Financial Times

GoldQuest takes evasive action as govt gets tough
By Duruthu Edirimuni
GoldQuest has told customers it plans to provide a bond as a sign of its sincerity and amend operating methods to comply with local rules as the Central Bank warned the public to beware of foreign companies operating pyramid or similar referral schemes trying to change their payment methods.

The Central Bank last week said it had advised the Finance Ministry to fast track laws to ban pyramid schemes. The Exchange Controller has sent show cause letters to 1,000 people who had violated exchange control laws in paying GoldQuest.

According to reports reaching Colombo last week, the Bhutan Central Bank banned GoldQuest earlier this year after labeling it a pyramid scheme where gains are made by some from the wealth lost by others.

At GoldQuest presentations, promoters have declared that its local representative, Quest SAR, is currently in negotiations with the government to tie up a bond of assurance. They said this is to convince the government the genuineness of the company.

They also said the company will amend its operations to suit local regulations and assured participants the company is facing only a temporary setback and intends to continue business.

The Central Bank warned in a statement (See page 3) that some foreign companies which operate pyramid or similar referral schemes are now attempting to collect payments for participation in such schemes in foreign currency as membership charges or request payments in other forms such as bank drafts and mail transfers.

Deputy governor W. A. Wijewardene told a news conference that fresh amendments will be introduced to the Banking Act to outlaw pyramid schemes. Meanwhile, investigations by Customs into the shipment of GoldQuest products that was detained has been held up because the company had not yet provided the actual transacting values of the gold medallions. "They had only submitted the price list of the medallions on previous occasions when we had insisted on the actual value," said Superintendent of Customs Athula Lankadeva. Altogether there are 316 products in the shipment.

Lankadeva was attacked by an armed man near his home recently in what appeared to be an assault connected with the investigation. He has so far not been issued with a gun as promised.

In Bhutan, its banking regulator the Royal Monetary Authority of Bhutan, wrote to GoldQuest International based in Bangkok demanding an explanation and saying that such pyramid schemes are prohibited under Bhutanese law.

It said in a statement that the Royal Monetary Authority had become aware of a financial scheme using commemorative coins from GoldQuest International as the primary product being marketed in Bhutan. "While studying this scheme, RMA found that this is a pyramid scheme," the statement said.

"Such schemes do not generate any productivity but gains are made by someone from the wealth lost by another. The scheme depends on bringing in an exponentially growing number of new members and is likely to collapse after a certain stage, resulting in heavy losses to a vast majority of its members."

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