatement, according to M.A, who is now making monthly payments to meet the extra burden. “The last two monthly payments I made were of Rs100,000 each” and since many invested varying amounts in the shifty enterprise, the burden of the extra payments differs. “According to the agreement that was imposed, somebody who put in Rs2.55 million, for example, now has to put in another million,” says M.A. To take the example of just one such project, out of the 31 buyers in the project Larkspur, 21 of them invested more than Rs2 million – with one investing as much as Rs4.3 million. In that particular development at least, the Rs750,000 presented by the administrator is clearly lowballing it.

 

And what are buyers receiving? After putting in 40 per cent more over and above what they were supposed to pay, according to the compromise deal that passed back in August 2013, they will get skeleton structures equipped only with basic utilities and connections. “So we have to pay more, but we get empty shells with no tiling, plumbing, doors  etc. We have to invest even more in that,” says N.Z., another victim. “From our point of view, it just seems to be getting worse.” Not surprisingly then, in August, a group of 28 victims within that particular project – Larkspur – (out of a total of 31 victims) attempted an ultimately unsuccessful legal challenge to the deal.

 

“That particular project (Larkspur) is about 90 per cent complete,” Ramtoola explains. “According to our schedule, we will complete all works by the end of October and start delivering the bungalows by the beginning of November this year.”

 

According to M.A., the administrators have also told the victims that an open day will be organised to reassure their restive clients that work is proceeding at pace. The date still has to be communicated. After being corralled into accepting to pay much more for much less and unsuccessful attempts at challenging the fait accompli, “what can we do?” sighs a resigned M.A. “At least we are not losing everything”.

 

The sense of resignation pervading the victims might be replaced by relief at if the tortuous chapter of A&A Construction is finally brought to an end. All courtesy of the Kessewnaths, who still continue to roam free.

 

*  This opinion appeared in Weekly’s edition of 7th to 13th august.This article appeared in Weekly’s edition of 7th to 13th august.