Genneva sold gold at abt 25% above spot. Meaning if Genneva has sold 4 pcs of 1 kg bars to 4 different buyers, Genneva would have generated enough $$$ to buy another 1 kg bar for itself to sell to the 5th buyer.

This kind of money generating biz, I also want to start.

Genneva Pte Ltd, the gold trading company that has been the subject of a literal run by its customers, is under investigation by the Commercial Affairs Department (CAD) for alleged "financial improprieties".

Its Orchard Tower offices were raided by CAD yesterday. The office is closed and its website is frozen. A number of employees were taken in for questioning. The police has confirmed that investigations are ongoing.

Matthew Kurian of Regent Law, who is retained by Genneva as its legal counsel, said that the firm is conducting its own internal investigation and has appointed forensic accountants. "The company intends to honour all its obligations. They are coming up with a plan."

A letter by Lim Kieng Justin, who has just taken over as Genneva general manager, said that the discovery of financial improprieties "some time back" has led to a delay in the payment of discounts, commissions and fulfilment of buy-back guarantees. The letter, dated Sept 28, was posted on the Web.

Mr Lim is a director of an apparently related company, Genneva World Pte Ltd, which was registered for business in March this year. He is not a director of Genneva.

Mr Lim wrote that the directors have lodged the necessary police reports and put in place new management staff. ". . . the directors are in the midst of negotiations with an external party who is prepared to assist the company and see it through this financial crisis. The objective of the directors is to ensure that all obligations to the company's customers and consultants are met."

He also wrote that the company would organise dialogue sessions with customers and agents in 7-10 working days. He urged customers and agents to remain calm and "help us work out (an) amicable solution for everyone".

Genneva is understood to have received several letters of demand from aggrieved customers who have entrusted gold to the firm or are owed the fulfilment of Genneva's buyback undertaking.

BT reported last week that at least two customers have filed suits in the Subordinate Court for Genneva to fulfil the terms of its buyback. At least one has secured an interlocutory judgement pending an assessment of costs. Prior to the judgement, Genneva did not respond nor contest the suit. Mr Kurian said that Genneva was looking into making an application to the courts for the judgement to be set aside and to file a defence.

Goh Kok Yeow of De Souza Lim & Goh, who represents the plaintiff Lee Bee Ghok in the case, said: "We will not agree and will vigorously oppose the application because they have no legal reason to do so."

Genneva operates under a police licence that allows it to deal in second-hand gold. Its model is to sell gold to customers at a hefty premium to the market. As at August, it listed a price of $96 per gram on its website. The indicative retail gold price at UOB yesterday was about $70.15 per gram or $70,149 per kilobar.

Genneva customers buy gold at a 1.5 or 2 per cent so-called discount off its list price. Genneva undertakes to buy back the gold in one or three months, at the list price, and customers pocket the 1.5 or 2 per cent discount. Assuming a monthly rollover, they stand to earn as much as 24 per cent year. Lately, some customers have been offered a discount of as much as 2.5 per cent.

The last few weeks have seen Genneva grapple with its worst case market scenario - that of a rush among customers for the exit. In that time, it has imposed a limit on the daily buyback of gold that it can do - reportedly five kilobars a day. Agents are also reportedly owed commissions for more than six months.

Three Genneva directors - Marcus Yee Yuen Seng, Ng Poh Weng and Chin Wai Leong, who are also directors of Genneva Sdn Bhd - are being sued by Bank Negara in Malaysia for alleged illegal deposit taking and alleged offences under anti-money laundering laws. The case is ongoing.

Genneva is in the Monetary Authority of Singapore's Investor Alert list, which tells investors to be on guard against unlicensed entities. Other gold companies such as The Gold Guarantee and Asia Pacific Bullion are also on the list.

Source: Business Times

Actually, it can be calculated that the interests given back can't even cover back the premium price that they have paid over the spot price of Gold.

Seeva Kumar : Konica Iatanp - Please don't cut and paste /modify my comments. Tell me why you say Genneva Gold is scam ? Don't just say it explain why? I understand how Genneva Gold Trading works. Just to give u a simple explaination, if you deposit money in the Bank, you get 3% interest, how much does the Bank makes profit from your deposit money? Please do your homework? Bank makes 100% profit but only gives you 3% interest. Bank become richer and you become poorer because the inflation is higher than 3%. I assume you are not a banker, if you are banker you will be rich. Genneva Gold shares the profit from GOLD TRADING between Genneva and customer. For details understanding talk to Genneva Gold for proper explanation. Seek to understand clearly before making statement. Even me it took some time to understand the process. You need to have detail understanding and not just on surface.
http://www.facebook.com/bnm.official
Oh no, trade secret leaked.  They follow fractional-reserve banking model with physical gold, no wonder so many peoples not holding their gold.

In his welcome speech, Dato Joseph Kow thanked TYT Tun Abdul Rahman Abbad and Toh Puan Majimor and the board of directors of Genneva Malaysia CEO Dato Tan Liang Keat, International Marketing Director Dato Phillip Lim, director Dato Mohd Azmi Dato Abdul Aziz and advisors Dato Sunny Yee and Dato William Chin.

Dato Joseph Kow noted with gratitude His Excellency the Governor of Penang had specifically flown back from Kuala Lumpur at 4pm that same afternoon after attending the coronation of the King and Queen of Malaysia just to be with us.

"Thank you so much YTY Tun for your tremendous effort to grace our event," said Dato Joseph Kow. "When we began operation in Penang in 2009, we operated under Samudra GV. YTY Tun Abdul Rahman Abbas launched it at Bayview hotel. Since then we have become a Syariah compliant company and our institutional status was launched by Tun Dr Mahathir Mohamad our former Prime Minister on 15 December 2010.

"In our first year we sold RM 60 million worth of gold. In 2011 I bravely committed in the presence of Tun and Toh Puan we would have sales of RM 100 million in 2011---I am proud to announce we sold RM 117 million and exceeded our target!

"Then I took a greater challenge to have sales of RM 20 million a month for Genneva Malaysia. We are again proud to announce within 3 months from January to March 2012 we achieved total sales of RM 127 million when our target was RM 60 million!

"This is due to our team of Consultants who have worked so tirelessly in educating the public about the value of gold in good and bad times. Our Consultants have earned the respect of over 30,000 customers who have bought over RM 3 billion from Genneva Malaysia over the last 3 years.

"We now have branches in Kuala Lumpur, Penang, Ipoh, Batu Pahat, Sitiawan, Seremban, Malacca, Sabah and Sarawak and soon Kota Baru and Johore Baru. We opened our Beijing office recently on 27 March 2012."

Dato Kow is a fervent believer in gold and declares it will never cease to shine even in the darkest economic cycle. He noted, "In my interview with The Star published on 16 February 2012, I stated the gold of price will increase between 5 to 8 percent this year. The recent contraction of gold has seen a huge increase in sales as investors buy now before the next bullish phase begins."

After the speeches by Dato Tan Liang Keat and Dato Joseph Kow, cheques were presented to charitable organisations by the Penang Governor.

probably very little in terms of percentage, the people who return the gold for the buy back.
the investors who return the gold, probably the ones who knows to quit while you are ahead, or decide to exit the scheme knowing it is too risky.

most would just keep the gold and earn the hibah and making a new contract after a contract ends, gold still investors hold.

All the Gold watcher knows that gold can never pass RM200/pergram and now it hovers at rm167 ~ 169/pergram this pass months. How the hell Genneva can produce profit and paid monthly hibah at 2% when gold market goes down and up by just a ringgit or two ???

Greedy people never learns.

Very serious talk. If hibah is 2% a month and let's use 1 year for our calculations, that is 24% a year. Consultants and senior consultants commission is 0.8% per month which is 9.6% per year. Total is 33.6% per year. Operation costs ? Let's use a dismal 2% per year shall we ? So the total gain need to be 35.6% per year. There is no gain in selling the gold because GM buys back at the price it sold. If gold gain more than the premium 24% charged, the customer can choose not to sell to GM. So the gold prices going up or down is irrelevant. Anyway gold does not gain 30+% per year y-o-y.

Can you tell me where the 35.6% comes from ?

They have borrowed the customer's capital at an interest rate of 35.6%. What kind of investment can they do to gain a gross margin of 35.6% per year ? That is for breaking even ok. Almost impossible for a company with only RM 50 K paid out capital.

The only other way is offer to launder money for illegal syndicates at 40%. That is the only way theoretically possible to cover such interests pay out to the buyers of GM gold.

Maybe the attached detail may help.

[attachmentid=3102892]

(Maybe not enough to cover hibah, but still not nett zero.)

Don't know if the details of mystery will be unravel in front of you......I doubt so.....because the details has too much implication on some big names.....but details are being fed to BNM.....everyone is rushing against time......some committee members of the bank is on a convey lead by top management are leaving to Europe and South Africa this week....to meet some "miners"..... if we are not confident.....our bosses have already run away long time ago......time will tell......

I think your analysis missed the point that though they pay the hibah and commissions on 100% of the investment sum, they actually have only 20% of the investment sum after using 80% of the investment sum to buy and deliver the gold. Their required ROI on 20% of investment sum is a lot higher, from 168% pa to 228% pa for hibah at 2%and3% respectively. Impossible!!!

A company search on GENNEVA MALAYSIA SDN BHD will show that the paid up capital is RM50,000. Have you been to their office in Kucai MAJU 6? Is RM50,000 enough to fit out the office with the stainless steel grilles and video cams and directors' leather chairs and fancy conference tables and the fancy wheels parked outside??? From the word GO, it has always been about 'HOW TO DRAW IN AND USE, EXPLOIT OPM, OTHER PEOPLES' MONEY"!

AND YOU ALL GUESSED IT.........THE PROBLEM IS HOW TO CONVINCE BANK NEGARA IT IS NOT A PONZI........THAT IS THE HARDEST PART OF THIS BUSINESS.......

dont be native.

Any worthy investor wouldve studied that Genneva could afford to pay hibah for the past 3 years cos gold was on an uptrend from 2008-2011.

Your questions and answer :

1. - As an investor the mark up premium already makes me short at 19 percent compare to buying uob bank gold bullion.The mark up can be used to be give me back my hiba. If i have 100k i go uob, i buy at 100k worth, I go genneva i have to pay 119k, why dont i just buy at uob 100k, balance 19k, i can just pay myself 2k per month.

You are correct.....but only up to 10 months or so....after 10 months....investors still can get hibah. If you buy from UOB. after 10 months, you cannot pay yourself hibah
2. Genneva overpriced gold worth it only at genneva itself, too high risk if something happens. - Too much trust into a few years company. If too many people want to sell back gold, no guarantee.

Yes, the black and white doesn't say buy back guarantee.....but the practice got buy back guarantee. So....if someone is not comfortable without black and white.....then the deal cannot go through....
3. - If really they can get the discounts why dont sell at rm 100 same as uob or less than uob? why need the markup.

To operate like UOB, you only earn 20%. To sell at market price to earn the 20%, the turnover will be very low. Genneva will never achieve sales of RM3-5  billion
4. -If really genneva can make money from gold trading (not just from customers), why need customers money. Go la take bank loan, cheaper to pay the banks.

As already answer the same question asked by someone else above......banks will go through the long evaluation process......with no guarantee it will be approved.....especially with little or no previous track records......you guys here wouldn't believe the dignitary/Italy/S Africa story....and surely banks will not believe like you all.......so the best solution is to do like MLM style.....

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Added on October 16, 2012, 8:49 pm
Haha you are the first person who point out the flaw here.....  

Ok, 20% will not work as I already pointed above to scorpio I think......just lower down the scenario so that somebody can point out the flaw

The scenario now is actually profit 40%.....20% from supplier + 20% from customer......

Try and run a excel model and see if it is still a ponzi.......