Singapore has a pro-business environment and adopts a "buyer beware" approach towards business dealings. Under this lax regulatory environment, several investment scams have surfaced in Singapore. I became aware of these scams after the victims had written to me for my assistance.
I wish to share some of these shady investments or scams with you.
a) Gold bar. This investment product pays an attractive interest rate, say 2% every 3 months, and promises to return the full capital at the end of the period of 6 or 12 months. There is also a certificate to allow you to collect the gold bar from a trusted third party, if the buy back guarantee is not honored. The risk is that the promoter will not honor the buyback contract, citing cash flow problems and other reasons. When you get the gold bar, you will find that you had paid a higher price than the real market value of the gold . I know of a specific case where the investor had paid a price, quoted in SGD per gram, which was 30% higher than the market price of the gold (expressed in USD per ounce). Although the price of gold had appreciated, the investor has recover the 30% in inflated price, before seeing any real gain.
b) Wine investment. This promoter sells you a portfolio of wine and convinces you that you can earn an attractive return, say 50%, when the wines are auctioned off in three years time. Several investors waited patiently for the stipulated period and received excuses why the auction could not be carried, e.g. bad market conditions. They were then pressured to make additional purchases to make a sufficiently large portfolio for a future auction. In most cases, the investors were not aware that they were sold the wines at twice of their real market price. It would not be possible to auction off the wine at a profit, if the investor had paid an inflated price.
c) Land banks. The promoter sells land plots in foreign countries, usually under agricultural or green zoning, at a price that seemed incredibly low compared to land in Singapore. The promoter promised to apply for change of zoning within 5 to 8 years and allow the land to be sold at a large capital gain. Many investors waited patiently for the planning approval but it never happened. They were not aware that they had been sold the land at 10 to 15 times of the real market value. Under this situation, who would buy the land from them at a higher inflated price?
d) Spa packages. One promoter opened a chain of spas and sold spa packages giving discount on spa treatments to be carried out over the next 12 to 18 months. The promoter closed their operations and many customers were not able to get the treatment that they had paid for. Another spa operator took over the liability, but it is not clear if the customer had received the value for the money that they had paid.
Here is the lesson. Always avoid putting your money in investments that promise an attractive return offered by companies that are not regulated by the authority. Even if they are regulated, you have to read and understand the investment contract and be aware of the potential risk. Do not trust the assurance of the person who markets the investment to you, as the marketer might give you some wrong information due to the desire to close the sale and earn the commission. Even if the marketeer is your friend, be aware that he might have been ignorant of the real risk of the investment.
Tan Kin Lian
I wish to share some of these shady investments or scams with you.
a) Gold bar. This investment product pays an attractive interest rate, say 2% every 3 months, and promises to return the full capital at the end of the period of 6 or 12 months. There is also a certificate to allow you to collect the gold bar from a trusted third party, if the buy back guarantee is not honored. The risk is that the promoter will not honor the buyback contract, citing cash flow problems and other reasons. When you get the gold bar, you will find that you had paid a higher price than the real market value of the gold . I know of a specific case where the investor had paid a price, quoted in SGD per gram, which was 30% higher than the market price of the gold (expressed in USD per ounce). Although the price of gold had appreciated, the investor has recover the 30% in inflated price, before seeing any real gain.
b) Wine investment. This promoter sells you a portfolio of wine and convinces you that you can earn an attractive return, say 50%, when the wines are auctioned off in three years time. Several investors waited patiently for the stipulated period and received excuses why the auction could not be carried, e.g. bad market conditions. They were then pressured to make additional purchases to make a sufficiently large portfolio for a future auction. In most cases, the investors were not aware that they were sold the wines at twice of their real market price. It would not be possible to auction off the wine at a profit, if the investor had paid an inflated price.
c) Land banks. The promoter sells land plots in foreign countries, usually under agricultural or green zoning, at a price that seemed incredibly low compared to land in Singapore. The promoter promised to apply for change of zoning within 5 to 8 years and allow the land to be sold at a large capital gain. Many investors waited patiently for the planning approval but it never happened. They were not aware that they had been sold the land at 10 to 15 times of the real market value. Under this situation, who would buy the land from them at a higher inflated price?
d) Spa packages. One promoter opened a chain of spas and sold spa packages giving discount on spa treatments to be carried out over the next 12 to 18 months. The promoter closed their operations and many customers were not able to get the treatment that they had paid for. Another spa operator took over the liability, but it is not clear if the customer had received the value for the money that they had paid.
Here is the lesson. Always avoid putting your money in investments that promise an attractive return offered by companies that are not regulated by the authority. Even if they are regulated, you have to read and understand the investment contract and be aware of the potential risk. Do not trust the assurance of the person who markets the investment to you, as the marketer might give you some wrong information due to the desire to close the sale and earn the commission. Even if the marketeer is your friend, be aware that he might have been ignorant of the real risk of the investment.
Tan Kin Lian
Hi Mr Tan,
ReplyDeleteI have also heard from a Malay friend that he invested in a timeshare programme offering stays at a residential development in Mecca, Saudi Arabia. This was sold with the proposition that they could stay there for free on their hajs and mini-hajs. For the rest of the time when they were not there, they could earn a return on their investment. All supposedly shariah-compliant. He came to know of this programme through a booth the promoter set up at a mosque. Trusting this to be "regulated", he proceeded to put money in it and even stayed a few days there. However, he later found his "certificate" was not the real deal. It looks like the local promoter kept the money and did not pass it on to the foreign developer/programme owner. He later learnt that he was (of course) not the only person who had parted with money. I advised him to seek help from MUIS since the booth was set up within the mosque and/or seek help from his Malay MP.
Ben
Greed and Fear are the Achilles' heel of ordinary people.
ReplyDeleteGreed from earning big money without slogging, give opportunist sharks using human psychology to snare their prey.
Amazingly, a stranger's call to instill fear into people's emotion of protecting loved ones on kidnapping ruses, could make one lose their rationality, creating a mental block to all logic. It's as simple as checking their loved ones' situation before responding to threats, and fear could freeze their mind just like that.
Our fellow citizens are not street smart, LKY said it all, we are dafts, that's why we got cheated by MAS approved products, like the devil in disguise Minibonds.
Now we become paranoid of all types of investments, breeding SOCIAL DISTRUST to extent we believe only in ourselves. This is the curse of globalisation and the highly flawed runaway Capitalism.
We don't trust anybody who makes a living on Commissions, like bankers and insurance agents. Now we have the mental freeze on such people, even though we have donkey decades' friendships. Sadly, some of these opportunists are our family members. We even have to fend against someone as close as our own brother and sister.
And God forbid that very soon, we have to fend against our own children. Have seen many friends' children ditching respectable careers like engineers and teachers to become real estate agents, and being newbies, desperate to close a deal, casting eyes at their own close relatives and aiming sales pitch at them.
ReplyDeleteWelcome to the new world of materialism at all costs. We have to thank our Govt for leading the way.
Many new graduates also life insurance for get rich quick scheme. If you attend recruitment talk the insurance companies will promise you sky the limit income provide you follow their strategy.
ReplyDeleteDid you hear them talking about life insurance being a job to help the clients to plan their financial goals?
Once you get in you will be trained to ONLY push high commission products; call as many as 100 people and make 10 appointment and close 3 sales a day.It is a numbers game. If you don't , don't come home.
The companies will tell you to close so much of these products and that and all are regular premium like whole life, endowment , cashbacks endowment or regular ILPs and as fewer single premium possible.
Any fact finding? do it after closing the sale..ie. try to justify the 'recommendation' of the product. The usual basis of recommendation is "cleint has no budget and will buy more of this limited payment wholelife living policy when he or she has money"
One company I am in has a template of writing the recommendation.This company has been pushing us to push only regular premium. Why? because the regular premium products give the company HIGH APIs and that is what the industry production is measured.
So you can see NO company is interested to put your interest first. In fact theirs first. How can you consumers trust these insurance companies. People before profit is bullshit, sham and scam and they dare to say this without batting an eyelid. The top down fair dealing guidelines are supposed to put you consumers first instead from top to bottom they all collude to fleece the consumers.Please, consumers do wake up. Beleive me you. I am an eye witness to all these scams and unethical practices.
Be careful...is this also scamming the public?
The Insider
Some people are scammed because they are too trusting. They believed the words and assurances of the person who marketed the investment to them. Sometimes, the marketeer is a friend, and may also be quite ignorant of the scam.
ReplyDeletei trust my brother who ask me to invest the gold guarantee . so i do have read it was scam . but too late this coe lee song teck took a billion of sgd.. n run out of sg. everyone was con, many pple lose alot money. cad cannot do much. singapore is not safe from what i feel. con alot of money and run out of singapore. if he is caught , he go jail only. and no canned or hang. so singapore cheating cases will be every where. no longer safe
ReplyDelete