Financial Times

JVP demands GoldQuest ban as asset freeze mooted
The possibility of freezing the assets of GoldQuest and its agents' assets in Sri Lanka, to pay off victims or dues to government if necessary, was discussed at the high powered Financial Sector Reform Committee last week while a key partner in the ruling coalition, the JVP, denounced the money-making scheme and demanded it be banned.

A member of the FSRC, a grouping of financial sector regulators and representatives of the financial sector looking at modernizing Sri Lanka's financial sector, said a top banker raised the issue of immobilizing GoldQuest funds that have been collected so far.

GoldQuest went through such an exercise in Nepal where the government froze the accounts of GoldQuest 'upline' leaders and also fined the firm (Nepali) Rs 1.6 billion for foreign exchange fraud, according to Transparency International. Members of the FSRC were shown the draft anti-pyramiding provisions by Central Bank at their last meeting with some complaining that the anti-pyramiding provisions were not tough enough. However, the Central Bank had countered that drafting a fresh act would mean a minimum of six months delay, and that a new law could anyway be brought in later.

Meanwhile, despite the urgency shown by the Central Bank to introduce laws to ban pyramid schemes, the Attorney General's Department is yet to give a ruling on the complaint on exchange control fraud linked to GoldQuest that the Fraud Bureau is investigating.

JVP media spokesman Wimal Weerawansa told The Sunday Times FT that they denounce GoldQuest and pyramid schemes in general and had requested the Ministry of Finance to ban them.

"GoldQuest is a scheme that speedily sucks the country's money to foreign countries and I have personally pointed out to Dr. P. B. Jayasundera, Secretary to the Ministry of Finance about the dangers of the scheme," he said.

He said that the JVP will give its fullest support to encourage a ban on such schemes, which hurt the economy. It has urged the Ministry of Finance to bring about the amendments to the Banking Act to outlaw them.

Jayasundera confirmed that Weerawansa had spoken to him about GoldQuest saying that several people have been adversely affected and urging the ministry to expedite the introduction of the required laws. He said according to information provided by the Central Bank, pyramid schemes should be prohibited. "The Central Bank has sent us the required amendments to be incorporated into the Banking Act and we will be going ahead with them," he said.

Customs have also completed investigations into the under-invoicing case where GoldQuest products were imported in bulk. The case was moved for inquiry this week but was put off after the shipping firm objected to the inquiring officer.

The Securities and Exchange Commission said it is prepared to investigate and deal with any case where capital market professionals are involved in questionable activities, where people are scammed. "We have cautioned all those entities that are regulated by the SEC to prevent the use of capital market infrastructure for any activity which is not within the rules, regulations or licenses or authorizations issued to them," SEC Director General Palitha de Silva Gunewardene said.

"If there are complaints that such activities are taking place we will look at the evidence, conduct investigations and take necessary action. We won't hesitate to take swift action where required." The SEC was the first regulator to move when it sent a circular cautioning brokers. The Central Bank moved in soon after. Central Bank has also instructed banks to take action against employees who are promoting products incompatible with their employment at banks.

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