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Two men arrested for suspected involvement in Genneva gold buyback scheme

THE Commercial Affairs Department (CAD) has arrested two men - with help from the Royal Malaysia Police - for their suspected involvement in Genneva Pte Ltd, a gold investment company which sold gold bars under a buyback scheme between 2008 and 2012.

One of them, the company's general manager at the time, has been charged in Court on Feb 22 with fraudulent trading under Section 340(5) of the Companies Act. The other man, the then-head of operations, will be charged on Feb 26 with a similar offence.

If convicted, they will face imprisonment of up to seven years, or a fine of up to S$15,000, or both.

Under the scheme, the company sold gold bars to customers promising returns as high as 36 per cent per annum over a contract period. When renewing their contracts, customers had to deposit their gold with the company under a "gold inspection" exercise, purportedly for the purpose of ascertaining the authenticity and purity of the gold.

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Customers were told that an equivalent quantity of gold would be returned to them within three working days. Within two months, Genneva collected around 3,500 kg of gold from the exercise. The company eventually failed to return about 640 kg of gold, with an estimated market value of S$45 million, to its customers due to financial difficulties.

Genneva Gold was at the centre of a controversial operation around the late 2000's and early 2010's, offering customers regular returns on gold and promises of guaranteed buyback amounts. It was estimated that more than 10,000 investors may have been affected when the company went bust and key company personnel went missing.