Genneva gold - cry also no tears

Genneva investors cry foul over raid

Business & Markets 2012

Written by Nadia S Hassan & Kamarul Annuar of theedgemalaysia.com   

Wednesday, 03 October 2012 09:57

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KUALA LUMPUR: Frustrated clients of Genneva Malaysia Sdn Bhd, a gold trading firm with a turnover of RM3 billion, have thrown their support behind the company and are crying foul over a raid at its headquarters on Monday.

Yesterday morning a crowd had gathered outside Genneva’s office in Kuchai Lama only to be told that the operations have been suspended pending the outcome of the investigations by the authorities which include Bank Negara Malaysia (BNM).

The other government bodies involved in the unprecedented joint action were the police, Domestic Trade, Cooperatives and Consumerism Ministry, and the Companies Commission of Malaysia.

A customer who only wanted to be identified as Tan said he was puzzled as he saw no reason for the raid by the authorities.

“We are not told a reason for the raid or Genneva’s offence. I’m happy with Genneva all these years and they have never missed a payment. There are no disgruntled customers here that would have filed a complaint,” said Tan.

BNM said it was unable to comment on the matter as the investigation into the company is still ongoing. In a statement to announce the raid, BNM had said the joint action was based on suspected offences under the laws administrated by the various enforcement agencies.

According to Genneva’s website, the company is primarily in the business of gold trading, with over 50,000 customers and RM3 billion in turnover.

Its business model is based on the syariah principle of “Al-Bai” (sales and purchase), where customers buy the gold for a contracted period. During the period of contract, customers are given “hibah” or a payment of 2% or 3% of the price they paid for the gold as a gift or discount.

As such, customers could possibly see returns of up to 24% per annum if the discount is 2% and 36% if it is 3% per annum.  

Since yesterday morning, Genneva’s website has been unavailable. The company has also yet to issue an official statement on the matter.

However, the many clients when met yesterday morning asserted that the company was not an investment company buy trading outfit.

Concerned investors and onlookers gather outside the office of 

Genneva Malaysia Sdn Bhd yesterday.

“We are simply buying and selling gold. We have the gold bullion as collateral now that the accounts of Genneva are frozen,” says a client.

During the course of the morning, a meeting was held within the Genneva premises for the company’s clients, some of whom double as its consultants for its business. After the hour-long meeting had ended, some of the clients said they were given assurances that the management of Genneva would look into the issue.

“Some of the directors (of Genneva) were not around when the raid happened... they were overseas, and our chairman was in London. During the meeting it was said that they are looking to resolve the matter over the next one to two weeks,” said a customer.

Genneva chairman is Tengku Muhaini Sultan Ahmad Shah, the daughter of the Sultan of Pahang.

Many of Genneva’s customers however, had voiced their concern over the state of the gold that had been seized by the authorities during the raid. 

“Some of that gold was already paid for by the customers and doesn’t technically belong to Genneva.

“As such, it should be returned to the customers that had purchased it,” says a Genneva consultant, who is also a customer.

According to the scheme offered by Genneva Malaysia, at the expiry of the contract, the customer can sell the gold bullion back to the company at the same price they had purchased, retain it or sell it to a third party.

An executive close to Genneva said he felt the company had been victimised by the authorities and claimed that it had BNM’s approval previously.

Genneva has been on BNM’s Financial Consumer Alert list, comprising companies or websites that are neither authorised nor approved under the central bank’s laws and regulations, since July 13 this year.

The central bank had also taken several advertisements in local newspapers warning the public against investing in gold schemes, without singling out any particular company.

In Singapore, the authorities — namely the Singapore Commercial Affairs Department — also carried a similar raid on Monday on Genneva Pte Ltd.

In Singapore, at least one customer had successfully brought Genneva Singapore to court after not being able to redeem the gold he had purchased. And there were a number of other customers looking to bring a lawsuit against the company.

According to the executive of Genneva Malaysia, there are no links between the company in Malaysia and that in Singapore.

This article first appeared  in The Edge Financial Daily, on Oct 3, 2012.

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