"Get-Rich-Quick" Scams in Malaysia

The Central Bank of Malaysia has created a useful FAQ section in their website that will greatly help create awareness of "get-rich-quick" scams that are victimising the Malaysian public:

1. What is a "Get-Rich-Quick" scheme?
   A plan which offers high or unrealistic rates of return for a small investmentwhile at the same time promising that such investment is easy and risk -free.
   
   The following "Get-Rich-Quick" schemes are prohibited under the legislation administered by Bank Negara Malaysia :
   

   Illegal Deposit Taking Activities
   
   Illegal deposit taking is an act of receiving, taking or accepting of deposits (moneys, precious metal, precious stone, any other article etc.) from members of the public that promises a repayment with interest or returns in money or money's worth without a valid licence under the Banking and Financial Institutions Act 1989 (BAFIA).
   

   Illegal Foreign Currency Dealings
   
   The following acts tantamount to illegal foreign currency dealings:

   • Buying or selling of foreign currency by a person who is not an authorized dealer unless such person has obtained the permission of the Controller of Foreign Exchange under the Exchange Control Act 1953 (ECA).
     
     
   • Buying or selling of foreign currency by a resident who is not an authorised dealer, with a person outside Malaysia except if the resident has obtained the permission of the Controller of Foreign Exchange under the ECA.
     
     

CAUTION: Internet Investment Schemes Members of the public are cautioned to be on guard against some investment schemes promoted on the internet as these schemes are not licensed or authorized by Bank Negara Malaysia to accept deposits or deal in foreign currency. Such schemes often come in the guise of attractive investment returns or opportunities involving unrealistic rates of returns withzero to low risk. Investors are reminded that they should only place deposits with institutions licensed or deal in foreign currency with institutions authorised by the Bank. Unlicensed operators may cease operating their business resulting in the investors with no means to recover their investments or seek redress against the persons connected with the scheme.




2. How To Spot The Scams?
   

   Illegal deposit taking scam

   • The person (an individual, a company or an organisation) receives, takes or accepts deposits from members of the public and is not licensed under section 6(4) of the BAFIA;
     
   • The person promises to repay the deposit, with or without interest or returns, over a period of time in the form of money or money's worth, etc.; and
     
   • The person promises to repay the initial deposit upon demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person receiving it, with any consideration in money or money's worth (the repayment of initial deposit is sometimes included in the fixed interest or returns promised).
     
     

Warning Signs for Investors • Illegal deposit taking activities have been disguised and camouflaged in various forms to deceive the public to fall victim to the investment scams, by giving valuable goods as part of the promised returns and camouflaging the deposits as loans to the company; • Illegal deposit taking activities appear to be able to provide high or unrealistic rates of interest or return over a short period of time as compared to licensed institutions. However, these schemes will not last long; • The survival of this scheme is dependent upon the recruitment of new depositors, i.e., new funds obtained will be used in paying dividends to the existing depositors. Therefore , the scheme will fail when there is no contribution of funds from new depositors; and • Initially the depositors may be paid their promised returns. However, the operator would eventually abscond with the moneys collected when he feels that the scheme is about to fail, thus leaving the depositors at the losing end.

Illegal foreign currency scam

Foreign currency dealings with a person, other than an authorized dealer, who has not obtained the permission of the Controller of Foreign Exchange under the ECA, often:

• Offer investors or members of the public the opportunity to deal in foreign currencies with a principal company (purported to have a valid licence to trade foreign currencies overseas);
  
• Facilitate the trading of foreign currencies by providing access to the principal company's website and trading facilities via internet;
  
• Recruit fresh graduates as marketing executives and allure them to get their family members to invest;
  
• Instruct the investors to deposit the investment moneys into either the principal company's bank account or a third party bank account; and
  
• Induce the investors to top up their investment ("margin call") or otherwise risk losing their investment.
  
  

Warning Signs For Investors Illegal operators of foreign currency scams will try to entice potential investors with a marketing strategy which promises quick and high returns - • By projecting a professional and reputable image with smart-looking employees, a high-tech office layout and advanced IT facilities where investors are induced to operate their accounts via the internet; • With tools of the trade, e.g., a news screen showing movements in exchange rates, to give the impression that a professional and legitimate business is being conducted; and • A business contract is usually entered into between the investors and the company. Such contracts are usually left unsigned by the company. This means no action can be taken by the investors against the company as there is no binding written contract.




3. How To Protect Yourself From The Scams?
   
   
• Remember the golden rule - if it sounds too good to be true, it's probably a lie;
• Deal only with licensed financial institutions and authorized dealers;
• Check with the relevant authority before investing;
• Don't be pressured or rushed to invest;
• Be extra careful with investments over the internet;
• Be skeptical of any investment opportunity that is not in writing; and
• In case an investment has been made, keep copies of all the investment and communications.
  
  
4. What Should You Do If You Are a Victim of such Scams?
   
   If you have any information pertaining to illegal deposit taking activities or illegal foreign currency dealings or are a victim of such activities or scams you can send details of such information or complaint together with the documents to Bank Negara Malaysia as follows:

Address:

Unit Penyiasatan Khas
Bank Negara Malaysia
Jalan Dato' Onn
50480 Kuala Lumpur
Fax: 03-26987467
E-mail: upkinfo@bnm.gov.my

Bank Negara can also be contacted at the following telephone numbers:

Tel.: 03-2691 5090 / 2698 4163 / 2691 0824 / 2692 6482 / 2694 2143

Golden Palm Growers to launch unique investment scheme

It is encouraging to note the growth of the interest scheme sector at the encouragement of the Companies Commission of Malaysia.

Interest schemes governed under the Companies Act 1965, offers a unique alternative fundraising model. These schemes are especially suitable for start-up businesses that have adequate asset-securitisation that meets with the approval of the Companies Commission of Malaysia.

Our firm pioneered the design of the first-ever interest scheme in Malaysia and, still work closely with the Companies Commission of Malaysia on new applications and proposals and, also legal and regulatory issues that arise.

Below is the media report sourced from Business Times on another successful interest scheme application to be launched in the very near future:

GOLDEN Palm Growers Bhd (GPGB) will launch this month an oil palm investment scheme, called "Golden Palm Growers Scheme", with returns pegged to oil palm prices.

The scheme will offer the retail public a chance to invest in an oil palm plantation and enjoy the full upside potential that comes with rising palm oil prices.

"The scheme is unique because, for the first time, the man in the street will be able to share the profits of an oil palm plantation directly.

"Such an opportunity is usually reserved for large corporates that have the money to develop a plantation on such a scale," GPGB executive chairman Andrew Phang told a media briefing in Kuala Lumpur yesterday.

Phang said the minimum investment in the scheme will be a quarter acre plot, or about 11,000 sq ft, adding that details will be available during the prospectus launch on August 20.

GPGB has received regulatory approval from the Companies Commission of Malaysia for the scheme.

AmTrustee Bhd will act as a trustee for the scheme to enhance investor protection.

GPGB, set up in 2007, is a subsidiary of Sterling Plantations Sdn Bhd, which in turn is wholly owned by Sterling Biofuels International Ltd, a company listed on the Australian Stock Exchange.

GPGB was set up to develop a 4,000ha oil palm plantation in Gua Musang, Kelantan.

The land is owned by an agency of the Kelantan state government.

In September 2007, GPGB was granted the concession to develop, manage and maintain the oil palm plantation for 60 years, with an option to renew for another 30 years.

"The planting under phase one, comprising 800ha, is 30 per cent completed, and the palms will start to produce fruits in 30 months.

"The entire plantation will be planted out over the next three years, with commercial yields in 2016," Phang said.

He expects the prices of commodities, including palm oil, to stay on the uptrend as income and population increase and supply falls short with the depletion in minerals and oil as well as limited agriculture land and the effects of climate change on crop production.

Phang said that palm oil prices, on average, had increased 7 per cent a year over the last 20 years, adding that the trend is expected to continue in the next 20 years.

New companies bill to be tabled in 2011

The Companies Commission of Malaysia (SSM) will propose to table the new Companies Bill in Parliament next year.

Its chief executive officer, Datuk Azmi Ariffin, said the draft of the new Bill, which was set to replace the existing Companies Act 1965, would be ready by year-end and was scheduled to be introduced next year.

"It is high time the contents of the existing Bill are reviewed holistically to have in place an effective and dynamic corporate legal framework to assist the growth of the country's economy," he told a media briefing on the new Bill here today.

Azmi said the SSM was in the midst of drafting the new Bill based on the 19 policy statements that would serve as the general parameters for the formulation of the new Bill.

"Among them are dynamic legal framework for all companies, simplifying decision-making process, establishing a mandatory registration regime for practising company secretary and modernising the enforcement regime," he said.

He said the new Act would align with the national agendas crafted towards achieving Vision 2020, the Government Transformation Plan, the New Economic Model and the 10th Malaysia Plan.

"The government is committed to ensuring corporate regulatory framework remains competitive to attract foreign and domestic investments, spur entrepreneurship and facilitate the conduct of business," he said.

The main features to be found under the new Act include:

(A) The introduction of single-member company: This allows companies to be incorporated only by one person.

(B) The introduction of non par value regime: The shares issued by a company will no longer be required to have a nominal value. This concept will allow a company to determine the value of its shares at the time it was issued based on the circumstances specific to the company.

(C) Sustainable-centric provisions: Companies will be required to make voluntarily statements relating to economic, social and environmental benefits associated with operating more sustainably.

Source: Business Times