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SCMP Reporter

Truckloads of gold, hidden by Japanese soldiers and now stored in secret bank vaults that can only be opened by secret code words - it sounds like a plot for a film with a big budget and not much intelligence.

  But, according to a series of intermediaries who have been trying to get investors in Hong Kong to fund various gold-related deals, it is all true.

  The gold may have been salted away by world leaders such as Fidel Castro or Saddam Hussein to fund their retirement. Or it may be the proceeds of war, such as the fabulous golden statues and gemstones looted from Burma by Japanese soldiers.

  The only thing tying these deals together is that their proponents are embarrassingly short of the cash needed to find the gold, get it released from a vault, or otherwise release the profits.

  And that is where you, the Hong Kong investor, come in.

  'Here in Kroll we get called about once a month about this,' said Steven Vickers, managing director of security consultants Kroll Associates (Asia).

  Mr Vickers has bad news for clients who ring him up to check out these deals: 'Basically, what this is is an advanced fee fraud.'   But fact is stranger than fiction. And the fact is that there is good evidence that investors in Hong Kong are falling for the stories.

  At least two teams have been working in the territory this year. One businessman approached recently said while he turned the offer down, he believed the team found someone who was prepared to pay more than US$250,000 (HK$1.93 million).

  In fact the teams, which generally fly into Hong Kong from elsewhere in Asia, tend to move from country to country - and usually manage to evade justice in each.

  Detective Chief Inspector Matthew Hemmings, of the Commercial Crime Bureau, says local people have lost out but notes: 'As far as I'm aware, there hasn't been a prosecution in Hong Kong for this particular scam.

  'The problem is that victims are reluctant to come forward. I suspect that when they look at this in the cold light of day they feel embarrassed about being duped.'   When arrests have been made, there are legal problems with evidence which mean prosecution cannot proceed.

  Because of this, there are no figures on how much annually is lost to the scam, either in Hong Kong or worldwide.

  But Chief Inspector Hemmings says he knows local investors have lost cash and police do regard it as a serious issue.

  There is a fear affluent mainlanders may be targeted after the handover as they may never have seen this type of operation before.

  But there is much more to this scam than simple treasure-hunting. Interviews with investigators and those targeted for the fraud show a wide range of stories. They include: Treasure-hunts, almost always in the Philippines.

  Victim's role: funding the dig. Hunts for treasure already dug up by others but which is stuck in a bank or otherwise inaccessible. One name that has appeared at least four times in attempts in Hong Kong is Sta Ramano, a Philippine resistance leader who is alleged to have found tonnes of gold after World War II.

  Victim's role: funding legal action by the next of kin to get the gold out of the bank. Huge quantities of gold held in a bank vault which cannot be removed until some tax is paid or some secret code-number presented to the bank. One recent deal offered in Hong Kong promised 1,000 tonnes of gold.

  Victim's role: paying the taxes or helping fund a search for the code number. Gold in strange forms such as gold dust that needs treatment before it can be sold at a huge profit.

 Victim's role: funding the treatment - cash upfront.

  'The typical target figure is US$1 million,' said the CCB's Detective Senior Inspector David Cope.

  But the most frequent deal offered, according to investigators, is based around 'paper gold', certificates showing entitlement to huge quantities of bullion. One purports to show Chaim Herzog, former president of Israel, had deposited 1,420 tonnes of 99.99 per cent pure gold in the Bank of America. The agent in Jakarta who is believed to produce most of the certificates issues them in names ranging from Gandhi to Hitler.

  A photocopy of the certificate was given to a Kowloon-based businessman, who asked not to be named, to try to get him to discount the certificate.

  'I just showed him the door,' the businessman said. 'It's all rubbish.'   The fraudsters will tell the investor that an investment from them will reap massive profits, maybe a return of five times in just a few weeks.

  The first step in getting the cash is making the victim believe that what glistens really is gold and to spare no expense on the certificate or other documentation such as photographs.

  One common trick is to spray-paint clay bricks with gold paint to create a pile of 'gold bars' for photography.

  The second is to make the team perpetrating the fraud appear wealthy - they stay at five-star hotels when visiting Hong Kong, if necessary on stolen credit cards.

  The third is to lend credibility to it from third parties, for instance, by depositing it in a safe deposit box in a bank and taking the victim to retrieve it or getting a bank to appear to vouch for it.

  'Our advice is to check it with the bank independently - without the conman in tow,' Chief Inspector Hemmings said.

  Once convinced the deal is genuine, the victim may be persuaded to pay cash to facilitate some gold trade, or be encouraged to pay cash to borrow the certificate after being told it can be used as collateral for a loan. Needless to say the fourth step is the disappearance of the cash, and the newly-enriched recipients, making the victim the owner of the most expensive fake maps and certificates in Hong Kong.

  One local businessman said when he asked why the profits were so huge, he was told the deal was in a 'grey area between law and no-law'.

  This helps dissuade victims from going to the police after they realise they have been duped, thinking they too will be arrested, for instance for illegal gold import.

  The only known recent conviction worldwide was last month when a bogus Spanish baroness named Elda Beguina was jailed for two years in London after a fraud involving US$25,000 billion of 'gold certificates' from the Philippines.

  This was claimed to be, at least in part, inside Hongkong Bank - but would have been more than three times that mined worldwide in the last 150 years.

  After the trial, police revealed she really was a millionaire, but the cash did not come from her blue blood but from previous scams, none of which were reported to the police. One of the British detectives who apprehended Beguina stated what embarrassed victims had long known: 'This has been going on for years.' 



False promise of fools' gold