A group of Australian and New Zealand investors, including retirees, claim they have lost millions in savings invested in debentures issued by a Labuan-based firm.
They say they have lost a total principal sum of US$25-35 million along with millions more in unpaid interest.
The matter was highlighted by Klang MP Charles Santiago in Parliament during a debate on 15 December 2009 on the Labuan Offshore Financial Services Authority (Amendment) Bill 2009.
The investors have written more than a hundred letters to various Malaysian government agencies and regulatory bodies to complain about the matter. Among other things, they want to know why the company is still in operation; they are also calling for a full-scale investigation.
Charles said it was important for the Malaysian authorities to look into the plight of these investors.
Deputy Finance Minister Awang Adek responded that the case was before the courts and the assets of the firm had been frozen. (The investors, however, are not a party to the case and seem to be in the dark about the proceedings.)
He added that the new Bill would expand the powers of regulatory bodies and agencies such as Lofsa and the Income Tax department.
Charles argued that the Ministry had to keep the investors abreast on the status of their investments if it wants to improve confidence in Labuan as an offshore financial centre.
Awang Adek said he was certain Lofsa was playing an appropriate role in keeping the investors informed. “I ask Lofsa to do this and I will oversee this to ensure that it is done.”
Much debate also ensued on why the Labuan off-shore financial centre, now being rebranded as the Labuan International Business and Financial Centre, hasn’t quite reached the levels of other off-shore centres after 13 years of existence.
Kamaruddin Jaafar (Tumpat) pointed out that water supply problems had not yet been resolved and noted that Labuan was still under-achieving despite its tax rate of 3 per cent being lower than the 18-20 per cent of Singapore and Hong Kong – a comparison Awang Adek described as “unfair”.
For the full and illuminating exhanges between Charles and Awang Adek and others on Labuan, look up page 158 onwards of the parliamentary Hansard.
Malaysia is attracting all kinds of international attention of the unsavoury kinds. Just how low those in authorities and powers are going to continue abusing their powers…?
Corruption and misrule, bad governance and irresponsibility, these are all very soon going to be associated to Malaysia.
Is there any solution or at least some form of accountability from all these public and financial institutions? How is the Government going to address these stinking problems to make us a competent state? The tax rate of 3 per cent lower is not going to attract investors! Competency, accountability and transparency are! We can give them another 15% tax rebate, but, if their monies are unsafe, will they invest?
Over to you Gerakan K, what do you see of this problem ever improving? With your NKRA, BTN and so forth?
Cheers bro.
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DO re-read the entire article again. There was misunderstanding for the investors. Anyway there was solution for that too. I want to remind you that these things occurred before PM Najib era. That is why PM Najib comes to rescue.
The purpose of NKRA and KPI is to establish a measurable performance for a particular target. Be it regarding to crime rate, work performance, etc. So that improvement plans can be devised and implemented. Our PM Najib uses modern management techniques to his administration which is good. With PM Najib, at least I can see his efforts for the betterment of Malaysia. Organizing political talks and demonstration will do no good for us. The GE already over long long ago. Now it is time to get down to work.
This issue of course has some elements of jealousy. Recently BN government just decided to pour RM2.1 billions development fund to Sabah and Sarawak. Let’s work together to ensure that effort fully implemented and the opposition please show some cooperative attitude.
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Bro, the gist of the article is that investors from Australia and NZ had complained about their lost in investments of US 25-35 millions plus interests.
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Gerakan K alias Hyperpolishia.
Don’t talk about KPI and NKRA, where is the H1N1 vaccine for pregnant women in Malaysia?other countries have given their citizen doses of the vaccine. RM2.1 billions for Sabah & Sarawak? until today Sabah general hospital still no where to be seen. You can only see abandon projects (eg. Sabah airport highway) here and there. Blackout here and there..and Sabah Amanah Saham still not came back to its original price(people’s sweat and blood money.) Gerakan K, which country are you from? or you have simply blinded your consciousness.
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Gerakan K aka Cinta M’sia K will say $emuanya OK.
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Bad governance, poor monitoring, slow and enforcement by Malaysian authorities. Before long, Labuan will be on the blacklist of all the countries.
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The alleged unpaid interest is more than the principal meaning that either the interest payable on these debentures are relatively high or the case has been dragging on for a long time for the interest to accumulate.
Since the company is still in operations, there is no reason not to keep the investors updated.
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From what I understand, there are investments that go back to 2003-2004…
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Labuan is a gold mine, what with its incorporation but will not achieve the staggered heights promised, not with UMNO in government.
The last decade has seen dubious schemes, scams etc with Labuan as a launch pad so this latest revelation just adds to that list of dubious activities.
Still, there might be a future but the necessary must be done before we revisit that potential. May I suggest, the govt in waiting, grant Labuan tax fee status outright but with stringent oversight and see it bloom.
Potentially, Labuan can be turned into a mecca of high finance with just a change in its letter of incorporation. With so much liquidity in Asian economies, I envision Labuan the locality where profits are “creamed off”, capital parked when investor’s need time out, a safe haven where capital resource can visit and go where/when they please.
Imagine a Labuan flushed with oil money, visiting Chinese capitalist, old money managed from there, only to spur the growth of a class of asset managers – a Labuan taking advantage of its locality to move money between Asia and Aust/NZ or beyond. It is possible.
The potential is there BUT only with proper will and enforcement that upholds best international practices – a gold standard that towers high over shady tax free ports around the globe.
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(Was) Labuan … set up to help politicians & cronies syphon $$$ out? Best way to ‘clean’ dirty $$$ gained via dubious means…?
Now the $$$ are safely parked in South Africa, UK, Aust, Canada, India. The mansions in Cape Town are ready & just waiting for them to live out a comfortable exile after GE13.
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The government has no credibility. Its consistently lies and seeks to cover up events. Whether it be the treatment of the local ethnic group or the Penan, the unexplained … judiciary where BN appeal take less than 24 hrs while Nizar has to wait for month, their refusal open up transparency of the various scandals. With such low prestige and credibility, how can one not lose his saving in such … investment.
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Looks like one failure after another, what’s new from the BeEnd?
These failures will continue to happen since it had becomes a culture for BeEnd as no further actions will be taken for all wrong doings. Isn’t this Koreh,koreh,koreh? Even this koreh episode has been swept under the carpet.
“Much debate also ensued on why the Labuan off-shore financial centre, now being rebranded as the Labuan International Business and Financial Centre, hasn’t quite reached the levels of other off-shore centres after 13 years of existence.”
Hey people!, as we are the tax payers, We need an explanation for this like “How much that has been put into Labuan (Labuan people enjoy the duty free status) and there is no ROI, than better shut it down. We, Malaysians cannot be continuing putting in good money to do bad business and after 13 years without ROI.
NO wonder my 1Malaysia Ringgit today cannot take me very far.
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Kamaruddin Jaafar (Tumpat) pointed out that water supply problems had not yet been resolved and noted that Labuan was still under-achieving despite its tax rate of 3 per cent being lower than the 18-20 per cent of Singapore and Hong Kong – a comparison Awang Adek described as “unfair”.
I am afraid this Awang Adek seemed to be out of his depth. What is fair or unfair. Trust and security are two very important factors not just lower tax. What is the point of lower tax if I cannot be sure that my money in Labuan is safe.
As it is remitting money from Labuan to other financial centers in the world requires more paper work than from HK or Singapore. The other centers have less trust of Labuan.
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Another good news for East Malaysia:
Sarawak allocated RM470million to achieve 50% Internet penetration
(http://www.bintulu.org/news/2010/01/28/swak-allocated-rm470million-achieve-50-internet-penetration.php)
With this rate of support, I believe BN will easily win GE13.
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Gerakan K,
Taking into consideration the 60% to be siphoned and along the way, the remaining 40% will be diluted again by all your BN friend, right? Agree or not agree and why? End result, of the 470 million budgetted, crumbs will be left for our poor East Malaysian brothers and sisters. They have always been mistreated since BN took over power there.
BN goons will announce the allocated development budget, spend they will they 470 million, but deliver they will not, agree or not? Why?
Cheers bro.
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You can evaluate relevant KPI there. That is why we need something which is measurable. However nothing we can measure about it when it comes to PR administration. They work or sleep we don’t know.
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Gerakan K,
You are so so confusing. How can KPI be ever evaluated? It is a real waste of time and the KPI portfolio was created for your leader, KTK because he is otherwise jobless.
This is a government, not a corporation or a company, where at the end of the year, we have the bottom line to evaluate. Here what is there to evaluate and what KPI are you talking of? How can there be KPI when every institutions of the BN led Governmnent is being screwed?
Penangnites should be thankful for being the best administered Government, according to the Auditor General, something, BN could ever dream of, and Penang is under the “dicator” Lim Guan Eng. And more LGE should be placed in PR Governments, and Khalid in Selangor, is doing us all proud, as he is no easy meat either. Penang has again led the way by being the first to submit their 2009 accounts. If Penang is with BN, they will have to scramble and doctor their accounts to look presentable to the AG. The Penang State Government is truly, competent, accountable and transparent! Syabas PR.
And to the ex UMNO warlords who are in PKR and cannot cari makan as easily in the new PR Government, they need to learn to govern properly. Unlike last time, they need to gel into the new culture of good governance and not not causing tantrums here and there. Warlords “tak laku” lagi under the new administration. Responsibility is! And to Teng Hock Nan, who wanted to capitalize on the statement from one ex UMNO now PKR parliamentarian, the thing is, Penangnites feel much better with PR, than having you as the CM, as you will be serving UMNO, not the Rakyat. It is better for LGE to be accountable to the Rakyat than to UMNO. LGE understands that the rakyat is his master and not UMNO, or ex UMNO PKR reps. PR is ready to lose all these reps in the name of spring cleaning. All can leave, please, losing the 2/3 majority pun tak apa lah. We will wait for the next GE and it is soon. Apa komunis? We do not need people like you. We will ensure you lose come the next GE, Zahrain, even Gerakan K will not support you, right bro?
Cheers.
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Good evening Anil,
Having read all the comments i can see a good cross section of opinions, this is good.
To Gerekan K
What was the misunderstanding for the investors?
The investments were made through a Trust Co what more can you do to safe guard your money. Yes it did happen before PM Najibs term but there have been no changes since.
To O
We have been complaining since our Debentures ran their term.
To LBJ
You hit it on the head, No Monitoring,No Enforcement.
To approving Authorities,
The unpaid interest is of course higher than the principle as these investments started in 2003. The company kept Investors updated only and when they thought it necessary.
Anil,
Yes you are right.
Casper,
Iagree totally.
Motorist,
From what i read and have heard you are correct.
Yang,
No credibility in Govt is tainting the people and Country.
Anthony Tan,
The Taxpayers of your Country need to stand up and demand Tranparancy.
LBJ,
Awang Adek appears to be following the party line, nothing changes nobody gets hurt.
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This Labuan based Trust Company was happy to take overseas investor’s funds and invest those funds into their own Investment Company and claim that every investment is going great, but when the debentures start to mature they dson’t pay back on their debenture debts but claim that the investments have been lost and then they produce their secert terms, clauses and deeds to say that they don’t have to pay back on their debenture debts and so far what has the regulatory body done about this deception. This Trust Company does not pay back its debts and still keeps trading looking for new investment funds, Thanks
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