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Beware of illegal business ventures, central bank warns

The Bank of the Lao PDR has warned the public to be on the alert for individuals or companies that illegally convince people to deposit their money or buy shares in business schemes, lured by the promise of high returns or interest rates.

The pledging of such incredibly high incentives poses a great risk and people could lose their property and money if they sign up, the central bank warns.

The warning, issued on March 30, comes amid growing concern that people can suffer a great loss following the scandal involving the Asianface Company Ltd, which was licensed as a consulting firm but was found to be mobilising funds illegally.

The company, established in June 2015 and owned by a Cambodian national, Mr Hout Sovanh, stopped paying the dividends it promised of 9 percent a month on the share value contributed by individuals in September last year.

The company also pledged to return all monies to those who wanted to withdraw their shares by January 15, 2017, but failed to do so. It also failed to fulfill its second pledge to return the money on March 27, 2017.

Business partners stormed the company's offices and police have kept Mr Hout in custody since March 28 fearing that the situation would escalate. The authorities have now stepped in to try to resolve the problem.

Reports emerged that many companies have engaged in this kind of illegal fundraising and massive amounts of money have been sourced.

It was reported that Asianface Company Ltd alone has raised more than US$12 million from more than 10,000 people.

Governor of the central bank Dr Somphao Phaysith told the National Assembly in October last year that as many as 24 companies and institutions had attempted to raise capital this way.

Nineteen institutions had been licensed by the Ministry of Industry and Commerce to operate certain kinds of business, but they were found to be sourcing capital illegally.

The remaining five transnational institutions were also sourcing funds in Laos without permission and appeared to have no offices in the country.

The central bank previously issued a notice instructing these institutions to cease their activities, but some were still operating.

In its warning issued last week, the central bank said that institutions wishing to mobilise deposits legally must be granted permission and a licence by the bank.

The central bank advised individuals to make sure that the financial institutions they are considering depositing their money in have been authorised to do so by checking the following websites: http://www.bol.gov.la/Otherbanks/ bank2016.htm for commercial banks, and http://www.bol.gov.la/laoweb/microfinancelao5.html for financial institutions.

As of October last year, 158 legal financial institutions were operating under the management of the central bank.

The central bank called on the public to inform the bank if they encountered any suspicious activity or incident concerning illegal fundraising by calling the following numbers: 021 265713-715 or 021 265607.

Officials said people who want to take part in a business venture should do so by buying shares in public companies registered on the Lao Securities Exchange.



By Souksakhone Vaenkeo
(Latest Update April 3, 2017)

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