Genneva gold storm poses political risks ahead of polls
(The Malaysian Insider) – The action against Genneva has resulted in pressure on the Najib administration to resolve the controversy that has put 300,000 livelihoods at stake — according to Genneva contractors and customers who spoke to The Malaysian Insider — and which could impact the Barisan Nasional (BN) government’s chances in the 13th general election that must be called by next April, less than six months away.
While many Muslim Malaysians are kicking back at home with their extended family over a feast of roasted meats and laughter this long Aidiladha weekend, Genneva Malaysia gold trader Che Surin Jusoh is struggling to explain to her five-year-old son why they cannot return to Kedah for the holidays.
“My son will ask ‘Ma, kenapa tak bawa keluar? Lama tak jalan-jalan’ (Ma, why haven’t you taken me out? Long time since we’ve gone out),” the 32-year-old banker-turned-gold-seller told The Malaysian Insider earlier this week, as city dwellers began their annual rush home to celebrate the Muslim holiday.
“I don’t know what to say… I only have RM1,000 to RM2,000 in my bank account,” the mother of two young children — her younger child, a girl, is two years old — and the sole breadwinner in the family added, her voice sounding thick as she fought to prevent a sob from escaping.
Che Surin is among the 60,000-plus sellers and buyers who have been left nearly broke after Bank Negara raided the firm and seized 200kg of gold bullion estimated to be worth a whopping RM40 million from Genneva Malaysia’s premises in Jalan Kuchai Lama here on October 1.
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.
How the scheme worked was the gold was priced at between 18 per cent and 20 per cent above market rate, and purchasers were paid guaranteed monthly returns of about three per cent. The physical gold was not passed to the buyer and the company would buy back the investment after the end of the contract period, according to a New Straits Times news report on October 5 highlighting several dissatisfied customers who lodged police reports against the company.
This meant that the customer’s return on investment appeared to have been funded by the principal capital put into the scheme which was above the market rate for gold.
Bank Negara has also frozen Genneva Malaysia’s accounts, cheques and other assets, on suspicion the company violated various banking and financial laws which include taking deposits without giving gold in return, money laundering, evading taxes, appointing agents without licence, failing to file statutory documents, and misrepresenting itself as an investment firm and giving false descriptions on its business after several people lodged complaints with the police.
The central bank’s actions sparked an immediate outcry from the 6,000 salesmen contracted to sell and buy back gold from Genneva Malaysia who have rallied to the company’s defence and its 60,000 customers from all walks of life, including professionals from the banking industry like Che Surin, pensioners, students, and The Malaysian Insider understands politicians and various foundations that have been working to fund charities like orphanages.
Bank Negara has yet to press charges against the company’s directors.
The action against Genneva has resulted in pressure on the Najib administration to resolve the controversy that has put 300,000 livelihoods at stake — according to Genneva contractors and customers who spoke to The Malaysian Insider — and which could impact the Barisan Nasional (BN) government’s chances in the 13th general election that must be called by next April, less than six months away.
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.
For Che Surin who had worked for three banks before signing up with Genneva Malaysia in February last year, the company’s unusual business operations had proved to be a godsend when she encountered financial woes two years ago which put her in what she called “ my dark summer of 2010”.
“I could not pay my bills then,” she said.
The round-faced tudung-clad woman recounted that she was initially sceptical of Genneva Malaysia when her bank customers sung its praises to her.
“When I joined, I was not 100 per cent convinced,” she said, but related that she dabbled in trying out the buying-and-selling back the gold scheme over a five-month period before becoming confident that it could work.
What truly sold her on the Genneva idea was the public endorsement campaigns headlined by dignitaries like Deputy Finance Minister Datuk Donald Lim and former Prime Minister Tun Dr Mahathir Mohamad who had encouraged Malaysians to buy gold instead of putting their faith in paper money during his speech at the syariah-compliant company’s launch on December 15.
Despite the action taken by authorities in Singapore and Malaysia, Che Surin and three other Genneva Malaysia contractors — what the company designates as its salesmen — told The Malaysian Insider that they strongly believe the company management had acted above board.
They bristle with indignation that the company is a Ponzi scheme or a get-rich-quick scheme despite the exceptionally high returns which many government officials and critics have pointed out was too good to be true.
“We are not investors. That’s the misconception,” said 54-year-old retiree Shereen Lim, who pointed out that Genneva Malaysia’s management had published advertisements in all the mainstream dailies, including the vernacular newspapers, to educate the public on what it was last March, following Bank Negara’s advice after its last audit and dialogue session with the company.
Read more at: http://www.themalaysianinsider.com/malaysia/article/genneva-gold-storm-poses-political-risks-ahead-of-polls/
