Many investors did not get gold they paid for, says Bank Negara

Authorities believe that up to RM10 billion may be tied up in the unlicensed gold trading schemes. — File pic

KUALA LUMPUR, Nov 5 ― Records seized from four gold trading firms involving the interests of tens of thousands of Malaysians show that many investors had not taken delivery of their investments up to five months after making payment, Bank Negara and other government agencies involved in the investigation of the commodity schemes said today.

Investigations so far also showed the companies had also failed to keep proper records of transactions, according to a statement issued today by Bank Negara, the police, Ministry of Domestic Trade, and the Companies Commission of Malaysia.

More Malaysians are delving into unlicensed investment instruments, including gold trading, in their search for higher returns and better yields to beat the banks’ low interest rates, but recent raids by the authorities have highlighted the murky nature of the business.

On October 5, the authorities conducted raids on the premises of Pageantry Gold Bhd, Caesar Gold Sdn Bhd and Worldwide Far East Bhd on suspicion of illegal deposit-taking, money-laundering, tax evasion and avoidance and false description.

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

Putrajaya believes investors may have pumped up to RM10 billion into the gold trading scheme under Genneva Malaysia.

The total amount of gold seized during the raids from the companies was approximately 142.7kg, while RM101.92 million in cash and in bank accounts were also confiscated, the government agencies investigating the schemes said today.

The companies also failed to submit audited accounts, while some maintained different versions of financial records for different purposes.

“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 investigating agencies added that the probe was international in nature.

“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.”

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. The other companies also reportedly offered similar schemes.

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.