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Quick-money
schemes "We wanted to know from the Attorney General, what provisions were available under existing laws for us to act on the GoldQuest case," SSP K Pinidiya told The Sunday Times FT and Lanka Business Report. Specific anti-pyramiding laws to ban such schemes are still at draft stages but in many countries such schemes are halted under lottery and fraud statutes. This came as the Central Bank stepped up the tempo repeatedly issuing warnings to the public on investing in pyramid schemes including those that purport to sell a product. The Bank, urging investors to beware of such investment schemes that could collapse like a pack of cards, also warned against third-party use of credit cards for foreign exchange payments saying this is a violation of Exchange Control Regulations. In an earlier advertisement, the Bank said it had information that investors in pyramid schemes were using credit cards owned by others to make such foreign exchange payments. A senior Central Bank official said that the regulator made a complaint to the CFB regarding the GoldQuest scheme. The danger of pyramid schemes, first highlighted in a joint investigation by The Sunday Times FT-Lanka Business Report TV on May 30, has now drawn widespread media attention while government agencies - the Central Bank, police, Import Control Department, Exchange Control, Customs and the Attorney General have come together to probe allegations of fraud, exchange control violations and fraudulent imports and misuse of credit cards. Some companies in the private sector have also advised employees against using company computers to log into pyramid websites. The Central Bank, stepping up its public campaign against pyramid schemes, also alerted the public to third parties craftily distorting the Bank warning and re-circulating it. "It has been observed by the Central Bank of Sri Lanka that a recent press notice on pyramid schemes issued by the Central Bank in the public interest and for the education of the public is being circulated by a third party through e-mail giving a completely misleading context to the original press notice by adding, without authority, sections which were not presented by the Central Bank," the regulator noted. "This distortion is obviously an attempt by an interested party to mislead the public. The public is warned of this deliberate attempt to mislead them by interested parties and is advised to refer to the 'Press Notice' published by the Central Bank recently in newspapers. It could also be accessed by visiting the Central Bank web site www.centralbanklanka.org." Separately, a senior director of John Keells Holdings (JKH) denied any knowledge of a proposed 'Eswaran' tower to be built at the group's prime Asian Hotels Corporation property as reported in an international website connected to the GoldQuest company. Quest Investments, which is said to be part of the GoldQuest medallion sales company, claims in its website that an 'Eswaran Tower' is to come up in the JKH property in 2005. "We have no knowledge of such a project," says Ajith Gunewardene, Group Director of JKH, which now controls Asian Hotels. "We have no links with GoldQuest. As far as we are concerned it is just a minority shareholder like any one else." GoldQuest
not permitted to import gold in Sri Lanka The company submitted an application seeking BOI approval on February 18 this year and it was approved by the board on March 5. On April 1 - a day before parliamentary polls - the agreement was signed by former BOI chairman Arjunna Mahendran. Officials said that the company has not listed any binary marketing activity in the application and had used the 'marketing and sales promotion' tag in the section 17 BOI approval to conduct their business. According to our investigations, the agreement between Quest SAR Lanka (Pvt) Ltd., and the BOI was entered into under the regional headquarters category of Section 17 of the BOI Act. This Act contains two sections, section 16 and 17 under which BOI approval is given to companies. Under Section 16 companies are facilitated by the BOI for investment and they are covered by the normal laws in the country. Section 17 companies are not only facilitated but given tax incentives and governed by special BOI laws. Section 17 has 14 categories that companies can be set up in. Among them are IT, small-scale infrastructure, export of non-traditional goods, agriculture, research and development, areas of administration, business and coordination, sourcing of raw materials and components, technical support services, finance and treasury management, marketing and sales promotion and 'regional headquarters' placed prominently. Officials said the main idea behind the two different sections is that section 16 is for smaller investors with capital of five million rupees and above whereas section 17 is for investors with a capital of Rs.50 million and above. The regional headquarters category requires that a company should have two offshore marketing companies where they can launch a company in Sri Lanka to operate as the regional headquarters. Quest Vacations (Pvt) Ltd., in Maldives and V Team Intentional Ltd., which is a BVI Company stand as the two offshore marketing companies of Quest SAR Lanka (Pvt) Ltd. Quest SAR Lanka (Pvt) Ltd is recognised as a marketing arm of an international company doing marketing activities. The company in its submissions to the BOI says that it is "established to set up a regional operating headquarter for the purpose of managing the operations in the Indian sub continent and Sri Lanka and carry out front end operations and provide services." Further they say that they will be carrying out administration, business planning, brand creation, marketing, product development, corporate governance, and community services for the entire group. BOI sources said that the agreement is currently being reviewed by the BOI and action would be taken if there were some irregularities found during the current investigation by other government agencies. |
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