Press Statements by Bank Negara Malaysia on Gold Firm Raids | Genneva Malaysia Sdn Bhd

The Bank Negara Malaysia(BNM) has release nine frequently asked questions on the recent joint raids on companies suspected of conducting illegal financial schemes using gold, for the benefit of members of the public, in particular the affected parties(victims).

BNM has warned the public to be very caution when evaluating an investment scheme that sounds too good to be true and Beware of Ponzi schemes.

In Genneva Malaysia Sdn Bhd’s case, 20% per annum is sounds too good to be true, it’s probably not true!

Bank Negara Malaysia Central Bank of Malaysia Press Statements by Bank Negara Malaysia on Gold Firm Raids | Genneva Malaysia Sdn Bhd

The less work you have to do for the returns, the more suspicious you should become.  In these companies suspected of conducting illegal financial schemes using gold, you don’t required to do anything.

You just do nothing and the  20% per annum return money will flow automatically into your bank account.

If that this the case, maybe Warren Buffett can put some of their fund here and retired early.

Asset assets(Gold Bars and cash etc) seized during the course of raids were  meticulously documented and accounted for and maintained in safe custody. If there are criminal proceedings, such assets will only be dealt with at the direction of the Court.

Assuming there’s a court case, buyer of gold may takes a long time before able to get their Gold Bars and cash etc back.

Joint Raids on Companies Suspected of Conducting Illegal Financial Schemes Using Gold

In light of numerous queries received by the enforcement agencies on recent actions taken against companies suspected of operating illegal financial schemes using gold, the following set of Frequently Asked Questions and Answers are for the benefit of members of the public, in particular the affected parties.

Joint statement by:

The Royal Malaysia Police
Ministry of Domestic Trade, Cooperative and Consumerism
Companies Commission of Malaysia
Bank Negara Malaysia
22 October 2012


Frequently Asked Questions

Q:  Why did the authorities raid such companies?

A:  The raids were conducted in the interest of protecting the affected investors from putting more money at risk as well as the public at large.

The companies that are involved are investigated for suspected offences that include illegal financial schemes, money laundering, tax evasion, false description including misrepresentations, appointment of agents without licence and failure to lodge statutory documents.

Q:  What is the concern with the business model of such companies?

A:  The concern is that such companies are operating schemes believed to be not sustainable. Such companies promised high monthly returns to the investors and a guarantee to buy back the gold. Such schemes are not funded through actual gold trading but from new monies invested into such schemes.

Frequently, the amount of assets and monies held by such companies do not commensurate with the amount collected from the investors.

Q: Why have the authorities only taken action now?

A:  Any enforcement action can only be taken when it has been established that there is reason to believe an offence has been committed.

This is to avoid hasty or reckless enforcement actions that may affect genuine businesses.

Q:  What is the status of the actions by the authorities?

A:  The investigations are now ongoing. Regular statements will be issued by the authorities to keep the public informed of the progress of the investigations.

Members of the public are advised to only refer to information from official statements issued by the law enforcement agencies for updates on the case.

Q:  How long will the investigations take?

A:  The length of the investigations would depend on the complexity and magnitude of the case. The complexity increases due to the international dimension of such cases.

Cooperation by the affected parties will facilitate the investigation process. The investigations are accorded high priority and all necessary resources are being mobilised by the relevant enforcement agencies to bring the investigations to the earliest conclusion.

Q:  Why have the assets been frozen and seized?

A:  In cases of suspected illegal financial schemes, the authorities conduct search and seizure operations to secure the evidence and to avoid the companies from destroying or suppressing evidence. This also prevents the assets from being dissipated to the detriment of the investors.

Under section 44 of Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA), the law enforcement agencies are empowered to freeze any assets when it is suspected that an offence of money laundering has been committed.

Q:  What is going to happen to the assets and gold that have been seized?

A: Any assets seized during the course of raids are meticulously documented and accounted for and maintained in safe custody. If there are criminal proceedings, such assets will only be dealt with at the direction of the Court.

Q:  Can an affected investor claim his/her money or gold from the seized assets?
A:   Assets seized during the course of the investigations can only be dealt with at the direction of the Court. Investors may file to the Court a third party claim for the return of his/her money or gold.

Information on whether, and how, to file a claim will be provided after court proceedings are concluded.

Q:  What is the advice to members of the public who would like to invest?
A:  The public is advised to be cautious of investment schemes that promise high returns with seemingly low risk, with an arrangement that guarantees the return of the principal amount invested.

Members of the public are also advised to check with the relevant authorities when dealing with companies or individuals offering such seemingly attractive business opportunities or financial services that are not licensed by the authorities.
As a guide, members of the public are encouraged to observe the following when evaluating an investment scheme:

  • Remember – if it sounds too good to be true, it’s probably not true;
  • Beware of Ponzi schemes. They are fraudulent investment schemes where the operators will take money from new investors to pay earlier or existing investors. Eventually it will reach a critical stage when there are not enough new investors to support this and subsequently the whole scheme collapses;
  • Deal only with licensed financial institutions and authorised dealers;
  • Check with the relevant authorities before investing/ depositing;
  • Don’t be pressured or rushed to invest;
  • Be extra careful with investments over the internet;
  • Be sceptical of any investment opportunity that is not in writing;
  • In case an investment has been made, keep copies of all the investment  documentation; and
  • Refer to the following  financial fraud alert websites:
    • bnm.gov.my/microsites/fraudalert/index.htm
    • sc.com.my/sub.asp?pageid=&menuid=233&newsid=&linkid=&type=

If you come across fraudulent investment schemes, you are encouraged to lodge a police report.

Bank Negara Malaysia
22 October 2012

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Bung Mokthar: Bank Negara should have acted sooner

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5 Responses to “Press Statements by Bank Negara Malaysia on Gold Firm Raids | Genneva Malaysia Sdn Bhd”

  1. Genneva Malaysia’s liabilities exceeded assets, says Awang Adek

    Bank Negara Malaysia (BNM) has found the liabilities of gold investment firm Genneva Malaysia Sdn Bhd (Genneva Malaysia) exceeded its assets, said Deputy Finance Minister Datuk Dr Awang Adek Hussin.

    He said the situation clearly shows Genneva Malaysia was unable to pay returns to its investors.

    Awang Adek, likening Genneva Malaysia’s operations to most illegal get-rich-quick schemes, said BNM’s initial investigations showed the company actually sold gold bars to attract investors, but later changed to just taking deposits.

    “There was already an element of deposit taking in Genneva, and the company’s assets were so small compared to the amount invested by the people, so there was a very big gap between assets and liabilities.

    “So how could it (Genneva) pay when its liabilities ran into billions of ringgit while its assets were just in the millions (of ringgit),” he said when concluding the Finance Ministry committee-level debate on the 2013 Supply Bill at the Dewan Rakyat here today.

    Early this month, BNM together with the Royal Malaysia Police, Domestic Trade, Cooperatives and Consumerism Ministry and the Companies Commission of Malaysia carried out joint raids on several of Genneva Malaysia’s premises as well as the residences of its directors after several investors who had become victims lodged police reports.

    Awang Adek said it is not possible for Bank Negara, which is considering what appropriate action to take on Genneva Malaysia, to pay back the company’s customers the value of their investments.

    “At first, some got a return of two per cent a month, but this was wrong. We cannot say the investors were blameless, they invested and there were risks.

    “The company was really to be blamed. Where is there a scheme that can give such good returns, if it’s too good to be true, then it’s not true,” he said. – Bernama

  2. Genneva gold storm poses political risks ahead of polls

    While many Muslim Malaysians are kicking back at home with their extended family over a feast of roasted meats and laughter this long Aidiladha weekend, Genneva Malaysia gold trader Che Surin Jusoh is struggling to explain to her five-year-old son why they cannot return to Kedah for the holidays.

    “My son will ask ‘Ma, kenapa tak bawa keluar? Lama tak jalan-jalan’ (Ma, why haven’t you taken me out? Long time since we’ve gone out),” the 32-year-old banker-turned-gold-seller told The Malaysian Insider earlier this week, as city dwellers began their annual rush home to celebrate the Muslim holiday.

    “I don’t know what to say… I only have RM1,000 to RM2,000 in my bank account,” the mother of two young children — her younger child, a girl, is two years old — and the sole breadwinner in the family added, her voice sounding thick as she fought to prevent a sob from escaping.

    Che Surin is among the 60,000-plus sellers and buyers who have been left nearly broke after Bank Negara raided the firm and seized 200kg of gold bullion estimated to be worth a whopping RM40 million from Genneva Malaysia’s premises in Jalan Kuchai Lama here on October 1.

    Singapore’s Commercial Affairs Department had also conducted a similar operation against Genneva Pte Ltd in Singapore.

    It has been reported that the scheme operated by Genneva offered extremely high returns of up to 24 per cent per annum.

    How the scheme worked was the gold was priced at between 18 per cent and 20 per cent above market rate, and purchasers were paid guaranteed monthly returns of about three per cent. The physical gold was not passed to the buyer and the company would buy back the investment after the end of the contract period, according to a New Straits Times news report on October 5 highlighting several dissatisfied customers who lodged police reports against the company.

    This meant that the customer’s return on investment appeared to have been funded by the principal capital put into the scheme which was above the market rate for gold.

    Bank Negara has also frozen Genneva Malaysia’s accounts, cheques and other assets, on suspicion the company violated various banking and financial laws which include taking deposits without giving gold in return, money laundering, evading taxes, appointing agents without licence, failing to file statutory documents, and misrepresenting itself as an investment firm and giving false descriptions on its business after several people lodged complaints with the police.

    The central bank’s actions sparked an immediate outcry from the 6,000 salesmen contracted to sell and buy back gold from Genneva Malaysia who have rallied to the company’s defence and its 60,000 customers from all walks of life, including professionals from the banking industry like Che Surin, pensioners, students, and The Malaysian Insider understands politicians and various foundations that have been working to fund charities like orphanages.

    Bank Negara has yet to press charges against the company’s directors.

    The action against Genneva has resulted in pressure on the Najib administration to resolve the controversy that has put 300,000 livelihoods at stake — according to Genneva contractors and customers who spoke to The Malaysian Insider — and which could impact the Barisan Nasional (BN) government’s chances in the 13th general election that must be called by next April, less than six months away.

    The Malaysian Insider understands that Putrajaya is well aware of the potential political fallout but there is concern that a bailout of any kind would involve several billion ringgit and would be a moral hazard.

    For Che Surin who had worked for three banks before signing up with Genneva Malaysia in February last year, the company’s unusual business operations had proved to be a godsend when she encountered financial woes two years ago which put her in what she called “ my dark summer of 2010”.

    “I could not pay my bills then,” she said.

    The round-faced tudung-clad woman recounted that she was initially sceptical of Genneva Malaysia when her bank customers sung its praises to her.

    “When I joined, I was not 100 per cent convinced,” she said, but related that she dabbled in trying out the buying-and-selling back the gold scheme over a five-month period before becoming confident that it could work.

    What truly sold her on the Genneva idea was the public endorsement campaigns headlined by dignitaries like Deputy Finance Minister Datuk Donald Lim and former Prime Minister Tun Dr Mahathir Mohamad who had encouraged Malaysians to buy gold instead of putting their faith in paper money during his speech at the syariah-compliant company’s launch on December 15.

    Despite the action taken by authorities in Singapore and Malaysia, Che Surin and three other Genneva Malaysia contractors — what the company designates as its salesmen — told The Malaysian Insider that they strongly believe the company management had acted above board.

    They bristle with indignation that the company is a Ponzi scheme or a get-rich-quick scheme despite the exceptionally high returns which many government officials and critics have pointed out was too good to be true.

    “We are not investors. That’s the misconception,” said 54-year-old retiree Shereen Lim, who pointed out that Genneva Malaysia’s management had published advertisements in all the mainstream dailies, including the vernacular newspapers, to educate the public on what it was last March, following Bank Negara’s advice after its last audit and dialogue session with the company.

    Another pensioner, who only wanted to be known as Othman, 62, agreed.

    The former construction contractor and father of four said Genneva Malaysia’s Wealth-Sharing Platform had helped him continue to support his family, including paying for his 22-year-old son’s studies in the US, and to care for his 88-year-old mother who is bedridden in Butterworth.

    “Now, nothing left with no ‘hibah’, commission and gold stuck with BNM after the raid,” said Othman, tall and thin with a head full of greying hair.

    “Hibah”, an Arabic word meaning “gift”, was a discretionary sum of between 1.5 per cent and 2 per cent paid out as a reward to regular customers, said Shanthi Masilamoney, 44, who has been supporting her sickly elderly parents and 16 adopted children, in addition to the two she gave birth to, on the lucrative income she derived as a Genneva Malaysia gold trader over the past two years.

    Shanthi declined to specify her earnings during the Genneva boom years, but said it enabled non-executive wage earners like her to be able to “own and drive a CEO’s car” while providing her the luxury of time with her family.

    Beside her, Che Surin bowed her head. On the other side of the table in the small conference room in one of the three Genneva offices congregated in Kuchai Lama, Othman and Lim — another mother of two and timber exporter who had suffered major business losses due to the European economic crisis — nodded their heads vigorously in agreement.

    Lim estimated the company’s daily business turnover at RM2 billion, before the banking and financial institution regulator iced Genneva’s operations.

    The four traders said they had been pushing Putrajaya to set up a regulating body for gold trading and still hope the government can fulfil its promise after the Cabinet discussed setting up a task force to do so.

    “We want regulation so we won’t have to worry about the grey areas that anytime they can come and raid us, like now,” said Lim.

    But in the immediate term, they want the federal government to remove its lock-down on the company.

    “We want Bank Negara to release Genneva Malaysia and the 200kg seized gold bullion so the company can fulfil obligation to customers who have paid for the gold,” Lim said.

    “Release all the cheques issued by Genneva Malaysia before October 2 to be cleared,” Shanthi cut in.

    “Unfreeze Genneva Malaysia’s account,” piped Che Surin, who said she had some RM250,000 worth of gold bullion stuck in Bank Negara’s vaults.

    The federal government, however, has indicated that it is unlikely to acquiesce to the gold traders’ requests.

    Deputy Finance Minister Datuk Awang Adek Hussin had told Parliament on October 23 that Genneva Malaysia’s liabilities exceeded its assets and that showed the company was unable to pay returns to its investors.

    Awang Adek said it will not be possible for Bank Negara, which is considering what appropriate action to take against Genneva Malaysia, to pay back the company’s customers the value of their investments.

    “At first, some got a return of two per cent a month, but this was wrong. We cannot say the investors were blameless, they invested and there were risks.

    “The company was really to be blamed. Where is there a scheme that can give such good returns, if it’s too good to be true, then it’s not true,” he was quoted as saying by state news agency Bernama.

    fr:themalaysianinsider.com/malaysia/article/genneva-gold-storm-poses-political-risks-ahead-of-polls/

  3. Malaysian gold plans flourish in hunt for yield: Southeast Asia

    Dadhyanna Tan Mian Lee ditched a 10- year career in telecommunications in 2009 to become a consultant with Genneva Malaysia Sdn., selling gold to customers with a plan that she says yielded as much as 24 percent a year.

    “My mom would say, she got 3 percent per annum placing her money into a fixed-deposit facility with a bank,” said Tan, 38. Genneva also won her father as a customer with its offering of discretionary monthly “gifts” to purchasers of its product.

    That income source is at risk after Malaysian authorities raided Genneva and three other companies this month for suspected offences such as illegal deposit taking.

    A search for better yields to beat the interest rates on bank deposits has boosted the appeal of alternative investments as diverse as stem-cell storage and birds’ nests, while unlicensed instruments in the Southeast Asian nation identified by the Securities Commission doubled to 25 in 2011.

    The central bank has refrained from cutting its benchmark rate since 2009, highlighting the risks of keeping borrowing costs too low, and authorities have moved to contain property prices and prevent asset bubbles.

    “More people are willing to invest in such schemes,” Sujatha Sekhar Naik, the Securities Commission’s head of investor affairs and complaints, said last month.

    “They are becoming more sophisticated. They are following the development of society, the markets and what they’re doing is upping the ante in terms of the types of schemes they offer.”

    Genneva was raided by the Malaysian Police, the Ministry of Domestic Trade, Cooperatives and Consumerism, the Companies Commission and the central bank on Oct 1, the authorities said in a statement, advising the public to be “cautious in investing their money to avoid becoming victims of activities that are illegal.”

    Four days later, raids were carried out on Pageantry Gold Bhd., Caesar Gold Sdn. and Worldwide Far East Bhd. Genneva said in an Oct 24 statement on its website that it would be “totally wrong” to say the company was engaged in illegal deposit taking. “Our legal advisers say for the time being we cannot have any comment on this,” Jamsen Lim, Genneva’s general manager, said when contacted by Bloomberg News. Authorities will complete all investigations as quickly as possible, Bank Negara Malaysia Governor Zeti Akhtar Aziz told reporters in Kuala Lumpur today. “We know that there are many anxious depositors and investors, so will expedite as fast as we can so that there will be an early conclusion,” she said. Interest in unlicensed investments is on the rise because of low interest rates and the desire for higher returns as consumers seek to boost incomes, according to the Securities Commission’s Sujatha.

    The regulator warned against 25 unlicensed activities offered by individuals and companies last year, the second highest on record since 2003 and up from 13 questionable operations in 2010, according to data on its website. The hunt for returns is suggested by investment and deposit movements. After the central bank cut its benchmark rate to a record-low 2 percent during the 2009 global recession, deposits growth slowed at the start of 2010 even as the expansion in nominal gross domestic product accelerated.

    Net assets of Malaysian unit trusts have grown more than twice the pace of bank deposits in five of the last seven years, according to data from the central bank and Securities Commission. “Lower interest rates will have a negative impact on deposit growth as investors search for higher-yielding assets,” said Ho Woei Chen, an economist at United Overseas Bank Limited Ltd. in Singapore. Still, the “current interest rate in Malaysia is not too low if you take into consideration inflation.” Higher property prices in Asia have also been caused by capital inflows and “stronger fundamentals” in the region, not solely low interest rates, she said.

    Malaysia’s consumer prices rose 1.3 percent in September from a year earlier. The central bank’s benchmark rate is 3 percent. The average fixed deposit rate for a 12-month bank saving is 3.17 percent, according to data compiled by Bloomberg.

    Still, Choo Chin Thye, a 50-year-old printing business owner, said he’s turning to stem cells and oil palm to get better returns than he can garner from deposits. Since 2008, Choo has put 50,000 ringgit ($16,332) in a plan by Plentiful Gold-Class Bhd. that directs funds from investors into oil palm plantations.

    The move has earned him yearly returns of more than 8 percent since 2008, he said. He’s also helped design a plan to invest in stem cell storage equipment, which he says will offer annual fixed returns of 8 percent for the first five years after it commences.

    “I chose this because it has better yields,” said Choo, who lives in Kuala Lumpur. “With these schemes, the upside is technically unlimited.” He points to other ventures investors can turn to in Malaysia such as one involving rearing the swiftlets that produce birds’ nests, a popular Asian delicacy.

    With lessons from the U.S. subprime crisis remaining in many policy makers’ minds, concern that keeping interest rates too low for too long will spur financial risks may have contributed to Zeti’s hesitation to join neighbors from China to South Korea in cutting borrowing costs this year even as the faltering world economy threatens growth. “With the low interest rate environment, savers and investors are going to keep looking for other types of investments,” said Anthony Dass, chief economist at MIDF Amanah Investment Bank Bhd.

    “This will be one of the factors Bank Negara Malaysia will consider if it wants to cut interest rates.”

    Keeping interest rates too low for too long may lead to the “mispricing of risks” by those who anticipate borrowing costs will stay low, as well as create asset bubbles, Zeti said in March 2010, citing signs that people are buying higher-yielding assets “that pose significant risks.”

    She has kept the overnight policy rate at 3 percent since raising it to that level in May 2011, even as neighbors from Thailand to the Philippines eased monetary policy. Bank Negara’s final decision for this year is due Nov 8. The authorities will keep rates unchanged until the second quarter of 2013 when a tightening is forecast, according to the majority of 19 economists in a Bloomberg News survey.

    “At this point, it is a rate that provides some decent rate of return on savings and at the same time, it is a rate that provides access to financing by businesses at relatively reasonable costs,” Zeti said in an interview this month.

    “If you have interest rates that are too low, it provides the incentive to seek better rates of return, and then in terms of mispricing of risk, they go into ventures that are of higher risk. Well, we haven’t seen that.”

    Malaysia “normalized” interest rates in 2010 when the economy showed clear signs of recovery, becoming one of the first central banks to start raising rates to prevent the buildup of financial imbalances, Zeti said. Highlighting that rationale in its statements gave signal for businesses and households that they should consider these risks, she said.

    Concern consumers will take on excessive risk and spur asset bubbles prompted the central bank to tighten mortgage lending rules in 2010. Prime Minister Najib Razak raised the real property gains tax on short-term investments in his Sept. 28 budget speech this year.

    The benchmark FTSE Bursa Malaysia KLCI Index has climbed more than 9 percent this year, according to data compiled by Bloomberg. Average condominium prices in the capital, Kuala Lumpur, have almost doubled since 2004 to 515,867 ringgit in the second quarter, according a government report.

    There may be only so much policy makers can do to deter risky investments.

    Genneva has more than 50,000 customers and a turnover of 3 billion ringgit, according to its website. The authorities said assets of the companies raided were seized and frozen to facilitate their investigation into the suspected offences and to protect the interest of the investors.

    “It has brought about sleepless nights,” said Tan, who gave up her job with a phone company to become a consultant with Genneva after her father became a customer, saying she was attracted by the chance to learn about gold trading. The raid has “shaken our financial ability for the month,” she said.
    fr:biz.thestar.com.my/news/story.asp?file=/2012/10/30/business/20121030122150&sec=business

  4. Genneva probe involves 35,000 investors, RM10bil in investments

    The probe into gold trading firm Genneva Malaysia Sdn Bhd involved some 35,000 investors and RM10bil worth of investments, the Dewan Rakyat was told.

    Genneva and its related companies are being investigated by Bank Negara Malaysia for suspected offences, including illegal deposit taking, money laundering and tax evasion.

    “Based on our information, there are 35,000 investors that had been detected with investments worth some RM10bil,” Deputy Finance Minister Datuk Dr Awang Adek Hussein told Datuk Ibrahim Ali (IND-Pasir Mas) during Question Time.

    “We found that there was a huge gap between the deposits and the assets of the company,” he said of the investigation carried out by Bank Negara.

    Ibrahim wanted to know if the government would interfere and assist the investors.

    Awang Adek said the reason Bank Negara had initially allowed Genneva to operate was because it was to operate as a gold trading company.

    “It is important that we do not rush and freeze the business immediately as some people have wrongly blamed us,” he said.

    Among steps taken by the Finance Ministry to curb illegal deposit taking and get-rich-quick scams are through constant monitoring and based on public tip-off.

    “We will also conduct raids from time to time against companies found to contravene the laws,” he said.

    fr:thestar.com.my/news/story.asp?file=/2012/10/31/nation/20121031133047&sec=nation

  5. Gold investment probe: Many paid but did not get their gold

    Seized records have revealed that many investors who had paid had yet to receive any delivery of gold, prior to the joint raids by Bank Negara, the police, the Ministry of Domestic Trade, Cooperative and Consumerism and the Companies Commission of Malaysia on four companies suspected of conducting illegal investment schemes using gold.

    In a joint statement giving an update on their ongoing probe, they said that, in some cases, the investors had been waiting for more than five months after making payment.

    “The total amount of gold seized during the raids from all the companies is approximately 142.7 kilogram, and monies in bank accounts and cash amounts to RM101.92mil,” the statement said.

    Investigations also revealed that these companies kept poor records with some of them maintaining different versions of financial records for different purposes.

    “These companies have also failed to submit audited accounts with the Companies Commission of Malaysia for the last few years, as required by law.

    “For businesses, especially those that involve large numbers of clients and monies, it is imperative to maintain accurate records of all business transactions to avoid financial mismanagement or misrepresentation of the true financial situation of the company,” the statement said.

    “The enforcement agencies are aware of the plight facing affected investors and every effort is being made to determine the whereabouts of any monies and assets of the companies.

    “A dedicated team has been established to track the movement of monies and other assets. International accounting firms have also been appointed on a full time basis to assist in the investigations.

    “The scope of the investigation is international.

    “In this connection, the enforcement agencies are actively collaborating with their foreign counterparts to obtain evidence in several other jurisdictions to assist in the investigations,” the statement said.

    On Oct 5, gold trading firms Pageantry Gold Bhd, Caesar Gold Sdn Bhd and Worldwide Far East Bhd were jointly raided for suspected offences that include illegal deposit-taking, money-laundering, tax evasion and avoidance and false description.

    Three days earlier, Genneva Malaysia Sdn Bhd had been raided.

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