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Cambodian investor in police custody over business scandal

A Cambodian investor has been in police custody since Tuesday after a number of angry business partners stormed to his office in Vientiane wanting to withdraw invested money in the joint venture.

The investor, Mr Hout Sovanh, owner of the licensed Asianface Company Ltd did not pay dividends to his business partners as promised and pledged to return their money but failed to do so.

Established in June 2015, the company was licensed as a consultant firm to give advice on business establishment and operations, but was found mobilising funds to do real estate business, an official of the Enterprise Registration and Management Department, Ministry of Industry and Commerce told Vientiane Times yesterday.

Mr Hout has unlawfully mobilised people to invest in his real estate business, which violates the relevant Lao laws and regulations.

The company has been able to attract a large number of business partners within a short period by luring them with high returns of nine percent per month. The official of the Enterprise Registration and Management Department, who wished to be unnamed, said his department previously issued a warning asking the company to stop its illegal action.

“We already warned the company to stop,” the official said. In mobilising capital, the company informed business partners its investment would involve developing properties such as condominiums, hospitals, markets and schools, business partners told Vientiane Times on Wednesday.

“The company also develops and allocates land [in which land use rights are owned by the company] and encouraged us to buy at a special price,” Mr Yingyang, one of the business partners, told Vientiane Times .

Despite the 9-percent dividend, the company campaigned it would offer additional incentives including free package tours to foreign countries.

More than 10,000 people have contributed more than US$12 million to the company with individual contributions starting at US$1,000 and only US currency accepted.

At the beginning, the company paid dividends to its business partners until it suffered financial problems. However, some new partners have not received any dividends. Business partners waiting to withdraw their money at the company's office in Phontongchommany village, Chanthabouly district told Vientiane Times they had received their dividends until August last year.

But Mr Kongkham Singmeuangkham, who contributed US$5,800, has not received any dividends as he joined the venture just before the company got into difficulties.

Later, the company issued an announcement informing its business partners it would stop accepting new partners, citing the Lao government having prohibited it, according to the business partners.

The company also informed its partners it would stop paying dividends and those who wished to withdraw their money could do so on January 15 this year along with an additional 20 percent in interest paid to those making withdrawals. Those wanting to continue joining the venture could also do so, but dividends would be paid every six months. Those who wanted land in which land use rights are owned by the company could also choose so instead of taking cash. A number of business partners came to the company's office wanting to withdraw their money on January 15 as promised by the company.

“The company did not give back the money as promised on January 15, 2017,” Mr Yingyang said, who is among several business partners who wanted to withdraw their money. In light of the issue, the relevant authorities stepped in resulting in the signing of an agreement on January 18, 2017 in which the company pledged to return all the money to the business partners by March 27, 2017 (Monday).

A number of business partners stormed the company office on Monday hoping to receive their money as promised. However, the company failed to fulfil its promise again angering many partners who have still been waiting at its office.

In wake of the issue, district police have kept Mr Hout in custody fearing the situation would escalate, a police officer said.

“Many of us have been here [the company's office] for several days waiting to hear what is going on,” Mr Kongkham said, one of the representatives of the business partners.

Security, industry and commerce officials in charge of the issue said they were in the process of reporting the issue to higher authorities seeking guidance to resolve the matter. An official of the Cambodian Embassy to Vientiane told Vientiane Times the embassy was informed about the issue.

More than 20 companies have raised funds from members of the public unlawfully, government spokesman Prof Dr Chaleun Yiapaoher said recently citing a report from the Central Bank presented to the National Assembly. In this regard, the government has instructed proper investigation into the issue to seek a solution.


By Souksakhone Vaenkeo
(Latest Update March 31, 2017)

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