Gold trading firm Genneva's offices raided
Any body here kena kaw kaw?
PETALING JAYA: The police, Bank Negara, the Companies Commission of Malaysia and the Ministry of Domestic Trade, Cooperatives and Consumerism jointly raided gold trading firm Genneva Malaysia Sdn Bhd and its affiliates in the country for various suspected offences.
Singapore's Commercial Affairs Department also conducted a similar operation against Genneva Pte Ltd in the republic.
In a statement released yesterday, Bank Negara said the raid was to probe suspected offences under the laws administered by the agencies.
“The public is advised to be cautious in investing money to avoid becoming victims of activities that are illegal and in breach of the law,” the statement read.
Waiting patiently: Customers gathering outside Genneva’s office in Jalan Kuchai Maju 6 as the raid is in progress.
The website for Genneva Malaysia remained accessible providing visitors with information on the company's background and contact details, among others.
The firm's Singapore portal, however, was not fully accessible.
The website for the Genneva Pte Ltd at http://www.genneva.com.sg/, takes visitors to a single page with the message that reads: “Work in progress, to ensure all obligations to our customers and consultants are met.”
The message urged for calm and cooperation during “these trying times as we work out amicable solutions for everyone”.
Genneva Singapore's Facebook stated: “Pray for positive outcome while the new management is working round the clock to solve problems.”
“We Shall Overcome!,” read a message posted on the page yesterday afternoon. (http://www.facebook.com/GennevaWorld.Sg)
Meanwhile, several clients and gold traders of the company cried foul over the raid.
A trader, who only wished to be known as Nick, said money earned from the purchase and sale of gold had helped fund his son through university.
“There has never been any complaint by the clients. The company has helped the livelihood of thousands of people. Why are the authorities interfering in a legitimate business?” he asked.
Another trader, S. Shanti, said the money from her buying and selling of gold, which she stressed was done with the relevant documentation and tax deductions, had helped pay for her mother's dialysis weekly treatment costing RM1,000 over the past three years.
“If they put a stop to this company, how am I going to foot the expensive bill for my mother's health?” she asked outside the company's office in Jalan Kuchai Maju 6.
She was among 100 customers, aged between those in their 20s and 70s, who had gathered at the office in support of Genneva after hearing of the raid yesterday afternoon.
They hoped that the authorities would complete the investigations and leave the company alone after that.
It was learnt that Bank Negara held a briefing with all the other agencies in Putrajaya at 8am before the simultaneous raids were conducted.
Staff at the Jalan Kuchai Lama office had their statements recorded until about 9pm before they were allowed to leave.
Officers at the scene were tight-lipped over the operation. However, they were seen carting away documents and files from the two premises located opposite each other.
As of 9.30pm, Bank Negara officers were still going through the records while customers of the company waited.
119 comment(s). Last comment by bullbear
at Oct 19, 2012 11:29 AM
Posted by bullbear > Oct 12, 2012 10:59 PM | Report Abuse
Geneva Singapore - Lawyer R. Nandakumar from RHTLaw Taylor Wessing told the press that the likelihood of customers suing Genneva to get their money back would depend on the "nature of the agreement that the customer enters into with the company".
"If there are obligations to make certain payments and the company defaulted on the payments, then a contractual claim may arise," he said.
Mr Wong told the press that there was hope for investors who were still holding on to their gold bars as they could sell them in the market.
In Malaysia, hundreds of investors gathered at Genneva's headquarters in Petaling Jaya and its office in Penang demanding answers, after the Malaysian police and financial regulators raided the firm, acting on numerous complaints by investors.
So folks, anyone went there? Care to share the news? Hehehehehe!!
Posted by chongkonghui > Oct 12, 2012 11:20 PM | Report Abuse
Read this... same 'INSANE' Stories at different countries at different eras because of same "Human DNA".
Posted by bullbear > Oct 12, 2012 11:37 PM | Report Abuse
Comment by Genneva Disgruntled Customer Group - Two groups of customers that were most seriously affected by the Genneva's delay in payment and delivery of gold:
1) The group that surrendered the gold and didn't get back the money, and
2) The group that paid the money and didn't get back the gold.
Was it all pre-planned....some say it was...but then who knows???
So folks, after reading the above comment you got anything else to add or share here? Heheheheheheh!!
Posted by bullbear > Oct 13, 2012 12:01 AM | Report Abuse
This comment copied from http://www.facebook.com/pages/Genneva-Disgruntled-Customer-Group/162867987187986
Genneva Disgruntled Customer Group : CONFESSIONS OF A GENNEVA CONSULTANT - Nicky Wu
My name is ZZZZZZ. I used to be an active con-sultant for Genneva ( formally known as Samudra) in the early 2009. Thankfully, I managed to totally pull-out/withdrawn all contracts since last year .
I assumed you are new and therefore do not fully understand what is really going on with the company. They kept changing company policies as and when they like, to suit their own interest every few days.
At first, every Consultants were forced to pay portion out of their commission regularly each month- so called monthly meeting expenses!!!. Later on, we, consultants were made compulsory/forced to pay Rm 500 each to joint as Gold Beam membership.
From there on-wards, to renew membership with Rm 250 every year.
Why is there a need to joint as member of Gold Beam when all of us consultants are under the umbrella of Genneva ??
Without our consent, Genneva can just subtract from our commission to “donate” to functions like big walk, F1, etc to boost it’s name/image. If company is doing well, why does the company needs to boost its image at the expense of its consultants??
When company’s cash-flow was low, its started forcing everyone of us to pay Rm 250 to Rm300 each to attend non-sense hibah training. After that, we had to pay extra Rm 40 per contract for stamping.
Later on, company came up with deducting Rm5 per cheque deposited into clients’ bank account. Is there any other company around who charge a fee for banking-in employees’ salary/commission into bank a/c??
To me, all the above collections are like day light robbery.
Have you ever heard of anyone having to pay to attend for their own company’s Annual Dinner Genneva must be the first and only one. On top of paying for dinner ticket, we even had to pay bus transportation fare to the event venue. Imagine that.
During the Annual dinner, lucky draws were not lucky at all because Genneva never fulfill its obligations until today. When asked where are the won prices, they said had to cancel because violate government guide lines. Free trips to China also no news until today!!!
Of course you may say these are small matters as long as you get your monthly commission and physical gold bars in hand. Yes, I do agree will you. Even if company wind-up or no longer pays out hibab, its “OK” as long as gold bars are with the clients.
But this is not the case. I had emphasized this 2 years back, for those who follow this forum would still remember. My only concern is the “Waiting Time”.
Scenario 1) Waiting to get hold of your physical gold after you have made payment
Scenario 2) Waiting to collect payment cheque when you had delivered your gold in advance to the company during “sell back”.
2 years back then, the “waiting time” was about 2 weeks maximum but now, it seems stretching beyond months!!!.
My fellow CON-sultants, have you ever thought of the consequences if you are caught in the above scenarios when suddenly :-
1) Genneva follows Gold Label footstep, to announced in newspaper it no longer sustain business & decided to wind-up or
2) Bank Negara decided to conduct a raid at Genneva & found no cash nor gold available at the premises.
The key point here is “Waiting Time”. The months of “waiting time” is total nightmare. You will have to be hold responsible to your relatives & friends whom you had convinced that the scheme is “safe”.
Please please and please do not compare Genneva with Poh Kong or any other gold smith shop. With Poh Kong, you pay and ON THE SPOT you get you gold. Likewise when you sell to Poh Kong, you get you cash ON THE SPOT.
Please please do not mislead others that you have physical gold in hand. In actual fact, during the duration of 3 months contract, you only get to hold on gold bar a few days at the most.By the time you got your gold, its already time to pass back to company for renewal inspection!!!! Yet wait another round….
Please, no more mentioning of holding gold bar in your hand & wait for it to appreciate then sell. The main issue of discussion is, the time for Genneva to deliver gold or cheque cleared before anything bad happened.
For those who are still waiting to get the gold or sell-back payment cheque, sweet dreams. By the way, ever wonder why sell-back payment cheques NOT auto-deposited into bank like monthly commission!?!?!.
Dear uncles and aunties, the end is near…You may start crying…………………..
So folks, view the link on top to view more interesting comments.
Posted by bullbear > Oct 13, 2012 10:47 AM | Report Abuse
Written by Finance twitter - Part I
Folks, was Genneva Malaysia, a company dealing in buying and selling gold products another Ponzi company waiting to collapse? Actually directors of Genneva – Marcus Yee Yuen Seng, Ng Poh Weng and Chin Wai Leong – can use MLM (Multi-level marketing) Pyramid system to do this business.
While MLM is more profitable, it’s more cumbersome since the regulatory control is much tighter. Of course you still can get away by appointing politically-linked Datuk-Datuk as your company chairman to facilitate license renewal and to close many enforcers’ eyes when irregularities occur. (Bernie Mandoff modus operandi)
Genneva brilliantly plays in a grey unregulated area – gold trading. Interestingly, according to the gold exemption order 1986, any Tom, Dick and his pussy cat can hold, borrow, lend, buy, sell or export gold without contravening any laws.
In short, it’s easier to move around gold than hold a rally in this country. Genneva was careful not to collect deposits from investors as this action can be seen as crossing into BAFIA’s (Banking and Financial Institutions Act) territory which requires a license from the Central Bank (Bank Negara). Without a need for a license (and renewal) means one less problem in doing business for Genneva.
How the Genneva Gold Investment Scheme works is quite simple. You purchase the physical gold which comes with a S&P (Sales ad Purchase Agreement), a Certificate of Ownership and a Letter of Hibah. The juice of the orgasm was in the form of “Hibah” (or monthly gift) – ranging from 1.8% (50g – 95g of gold purchase) to 2.5% (3kg and above of gold purchase) in cash return every month. That’s a whopping 21.6% – 30% annual return rate, mind you.
Warren Buffett must be super idiot not to join Genneva, no? In addition, your initial capital is 100% protected because according to die-hard investors, you can sell back your gold to Genneva at the same price you bought initially.
However, according to Genneva website, the company “does not” gives any undertaking or guarantee the repurchase of the gold products sold to its purchaser. Now, what did mom said about there ain’t no such thing as a free lunch. ............... cont
Posted by bullbear > Oct 13, 2012 10:56 AM | Report Abuse
Written by Finance twitter - Part II
First of all, this gold trading is a mega project. Genneva claims to have about 50,000 satisfied clients (or investors) in Malaysia alone. Let’s assume each investor poured in RM100,000 for this once-in-a-lifetime investment – that’s a mind-boggling RM5,000,000,000 (RM5 billion) hot money.
Knowing how greedy Malaysians are, the RM100,000 of investment quoted here is a super conservative figure. And here comes the magic. Genneva actually sells its gold to customers at a staggering premium of 20-30 percent. For example, while UOB was selling gold at $74,500 per kilobar, Genneva sells $96,000 per kilobar, on the same date.
And why wouldn’t Genneva laugh all its way to the bank with RM1 billion to RM1.5 billion in profit (20-30%) from these so-called 50,000 “expert” gold investors (*tongue-in-cheek*). Now, do you understand why I call this scheme a mega project? It’s because everything was designed to be gigantic.
If you want to fleece others’ money, do it big and systematically. Adding spices to instil artificial confidence would be to invite heavyweights such as mighty former PM and PM’s wife. Heck, Genneva even has the Sultan of Pahang’s daughter, as its chairman. Very confincing strategy, right?
Do you really need to be a rocket scientist for a scheme that gives you 1.8% – 2.5% of cash when the banker already made 20% – 30% in profit upfront? If you think taking 30 bucks from your pocket and return 2 bucks and 50 cents to you every month is the best invention since sliced bread, then you deserve to be scammed.
But there’re many great testimonies – not only they’re still keeping the physical gold, they’re also making 30% annual return rate. Of course they do otherwise this scheme won’t work, would they? You need some testimonies for this musical chair game to continue playing. And due to greed, some investors would sell every inch of cloth increasing their investment, which keep the money rolling.
How do you know the gold you’re hugging every night is as pure as it claims? How do you know it’s not tungsten-filled gold bars? Yes dude, jewelry stores on 47th Street and Fifth Avenue in Manhattan discovered a 10-ounce 999.9 gold bar costing nearly $18,000 turned out to be a counterfeit.
The bar was filled with tungsten, which weighs nearly the same as gold but costs just over a dollar an ounce. Heck, the gold bar even had stamp of the reputable Swiss Produits Artistiques Métaux Précieux and a serial number. Apparently the victim, Ibrahim Fadl, a dealer himself bought the gold bars from a merchant who has sold him real gold before ( watch video here: http://www.youtube.com/watch?feature=player_embedded&v=VLekbvBCmUo ). Previously such fake gold bars case happened in England but now had spread to New York.
If you challenge Genneva investors with questions, they may put a gun to your head. Besides, who cares as long as they continue receiving their Hibah. To the investors, Hibah was the main juice of orgasm but to Genneva, Hibah may be their biggest bait.
Frankly, the whole system works as long as the gold price doesn’t crash, people continues to buy gold bars, Genneva continues to generate positive income from their billions of dollars of profit elsewhere, no power struggle within the company and whatnot.
For every single Ringgit of your hard-earned money, Genneva can pay you the Hibah for 10-months and still make profit – with not a single cent coming out from the company’s own pocket. It’s your original money that they’re rolling and playing, as simple as that.
Genneva also knows all the 50,000 “happy” investors will not redeem their gold at the same time. If they do, the company will simply go bust simply because they don’t have RM5 billion (based on example above) to take back all the gold bullions (*grin*). With billions of dollars war chest, Genneva was like a mini bank.
Back in Oct 2010, the directors of Genneva Sdn Bhd – Ng Poh Weng, 60, face 263 charges involving RM185mil while Marcus Yee Yuen Seng, 58, faces 234 charges amounting to RM153mil and Chin Wai Leong, 34, face 210 charges involving RM212mil.
Earlier in July 2009, Bank Negara (Central Bank) had frozen their personal and company bank accounts and their asset of gold bars. Later, Genneva Pte Ltd, also a gold trading company in Singapore, with the same directors from Malaysia’s Genneva, lost a lawsuit from one of its investors claiming $190,000 with a second writ of summons for a total sum of $86,000 in the pipeline. If everyone was enjoying 21.6% – 30% annual return with option to sell back the gold bars to Genneva, why would investors sue the company?
Posted by bullbear > Oct 13, 2012 11:00 AM | Report Abuse
Written by Finance Twitter - Final Part
Another burning question – if the company’s account and asset were seized and frozen since 2009, how can the directors and company allowed to operate until the latest raid early this month, more than 3-years later?
Was Bank Negara sleeping on the job? Were there too many (greedy) hands in the cookie jar, hence the power struggle (or rather money struggle), considering the gigantic amount of money in the coffer (if there’s any left).
Or was it purely SOP (standard operating procedure) by any ponzi scheme operator to call it the day by asking the authorities to raid the company itself so that they can stop paying investors, knowing very well nobody would go to jail?
There’re people who makes good money from Genneva gold trading scheme but not everybody makes it to the finish line. But now that the company is raided, what’s next?
As usual, early bird catches the worm and as for the latecomers – remember to join the party early next time, will ya?
Posted by bullbear > Oct 13, 2012 11:23 AM | Report Abuse
Folks, interesting point to ponder from lessons from the past:
One criterion was whether the investor was actively involved in recruiting others, in which case he was considered as abetting the scheme. “Any investor who was also involved in the scheme as a recruiter or an upliner would not be eligible to claim his money back" says the SC in its website on Swisscash ponzi scheme.
So folks, to those people........How Now? Heheheheheh!!
Posted by bullbear > Oct 13, 2012 11:26 AM | Report Abuse
Lessons from the past
Meanwhile, it may be useful to study the case of the Swisscash investment programme, an Internet-based scam that drew civil action by the Securities Commission (SC) in 2007. But before that, Swisscash-related websites had been flagged by the SC as unauthorised investment websites.
In September 2006, the SC and Bank Negara issued a joint press release to warn Malaysians against investing in the Swisscash programme, which claimed to have invested in equities, commodities and foreign exchange, and offered returns of up to 300% within 15 months of investment.
To stop the defendants from holding out as fund managers and investment advisers without a licence, the SC filed a civil suit in June 2007 against three Malaysians and four companies controlled by one of the three individuals.
The regulator also obtained a worldwide injunction to prevent the Swisscash operators from disposing their assets, and to compel them to disclose details of their assets, companies and bank accounts.
In September the following year, the SC obtained judgment against the defendants in the amount of US$83mil and such further amounts as may be traced for payment.
A November 2009 settlement between the SC and two Malaysian defendants paved the way for the compensation of Swisscash investors, using the eligibility and payment criteria and payment ratio approved by the Kuala Lumpur High Court.
These criteria were recommended by the SC and PricewaterhouseCoopers Advisory Services Sdn Bhd, the Administrator appointed by the SC to manage the restitution from a pool of funds amounting to RM32.7mil.
One criterion was whether the investor was actively involved in recruiting others, in which case he was considered as abetting the scheme. “Any investor who was also involved in the scheme as a recruiter or an upliner would not be eligible to claim his money back,” says the SC in its website.
The Administrator received 22,780 claims, totalling approximately RM188mil, from Malaysian and foreign investors.
According to the SC's Annual Report 2010, RM30.53mil was paid to 19,625 eligible claimants. The payout rate was 20 sen to the ringgit. By the end of 2010, the Administrator had effected restitution to 99.1% of the total eligible claims.
Considering these numbers, the Swisscash case is not exactly a source of comfort and optimism for the Genneva Malaysia consultants and customers. The SC's actions here show that it's a long, hard road towards getting back money albeit merely 20% of the original sum invested in a too-good-to-be-true scheme.
Swisscash ought to be a cautionary tale about the need to truly be sure about the transparency and regulatory aspects of an investment scheme. Sadly, not many people see it that way.
Those involved in Genneva Malaysia are likely to say their case is completely different. Let's hope they are right.
Folks, read more on "What’s next for Genneva Malaysia?" dated 13/10/12 here: http://biz.thestar.com.my/news/story.asp?file=%2F2012%2F10%2F13%2Fbusiness%2F12167213&sec=business
Posted by bullbear > Oct 13, 2012 04:04 PM | Report Abuse
Given what the police, Bank Negara and the Attorney-General's Chambers have said to date, it's hard to imagine Genneva Malaysia going back to business as usual.
That's a horrifying thought for its customers and consultants, said to number in the tens of thousands.
Well folks, the end is near!! Heheheheheheheheh!!\
Posted by bullbear > Oct 13, 2012 05:07 PM | Report Abuse
After wrapping up their investigations on the goldcos, the agencies will decide whether there's any wrongdoing and if so, whether there's sufficient evidence to initiate prosecution. That decision may come soon.
Well folks, such uncertainty is stressful and painful, particularly for those who have at stake money that they simply can't afford to do without. The next best thing is to know when, if ever, they'll be handed back the money.
However folks, nobody can provide that information anytime soon. He that thinks he can afford to be negligent is not far from being poor!
Posted by bullbear > Oct 14, 2012 01:03 PM | Report Abuse
The Swisscash case is not exactly a source of comfort and optimism for the Genneva Malaysia consultants and customers.
In the Swisscash case, the SC's actions here show that it's a long, hard road towards getting back money albeit merely 20% of the original sum invested in a too-good-to-be-true scheme.
Will Geneva be any different from Swisscash case, folks? So those still holding the gold bars, better lose the anchor then the whole ship. For those with investment still stuck with GM2 ............... going to lose the whole ship?
Time will tell!
Posted by bullbear > Oct 15, 2012 01:37 PM | Report Abuse
Comment by Genneva Disgruntled Customer Group Question:
1. Who stand to benefit most from the BNM raid?
Answer: Shocking as it may sound but GM stands to benefit the most actually. Why? They don't have to pay hibah or deliver gold to customers any more particularly if they are on the brink of collapse as seen in Singapore. And if they have a few billions stashed in Switzerland or the Cayman Islands, they can live like Lords in any country of their liking. They can also always buy another small, obscure company, change the name later and start a new scam all over.
2. Who stand to lose the most in this whole sordid episode??
Answer: The customers of course. The aunts, uncles, pakcik, makcik, retirees, sick and disabled, households, consultants who left their jobs and went full time, even banks and financial institutions (from the money siphon off FDs, Savings and other banking facility).
The ordinary folk who surrendered all their hard-earned money and life-savings, families who pooled their money just to send a family member for dialysis or for further education overseas, retirees who withdrew all of their EPF, savings, sold their jewellery and gold teeth, professionals who made term/individual loans but never saw their gold, these are the biggest losers.
The monies GM received amounted to billions ie RM3 - 4 billion from customer's money. Can GM account for every sen of this money???
Posted by bullbear > Oct 15, 2012 07:32 PM | Report Abuse
High Returns Investment Scheme
1. No one can argue that conducting such investment scams and internet fraud can be highly lucrative.
2. Creativity is keeping these guys alive! Tactics being used are no longer straightforward, not in all cases.
3. Some Malaysia based con artists now understand the laws and regulations of the Malaysia.
4. The con artists appear to be well established and honest corporations or individuals, defrauding investors billions of dollars.
5. Most of these companies operate using proven techniques and are savvy in their area of specialization.
6. Operators generally set up a website offering an "investment program" which promises high returns per month, disclosing little or no detail about aspects of how money is to be invested.
7. Their headquarters are well set and their websites look professional, and they know the lingo to get the investor’s attention, so people fall easily.
8. The con artists are experts at using social media — including YouTube, Twitter and Facebook — to lure investors and create the illusion of social consensus that these investments are legitimate.
Posted by bullbear > Oct 16, 2012 10:17 AM | Report Abuse
Genneva - I don't understand how it's clients are so blur!
I don't understand how so many people think that Genneva is a legitimate company that makes it's profit through selling gold.
The worst part is that many of it's "clients" are actual BUSINESSMEN who sell goods and services to make their living.
Since someone didn't like my "proton car" example and said car depriciates but gold appreciates, I'll simplify and repeat my explanation, hopefull improving it.
Let's take a construction company. Sime Darby. Property appreciates too, right? So, let's say it costs them 500k to build a house. They sell it for RM1million.
1) Do you think that Sime Darby can afford to pay you 240,000 a year as hibah, as a present for buying the house from them???
If Sime Darby came up with this sort of deal, would you go for it???
2) If Sime Darby signs a contract where they have to buy the house back from you at RM1m after 6 months... do you think Sime Darby can do that???
More importantly, as a business person... if you buy 1kg rice for RM3 and sell it to me for RM5... but I turn around and return it to you and get back my RM5... how much profit have you made? ... that's right, NOTHING, it does not matter how much "profit" you make on a sale if the goods and money are returned!
So, what about a company that combines 1) and 2) ? In other words, Genneva is a company that MAKES NO PROFIT. ZERO. And yet somehow it pays out lots of money.
And none of it's "investors" are suspicious? ...
Generally, I would say that these "investors" are partially guilty of being party to an illegal activity. Because, essentially, all of them are having the attitude "I don't care where Genneva get's it's money from, as long as they pay me my due portion"
So, if Genneva is found guilty of illegal money laundering and all these investors lose their money, it's pretty much comparable to a bunch of people who invested in an unlicensed massage parlor which gets closed down. Sorry for your loss, but you were investing in an illegal activity in the first place...
Written by: http://theangryinvestor.blogspot.com/
Posted by bullbear > Oct 17, 2012 10:55 AM | Report Abuse
Some news related to GENEVA SINGAPORE - http://www.mas.gov.sg/en/News-and-Publications/Parliamentary-Replies/2012/Reply-to-Parliamentary-Question-on-Gold-Trading-Schemes.aspx
Response by Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister in Charge of MAS.
"5. However, regardless of whether these activities are regulated, it is an offence under the law to operate a fraudulent or deceptive scheme. As Members know, some of the operators offering gold buy-back schemes are currently under investigation by the Commercial Affairs Department (CAD). If there is evidence of fraud or other breaches of the law, CAD will take firm and appropriate action".
There you go folks. Regardless of whether these activities are regulated, it is AN OFFENCE under the law TO OPERATE A FRAUDULENT OR DECEPTIVE SCHEME. So folks, will GM2 be any difference from GS? Time will tell!
Posted by bullbear > Oct 17, 2012 03:35 PM | Report Abuse
As separate attachment to client’s purchase, Genneva also extends discretionary – a) monthly ‘Hibah’ or gift averaging 1.5 to 2.2% over 3 to 6 month period – or 18 to 26.4% if annualised, and b) outright sellback option at purchase cost at the end of Hibah period – both are commitment each client must acknowledge and is discretionary and can be withdrawn by the company at anytime. Since my first purchase of gold in May 2011 however, Genneva has never failed to honour both these commitment.
If Genneva pays 1.5 to 2.0% monthly Hibah, or 18-24% per annum under existing business model and trading platform of creating market liquidity and sharing and distributing profits along the way with participating clients, I personally believe that this business can be sustained for at least another 3 to 5 years.
I saw an elevated transaction risk however, each time Genneva promoted higher than average Hibah of up to 3% – gold delivery took longer than usual triggering Gharraror uncertainty forcing Majlis Fatwa’s edict on Genneva as non-syariah compliant and unsolicited complaints from PPIM which triggered and precipitated into an outright mass sellback from majority Muslim clients sometime in August and September.
I would have fully supported this promotion if used sparingly based on limited stock and ready for delivery ex stock basis or over predetermined and mutually agreed date.
I congratulate Genneva’s ability to weather the sellback storm and attribute it to management prowess in gold trading and cashflow juggling and promotion timing, but thanks also to vintage gold and a stroke of luck when prices actually turned bullish heading into the month of October.
Despite the above episode, I see more frequent promotion offering beyond average Hibah of up to maximum 3.0% (36.0% per annum) as controversial, ‘eye popping and attention grabbing’, and hence very inviting for a BNM action.
It is most unfortunate however that BNM has to force a shutdown in Genneva in the name of pre-emptive and prudential measure on amongst others, suspicion of business sustainability as an ongoing concern.
I would rather see Genneva itself determine its own fate and choose its own ‘day of reckoning’ which I believe is possible the moment it declares inability to pay discretionary Hibah and discretionary purchase of sellback gold from its clients. Clients lesson from this is already learnt following BNM’s forced suspension of Genneva i.e. ‘at least the client has physical and valuable gold in hand’.
Read more here: http://www.freemalaysiatoday.com/category/opinion/2012/10/17/gold-trading-a-clients-experience/
Posted by bullbear > Oct 18, 2012 09:30 PM | Report Abuse
Latest From BNM 18/10/12
Orders have also been issued to the directors and key personnel of the companies concerned to declare their assets in Malaysia and overseas, including those of their spouses and proxies.
These investigations have been accorded priority and all the necessary resources are being mobilised by the relevant enforcement agencies to expedite this process. This is to bring this investigation to the earliest conclusion.
Actions will be taken on those companies that offer fraudulent and deceptive financial or interest schemes that promise high monthly returns which are funded from future investors and not from gold trading activities or any other legitimate business activities.
Read here: http://www.bnm.gov.my/index.php?ch=en_press&pg=en_press_all&ac=2681
Posted by bullbear > Oct 19, 2012 11:29 AM | Report Abuse
The lure of promised paybacks
If you leave the ‘loan’ with Genneva for the next 12 months, they will pay out 24 % in total back to you with an additional 12 % to the consultants who fit into the pyramid that successfully referred you to them. That totals 36 % payback for each subsequent year.
If we assume the company purchases gold bullion at the prevailing market rates, they will still stand to lose 6 % for every such ‘loan’ made to them – 100 % cost of gold + 30 % mark-up – 36% interest equals -6 %.
And so the question is how or what Genneva needs to do to make up for the yearly loss of 6 %. By then their total ‘loan’ intakes had amounted to RM 3 billion, which means the interest payouts were working out to RM 180 million annually. That’s where Genneva resorted to a combination of scams going by the names of ‘Factional Scam,’ ‘Ponzi Scam’ and something as dubiously named as ‘Tai Chi Tactic.’
To elevate Genneva to the ‘big boy’ stakes, they went on a huge recruitment and exposure campaign, not only sponsoring sporting events but also bought out Datok-ship titles from Indonesia and/or Brunei, hosted lavish annual dinners, extravagant lucky draws, glittering conferences and seminars. Once they have attained the maximum requirement amount of investment, the second stage of their plan kicked in – that’s where the real game began.
One scam after another
‘Factional Scam’ begins with the purity of the gold bullions downgraded over time. At RM 200 per gram for 99.99 gold, each 100 grams will cost RM 20,000, which is what the first gold bullions are worth. By reducing the purity to 95 %, the worth of gold would drop to RM 19,000 although you will still be paying RM 23,000, because of the stipulated 30 % mark-up.
In case they got into trouble down the line, the directors of Genneva decided to form their own NGO and called it Gold Bullion Association of Malaysia (GBAM). Their task is to issue certification and quality assurance in case anyone amongst the public decides they want the gold certified and checked for quality.
The problem at this stage is that nowhere in Malaysia is gold regulated and therefore no one could actually say they were doing anything wrong or illegal even if anyone were to find the gold to be lacking in actual quality. But to ensure that the whole scenario was legitimate in order to buy public confidence, GBAM was established purely to hoodwink everyone into believing them entirely. In other words they had their backs covered to prevent the scam from surfacing.
Next came the ‘Ponzi Scam.’ This is where Genneva managed their own little bubble economy. Over time, the directors knew that after they have cooked their books, they had to hide them in order to ‘honour’ the investors with their interest payments.
However since they really don’t have the RM 180 million to do so, they decided to issue ‘coupons’ for their gold, which stated that upon the expiry of the three-month contract signed with Genneva, you the investor will receive the gold bullion as promised.
But hardly a few days thereafter, they tell you that you need to return the gold bullion to facilitate the renewal of the contract in which case then you are required to wait a further two months or so before you could even get your hands on a supposedly ‘new’ bullion.
Read more here: The Shameful Scam Story of Genneva http://www.investlah.com/forum/index.php?PHPSESSID=261e6911480fdeb873a1e13fe28945e0&topic=48522.msg942981#msg942981