Explained: The what and why of Kerala’s rotten Mango phone scam

It was a case of rotten mangoes. Just hours before mPhone Electronics and Technologies Private Limited was to launch its much-hyped Mango phone, the owners of the company were arrested by the police for financial fraud.

Reportedly based in Kochi, the company had projected the Mango phone as Kerala’s answer to the iPhone, with the latter’s trademark features. The ‘Malayali’ phone shot into the limelight around a month ago when mPhone announced that actor Amitabh Bachchan and cricketer Sachin Tendulkar would be its ambassadors. The day before the launch of the ‘Malayali’phone, most of the major newspapers in the state carried full front page advertisements.

On Monday, the Kerala police arrested Anto Augustine and Josekutty Augustine, the owners of the company from Kochi’s Le Meridien hotel.

The third brother Rojy Augustine has not been arrested. During the launch ceremony, he said that the company had issues with the banks and that it would be resolved soon. However, he did not say when the phone would be available in the market, nor did he take questions from the media about forging documents.

The brothers hail from Kalpetta in Wayanad district but the company is reportedly registered in the name of their mother and sister.

A whiff of the rot

In the first week of February, online Malayalam news portal Marunadan Malayali first reported that a woman employee of the firm had been assaulted. A complaint was filed at the Ernakulam Central police station.

She was the Chief Relationship Manager at mPhone. She says she was assaulted for raising questions about cases of alleged fraud filed against the company owners in the past.

When she learned of these cases against the Augustine brothers, she wanted to resign from the firm, which provoked them. She was assaulted severely and was hospitalised for some days, she told The News Minute. Although the complaint was registered, the accused were not arrested.

Marunadan Malayali then published a series of investigative reports, detailing several cases of fraud registered against the brothers in Kerala and elsewhere, triggering a debate on social media.

While there was a buzz about the Mango phone, people on social media talked about instances in which they had allegedly been cheated. Some said that in 2012, a company called Asian Motors, owned by the brothers, claimed that it had been appointed as a dealer of AMW Trucks in Kerala. A number of people said they had bought vehicles and been cheated.

Number crunching

Employees of the company say that although the company announced it was going to spend Rs 3,500 crore for mPhone, the firm was cash strapped.

“The company phone connection was disconnected for not paying the bills. They did not give our salary on time. If we ask for it, they behave like goondas,” an employee said on condition of anonymity. 

Some former employees allege that the company has taken money from mPhone franchisees.  

“The comments on every news story about the company and mPhone, several people claimed that the company was fake and that it had cheated many people through Asian Motors. That is how we started inquiring about him and decided to resign,” one of the ex-employee of the company told TNM.

Cases

Anto and Josekutty were arrested based on two complaints from the Pathadipalam branch of the Bank of Baroda and Kalamasery branch of the State Bank of Travancore (SBT). Besides this, they faced a 2015 cheating and fraud case in the Mangalore North Police station, for which they later obtained bail from the Karnataka High Court.

Ernakulam Central sub-inspector S Sajeev Kalamassery told The News Minute, “He obtained a loan of around Rs 13 crore from SBT by mortgaging the properties of Asian Motors and did not repay the amount. It is known that the company no longer exists. It was the same with Bank of Baroda, which granted them a loan of Rs 2.68 crore.”

There are allegations that the brothers have also defaulted on loans from Canara Bank, granted by the Banerjee road branch. The bank had issued an auction notice for the mortgage as it did not repay the amount. Marunadan reports that there are legal complications with the mortgage pledged by the Augustine brothers to Canara Bank, stalling auction procedures.

In the media

Allegations of fraud are not the only news stories appearing about the Augustine brothers after the arrest. A prominent Malayalam daily carried promotional news about the company on its business page on Tuesday.

Although the phone was launched on Monday, employees say that it does not have the features that were advertised.

“The company has invested some money in a major media firm, whose head used to visit our office frequently. He is a major support for them,” a former employee told TNM.