Financial Times

GoldQuest back in action?
GoldQuest, the controversial multi level marketing (MLM) company, which has been quiet for awhile since wide media exposure and Central Bank inquiries, is said to be considering returning to the market with a local rupee-based scheme.

If sponsors of this scheme go ahead with this plan, it would be with the sole intention of overcoming strict exchange control regulations and avoid detection.

Stock market analysts said that unlike earlier, payments under the proposed scheme under consideration will be made in Sri Lankan rupees. “We are not sure when they will be starting this scheme or whether Goldquest had decided to go ahead with this scheme.

All we know is that the company is considering this option,” one analyst said.
He said GoldQuest officials are believed to have met top government officials in a bid to seek a meeting with President Mahinda Rajapakse.

GoldQuest came under fire by the regulator when the company encouraged its customers to pay through credit cards thus violating exchange laws, which treated these payments as capital transactions.

Some arrests were also made and there were many who were fined large amounts as well. However, at the time, there were no laws preventing GoldQuest and similar firms dealing in pyramid schemes or MLM.

The Central Bank amended the Banking Act in February last year, prohibiting such schemes, but so far has not put the laws into practice. The Bank in the meantime is planning to hold a seminar next month for police officers in an effort to familiarise them with pyramid schemes.

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