Genneva, ex-directors must pay RM2.2mil to investors, including Mother Mangalam’s estate

High Court says they knowingly operated a systematic fraudulent scheme that deceived the plaintiffs and many other members of the public.

The High Court has ordered Genneva Malaysia Sdn Bhd and ex-directors Ahmad Khairuddin Ilias, Philip Lim and Tan Liang Keat to pay RM309,560 to the estate of humanitarian Mother Mangalam. (Facebook pic)

KUALA LUMPUR:

 The High Court has directed a gold trading company to pay RM2.2 million in damages to three former investors, including the estate administrator of the late humanitarian Mother Mangalam.

Justice Atan Mustaffa Yussof Ahmad said plaintiffs Lim Ting Chai, Shi Li Li and Mangalam’s sister, A Thanalakshmi, had successfully proved their claim against defendants Genneva Malaysia Sdn Bhd, and its former directors Ahmad Khairuddin Ilias, Philip Lim and Tan Liang Keat.

Mother Mangalam — whose full name was A. Mangalam S. Iyaswamy Iyer — co-founder and former president of the Pure Life Society, passed away in 2023 aged 97.

Mustaffa held the defendants jointly and severally liable, ruling that they had operated a systematic fraudulent scheme that deceived the plaintiffs and as many members of the public.

He said Khairuddin, Lim and Tan had misrepresented Genneva as a licensed and legitimate enterprise, despite knowing or being recklessly indifferent to the fact that it was in fact operating an illegal deposit‑taking scheme.

“They induced the plaintiffs to part with substantial sums of money and gold under false pretences,” he wrote in a 134-page judgment.

“They hold the plaintiffs’ property on constructive trust, and have fraudulently breached that trust. The defendants cannot shelter behind the corporate veil.”

Describing them as “the controlling minds and operators of the fraudulent scheme,” Mustaffa ruled that the trio were personally liable alongside the company.

“The substantive claims in fraudulent misrepresentation, breach of constructive trust, money laundering participation, breach of contract, and money had and received are all established,” he said.

Mustaffa also found that the defendants had unjustly enriched themselves at the expense of the plaintiffs, having received and retained the benefit of payments without performing their corresponding obligations.

“The foundation for the payments, namely the delivery of gold, has wholly failed. Where there has been a total failure of consideration, the law imposes an obligation on the recipient to return the benefit received,” he said.

Mustaffa also dismissed the defendants’ defences based on res judicata and limitation.

He ordered the defendants to pay RM1,093,070 in special damages to Lim, RM938,490 to Shi, and RM309,560 to Mangalam’s estate, together with 5% interest on all sums calculated from the date of their respective investments in the company.

The defendants were also directed to pay RM60,000 in costs to each of the three plaintiffs.

The defendants have filed an appeal in the Court of Appeal.

The plaintiffs had sought to recover gold products and money they had invested in Genneva’s gold trading scheme. Their claims stemmed from transactions carried out between 2011 and 2012.

They alleged that despite making payments, they neither received the purchased gold nor the return of the gold or funds entrusted to the company.

According to Thanalakshmi, Mangalam had paid RM309,560 to Genneva, relying on representations that the business was a legitimate gold trading operation, including endorsements by prominent figures.

She said Mangalam’s purchase of 1,420g of Genneva gold was financed using funds from her 2010 Merdeka Award. - FMT