Investment firm 'refuses to return funds'

PUBLISHED : Sunday, 11 February, 2007, 12:00am
UPDATED : Sunday, 11 February, 2007, 12:00am

Indonesian investors file complaint with HK police that offshore company is withholding their money

Indonesian investors have complained to Hong Kong police that an offshore investment company is refusing to pay back their investment capital and dividends.

Seven investors from Surabaya and an agent for the Indonesian company appointed to market the investment scheme, visited police headquarters yesterday with what they claimed was evidence their money was being withheld. The agent said Surabaya clients alone had invested US$120 million.

A Hong Kong businessman who is one of four directors of the investment firm - the other three are based in the US - claims the group is trying to press him to pay them out earlier than other investors.

He said that, as with any investment, there were risks involved in putting money into the two funds concerned. He added that there had never been any guarantee the funds would yield the annual returns of 24 per cent and 28 per cent respectively which the agent claimed he and his colleagues had been instructed to use in order to attract clients.

The firms, director and funds cannot be named for legal reasons.

The company operating the two funds - which have been running since 1997 and are marketed exclusively in Indonesia - is registered in the British Virgin Islands and also operates funds targeting the Japanese and Mexican markets. It describes the Indonesian funds as 'pooled investments for diversified placement across multiple industries and sectors'.

According to its website, the Indonesian funds' investment portfolio includes a gold mine in Alaska, a technology company, real estate in Canada and the US, Stradivarius violins and Chinese ceramics and art.

The website and brochures say investors may withdraw their initial investment in full or in part after six months, providing cash is available.

One of the Indonesian investors, Elly Norindah Poerwanto, said she and her family had invested US$245,000 but had been unable to get the money back. She showed a cheque for HK$2,117,500, signed by the Hong Kong director, and stamped 'payment stopped'.

'The cheque was cancelled. The company paid US$40,000 into my account, but that's less than 15 per cent of the total amount,' she said.

The group has 25 other cheques, post-dated to July this year, made out for a total of US$800,000.

A police spokesman said three complaints had been received and that, pending further evidence, officers were treating the cases as obtaining property by deception.

The Hong Kong-based director claimed that Ms Norindah and the others had approached him saying they represented all the Surabaya investors. He gave Ms Norindah a cheque dated January 31 and signed post-dated cheques for others. He paid US$40,000 into her account, but 'realised this was a mistake when it became clear [they] were acting only on their own behalf'.

He feared paying them out would set a precedent for other investors.

But Ms Norindah says she never claimed to represent other investors.

She said her family had invested its money in 2003 and had been paid profits from the investment regularly until three months ago.

The director said the company was trying to restructure the investment funds so investors could be paid. He said investors had made a run on the funds after rumours they could get better returns elsewhere.

'We had four to fives time more withdrawals than normal ... We've had to delay payment,' he said.

The Indonesian investors say they will stay in Hong Kong for as long as it takes to get their money back. 'A lot of people who have invested are elderly, or are just housewives. They've put all their savings into this,' said Ms Norindah's brother-in-law, Rudy Eduard. He and his wife have US$36,000 in the funds.