Financial Firms Defend Validity of Investment Scheme

A Cambodian company that encouraged clients to pour money into a Hong Kong-based investment firm, which is linked to an alleged ponzi scheme here, on Wednesday held a conference in Phnom Penh to reassure its investors that the scheme is legitimate.

Hundreds of people filled the conference hall at the Dara Airport Hotel to hear from the director of the Asean Instrument Foundation (AIF), which together with the Investment Consultant Association (ICA) advises clients to invest with the Hong Kong-based Empire Big Capital (EBC).

The Securities and Exchange Commission (SEC) released two statements last month warning the public not to invest with EBC, or do business with its Cambodian affiliates AIF and ICA, citing the unusual nature of the scheme, which promised monthly returns of 10 percent.

The warnings were followed by seven arrests each in Siem Reap and Takeo provinces. All of those arrested were linked to EBC and charged with fraud.

But AIF director Hout Sovann said at Wednesday’s conference that troubles with Cambodian authorities boiled down to a licensing issue and claimed that no one had been defrauded.

“In fact, they [government bodies] have not yet issued any statement that specifies that the business is illegal—the statements just said that the business is being conducted without license in the Kingdom of Cambodia,” he told reporters after addressing the gathered investors.

“AIF and ICA are bodies that were legally registered with the government’s Ministry of Interior,” he added. “But our work should involve the Ministry of Economy and Finance and the Securities and Exchange Commision of Cambodia, so we are working with them to fulfill additional legitimacy, but I cannot comment further.”

Mr. Sovann, who noted that about 30,000 Cambodians have invested with EBC, said he could not comment on the accusations of fraud leveled against the 14 people arrested, citing the ongoing legal action.

A number of investors interviewed at the conference said they have been receiving their promised 10 percent interest payments on their capital.

“I received my first dividend in cash at the AIF office,” said 42-year-old English teacher Seng Dara. “For me, I have no concern.”

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