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$258.8m lost in scams: Malaysia

$258.8m lost in scams: Malaysia
By Lim Wey Wen
The Star/Asia News Network
Sunday, Mar 04, 2012

KUALA LUMPUR – Malaysians lured into investing in illegal interest schemes have been fleeced of at least RM620 million (S$258.8 million) over the past three years.

The Companies Commission of Malaysia (SSM), concerned over the rise of such scams, published an advertorial in the wake of recent complaints over a Canadian land-banking scheme to remind investors of the risks involved.

Commission legal services division director Mohamed Sufyan Mohd Mokhtar said the number of the illegal schemes rose from 120 in 2009 to 151 in 2010 and 150 last year.

“An interest scheme is a form of investment in a medium other than shares and debentures (unsecured loans) involving the pooling of public funds to finance the business activities of a company,” Mohamed Sufyan said.

In return, participants are offered a specific return on their investment in the form of money, benefits or facilities.

“A common modus operandi involves convincing people to make a one-off investment in a business endeavour that is managed entirely by the operator,” Mohamed Sufyan said.

Another is to convince investors to build their own business (often with a buyback guarantee) on the condition that they purchase their training and equipment from the operator. “The operators are creative,” cautioned Mohamed Sufyan.

A few years ago, agriculture and its products (like lemon grass, leeches, earthworms, seaweed) were very popular.

Recent products include livestock (swiflets and arowana fish), plantations (palm oil, jatropha and agarwood), leisure and property development (holiday homes and hotels), equipment (ice-cream, ICT and water-vending machines) and gold.

While such interest schemes have existed in the country since 2006, it only picked up in 2008, he said.

However, not all interest schemes are illegal. There are provisions that regulate them under the Companies Act 1965.

“Legal schemes are registered with SSM in accordance with requirements under the Companies Act 1965,” said Mohamed Sufyan.

He said the only way to determine the legality of an interest scheme was by verifying with SSM the status of the company and the scheme it operated.

To date, SSM has registered 173 schemes worth about RM1.29 billion.

A list of registered interest schemes is available on the SSM website (http://www.ssm.com.my/en/company/is-registered-scheme-public) and the public can call 03-2299-5500 to check or verify offers from interest scheme operators.

http://news.asiaone.com/News/AsiaOne+News/Malaysia/Story/A1Story20120304-331485.html

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