Land banking companies in UK found guilty of unlawful investment sales

James Maynard of Countrywide Land Holdings faces ban and £32m fine to FSA for unauthorised sales to UK consumers

The Financial Services Authority (FSA) found three land banking companies guilty of unlawfully selling plots of land to UK consumers, and imposed a ban and fines of £33m. Photograph: Clive Gee/PA

Jill Insley

guardian.co.uk, Wed 21 Mar 2012 11.55 GMT

Three land banking companies who sold plots of land unlawfully to UK consumers have been ordered to pay a total of £33m to the Financial Services Authority.

The high court ruled that James Kenneth Maynard, Countrywide Land Holdings Limited (Countrywide) and Plateau Development & Land Limited (Plateau) operated collective investment schemes without authorisation.

Maynard, who operated through the trading names Regional Land and Countrywide, has been banned for life from selling for business purposes in the UK, and has been ordered to pay just under £32m to the FSA. A bankruptcy order has also been made against Maynard, who is believed to be living in Northern Cyprus.

Plateau, which is now in liquidation, was instructed to pay £918,975, while the firm's director Wasim Minhas, has been ordered to pay £75,000.

However, the regulator has warned that victims are unlikely to get any of their money back. Although the FSA is trying to trace the funds paid by investors, it not yet identified any assets that would enable more than a small proportion of these payments to be made, and therefore it is unclear how much will ultimately be returned to investors.

Maynard, Countrywide and Plateau sold plots of land across the UK with the promise that investors would make a significant profit when the land obtained planning permission and was sold. Investors were also told by sales staff that Maynard, Countrywide and Plateau would apply for planning permission for the land or that they had corporate buyers lined up to purchase the sites.

In reality there was no intention to seek planning permission or help buyers sell their land and the plots were in locations unlikely to ever gain planning permission, such as areas of outstanding natural beauty.

The Guardian and Observer warned readers about the risks of investing in land banking as far back as 2006.

The FSA first obtained injunctions against Maynard and Countrywide in August 2010 to freeze assets and stop them from selling more land. But the regulator then discovered that Plateau had been set up subsequently to continue the business. It secured a similar injunction against Plateau in December 2010.

The FSA does not regulate the sale of land, but deemed that land banking amounted to a collective investment which does require its authorisation.

Because these schemes were unauthorised, their victims are not protected by the Financial Services Compensation Scheme.

Tracy McDermott, acting director of enforcement and financial crime at the FSA, said: "We have to be realistic about the low probability of securing meaningful compensation for victims of these scams, but this is still an important victory. Proving that a land bank is operating a collective investment scheme – and should therefore be FSA authorised – is very complicated, so every success puts us in a stronger position to tackle other schemes."

McDermott said the decision should send a clear message to other land banks.

"We have also started court actions against others that we believe have been involved in Maynard's scheme.

"Anybody investing in land should always have it independently valued to check its worth. Furthermore, if you are ever sold land as an investment with the promise of fabulous returns, and on the basis that someone else will manage it for you as part of a wider site, you should check the firm is authorised by us."

Anyone who believes that they may have been contacted by a land banking operation or any other unauthorised financial services provider can call the FSA's consumer helpline for guidance: 0845 606 1234. The regulator has produced a video explaining what land banks are which is available on the FSA website.

Sourced from here.

Cautionary investment tales

Bill Singer has written an excellent piece in Forbes that offers good cautionary advice for income-starved investors. The piece resonates beyond the U.S. and is certainly highly relevant to Malaysian investors.

Interestingly he also addresses the difficulty that market regulators have in balancing the need to keep a fair and orderly open market where the investor should beware and act rationally against the necessity of policing the market for highly fluffy investment products that promises much but are dodgy on delivering actual yields. Read on---

Beware of Alternative Higher Rates of Return For Your Fixed Income Portfolio

The other day, the folks at the North American Securities Administrators Association (‘NASAA”) issued a press release:NASAA Cautions Investors Not to Stumble When Interest Rates Fall Flat (February 1, 2012). After reading the release, I feel pulled in two diametrically opposite directions when trying to write this column. There’s a lot of good stuff in the release, but there’s also a lot of bad stuff. I start off with “On the one hand . . .” but inevitably swing over to “On the other hand . . .” So — let’s get on with it.

On the One Hand

On the one hand, NASAA issues an absolutely valid, worthwhile, and intelligent warning:

Following the Federal Reserve’s announcement that interest rates are expected to remain low until at least late 2014, the North American Securities Administrators Association (NASAA) today cautioned investors to beware of risky or outright fraudulent investments promising higher yield or returns.

That’s truly great advice – and couldn’t be more timely! Kudos to the state and provincial regulators at NASAA!

With interest rates barely in the single digits and likely to stay there for some time, a lot of folks are antsy.  If you factor in a modest degree of inflation, some fixed income products are actually losing ground and technically costing you money to own them.  The problem with that somewhat dicey logic is that you then have to consider whether there is a safe alternative to earning a pittance on your bonds or similar investments.  In anticipation of such investor ruminations, NASAA offered this quote:

“Investors running away from low yields on fixed investment products risk stumbling into the arms of unscrupulous salespeople promising low risk and high returns,” said Jack E. Herstein, NASAA President and Assistant Director of the Nebraska Department of Banking & Finance Bureau of Securities. “Don’t chase the offer of high yield or returns into a dead-end investment.”

Herstein said that state and provincial securities regulators are concerned that individuals who depend on fixed income investments, particularly seniors, may be tempted to turn away from their slower growing but safe investments to alternative investments without understanding the risks and terms.

CCM introduces Limited Liability Partnership as New Business Vehicle

The Companies Commission of Malaysia has introduced a new business vehicle called the limited liability partnership (LLP) as an alternative for businessmen to conduct business.

The Limited Liability Partnership Bill 2011, passed by Dewan Negara yesterday and slated for implementation mid-next year, will allow the public more options to choose their nature of business vehicle, either in the form of a company, sole proprietorship or partnership firm.

In a statement, the commission said the LLP would combine the characteristics of a company and partnership firm but provide the protection of a limited liability for its partners.

Domestic Trade, Cooperative and Consumerism Datuk Seri Ismail Sabri Yaakob was quoted as saying in the statement that the initiative taken by the ministry, through the commission, was to enable the country become more competitive in line with the government's call to simplify procedures, reduce business administrative cost and compliance requirements for the business community.

"It is timely for the business community to be given the option of a business vehicle which would offer flexibility in terms of its formation, maintenance and termination," he said.

While saying that the LPP would have the necessary dynamics, Ismail Sabri added that the LLP would complement the traditional choice of sole proprietorships, partnerships or companies which would provide businessmen and investors the flexibility and the freedom to select the best business model that suited their needs and requirements.

"The LLP concept will also support new businesses, small-and-medium enterprises and professionals to grow their businesses without having to worry too much about their personal liabilities, assets and strict compliance requirements", he added.

As of November, there were 964,612 companies and 4,623,513 sole proprietorship and firms registered with the commission.

Professional accounting, audit and law firms are expected to convert their mode of business into a limited liability partnership, following the introduction of the new business vehicle.

Sourced from here.

Limited Liability Partnerships

The Companies Commission of Malaysia (CCM) has introduced a new business vehicle called the limited liability partnership (LLP) as an alternative for businessmen to conduct business.

The Limited Liability Partnership Bill 2011, passed by Dewan Negara on Wednesday, will allow the public more options to choose their nature of business vehicle, either in the form of a company, sole proprietorship or partnership firm.

In a statement, the commission said the LLP would combine the characteristics of a company and partnership firm but provide the protection of a limited liability for its partners.

Source: BizStar

Independent Directors Beware

In a significant prosecutorial and judicial milestone of sorts, two Independent Directors who were members of the Audit Committee of public-listed company, Transmile Group Berhad, were convicted for submitting a misleading statement on the company to Bursa Malaysia Securities Bhd.

__________________________________

KUALA LUMPUR, Oct 28 (Bernama) -- Two former non-executive directors of Transmile Group Bhd were sentenced to a year's jail and fined RM300,000, in default six months jail, each by the Sessions Court here today for submitting a misleading statement on the company to Bursa Malaysia Securities Bhd.

Judge Datuk Jagjit Singh Banth Singh made the decision after finding Chin Keem Feung, 46, and Shukri Sheikh Abdul Tawab, 47, guilty of the offence.

In the judgment, Jagjit Singh said Chin and Shukri had failed to raise reasonable doubts against the prosecution's case at the end of the defence case.

However, the court allowed a stay of the sentence pending an appeal at the High Court.

The court also allowed Chin and Shukri's application to pay their fine in installments, with the first payment of RM150,000 to be paid today and the balance before Nov 30.

Chin and Shukri were charged with knowingly authorising the making of a misleading statement in the company's annual quarterly report on its unaudited revenue for the financial year ending Dec 31, 2006.

They were charged with committing the offence at Bursa Malaysia Securities Berhad, Exchange Square, Bukit Kewangan here on Feb 15, 2007.

The offence, under Section 122B(b)(bb) of the Securities Industry Act 1983 (ACT 280), carries a fine not exceeding RM3 million or to imprisonment for a term not exceeding 10 years or to both.

Deputy public prosecutor Shanti Geoffrey and prosecuting officer Nor Rifhan Rozi appeared for the prosecution, while Chin and Shukri were represented by lawyers Mohd Firuz Jaffril and Tan Hock Chuan, respectively.

Budget 2012 Real property gains tax: Gradual impact

The existing rate is not effective in curbing speculation and could jeopardise the ability of the low- and middle-income groups to buy houses, says Najib

Kuala Lumpur: The impact from the real property gains tax (RPGT) hike, a move to curb speculation in the property market, will be gradual.

RPGT is a tax on properties sold less than five years after they are bought. Only the profit from the sale of a property is subject to RPGT.

It has been doubled to 10 per cent for the first two years and will remain at the previous level of 5 per cent in the third, fourth and fifth year. There will be no tax on gains after the fifth year.

RPGT exemption on a residential property is given to both husband and wife on one residential property each, once in a lifetime.Yesterday, Prime Minister Datuk Seri Najib Razak in his 2012 Budget speech said that the existing rate of 5 per cent is not effective in curbing speculative activities and could jeopardise the ability of the low- and middle-income groups to buy houses.


These changes, he said, are low enough not to affect genuine property owners and will curb speculative activities.Chairman of the Property Management, Valuation and Estate Agency Division of the Royal Institution of Surveyors Malaysia Adzman Shah Mohd Ariffin said that the move will deter future sales of property within two years of purchase. 


With prices stabilising and should they sell fast, they will not be able to make a killing."But, for those who bought a property three years ago, the price appreciation would have been much higher than the 10 per cent RPGT imposed," Adzman said, adding that this category of buyers will continue to make a profit.According to him, properties can appreciate by 20 per cent or more once completed.


Real Estate and Housing Developers' Association Malaysia president Datuk Seri Michael Yam welcomed the move. "The fact that there is no drastic change to the ruling on RPGT encourages long-term ownership of property which also helps the owner with capital appreciation and wealth creation as they will hold on to the property longer," said Yam. 


He added that the first two years are effectively a 100 per cent increase, thus it will help discourage short-term speculation.


"It is a gentle/soft landing which will avoid a dip in the supply and demand of property," Yam told Business Times.


"The increase in this instance is not unreasonable, given that there are no speculative activities in the entire country but only confined to pockets of urban areas like Kuala Lumpur and Penang. 


These pockets of activities are insignificant compared with the total supply and demand for housing in Malaysia," he added. However, real estate agent Rahim & Co's managing director Robert Ang said the 10 per cent increase is not an effective measure to try and curb speculation activities."If you want to curb speculation, why not something higher?" he said.

Sourced from: BT

Interest Scheme: Golden Palm Growers declares payout

Golden Palm Growers Bhd (GPGB) has declared its first dividend of eight per cent for the Golden Palm Growers' Scheme, an oil palm investment scheme targeted at local retail investors.

The scheme, launched on Aug 20 last year, enables investors to share profit from an oil palm plantation in Gua Musang, Kelantan.

GPGB holds a 90-year concesssion to develop, manage and maintain a 4,512-hectare plantation.

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

GPGB 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.

Executive chairman of Golden Palm Growers Bhd, Andrew Phang,said the planting of oil palm trees started last year and the first harvest was expected by 2014.

The scheme involves a minimum investment of RM8,000 for a quarter acre plot; investors are guaranteed six per cent return per annum fully backed by cash deposit with a licensed trustee.

"If crude palm oil prices exceed RM1,500 per metric tonne investors will be guaranteed a minimum return of nine per cent per annum in the next 17 years," Phang said.

To date, according to Phang, over 8,000 grower plots had been sold.

"Oil palm has a long history and a bright sustainable future, especially as biofuels are seen as an important energy source in time to come replacing fossil fuels," he said.

Read more: Golden Palm Growers declares payout http://www.btimes.com.my/Current_News/BTIMES/articles/20110818184523/Article/index_html#ixzz1VNb205Uq



-----------------------------------------------------------------------------------------------------------------------------------------------

Palm scheme to pay first dividend

KUALA LUMPUR: A year after its launch, Golden Palm Growers’ Scheme will pay investors its first guaranteed dividend payout of 6% with an additional 2% discretionary bonus dividend by the end of this month.

A first of its kind, the scheme guarantees a net yield of 6% for the first six years or a minimum return of 9% per annum if crude palm oil price exceeds RM1,500 per tonne in the 23-year period of investment.

After the first six development years, the scheme will move into full profit-sharing when profits from the total plantation will be distributed to investors according to the number of plots they invested in.

“This encouraging results strengthen our belief that making oil palm investment accessible to everyone is the right move,” Golden Palm Growers Bhd (GPGB) executive chairman Andrew Phang said at a briefing yesterday.

GPGB, the company providing the scheme, also announced a 30% increase in asset valuation in the past 10 months, making the plantation worth RM71.5mil as at June compared with RM55mil in August last year when the scheme was introduced.

The company holds a 90-year concession to develop, manage and maintain the oil palm plantation on 11,280 acres owned by an agency under the Kelantan government.

The plantation is expected to make its first harvest at the end of 2013.

“Of the total acreage, 19,600 plots were initially made available for sale to local investors or ‘growers’,” Phang said, adding that GPGB had allocated 4,000 acres more for the scheme on top of its initial 7,000 acres.

The company said 60% of the 11,000-acre plantation in Gua Musang, Kelantan, was under development now and about 8,000 plots had been taken up.

The size of each plot is a quarter of an acre.

Source: BizStar