National 3 (Spotlight Weekly)

Illegal Deal

More than 15,000 Nepalese lose their investment in the pyramid scheme

By KESHAB POUDEL

Many still have a hearty laugh when they re-read how two frauds fooled a king into walking in a procession naked, having convinced him that only a wise man could see his new clothes. Last week, a lot of Nepalese were forced to revisit the moral of the Emperor's New Clothes in a somber mood. More than 15,000 people were conned into paying Rs.64,000 for a gold coin worth less than half that amount.

Police office : Containing fraud

Living in the false dream of securing a certain amount of commission and a gold coin after initially investing Rs.37, 000 and expanding the membership of Gold Quest, Kumar Shrestha (identity changed on request) has gone underground.

After Gold Quest reached the end of its road in Nepal last week, Kumar received hundreds of requests from relatives and friends demanding reimbursement of their deposit money. Kumar, too, was part of a network of his own friends. After several inquiries and meeting members, Kumar finally realized he was being accused of cheating - and was cheated - by a chain of people.

"Actually, I was trapped in a vicious circle of cheating relatives and friends. Because of my insistence, my father-in-law, sister-in-law, brother-in-law had acquired membership of the scheme. I don't have any place to go now," said Kumar.

Kumar is not alone in facing such a situation. Most of the people who joined Gold Quest at the last minute are facing similar problems. Actually, the scheme began two years ago with the false hope that those who joined it would receive commission from new members.

Politicians, lawyers, senior bureaucrats, police and army officers, businessmen and a host of all kinds of people lost their initial investment. The members involved in the scandal are from Kathmandu, Pokhara and Butwal. Gorkhapatra, the government owned daily, reported that there were 1,000 people in Banepa and Dhulikhel alone. Although the company provides a coin for collection, not for sale value, nobody understand how such a large number of literate and powerful people chose to invest in the business.

As soon as the Home Ministry issued a notice banning Gold Quest and asked citizens to file complaints, dozens piled up at various police stations. In his private and confidential press release issued to the media, J. R. Mayer, associate director for product development and promotions, claimed that his company GOLD QUEST International Ltd has property of US$ 200 million. Based in Hong Kong, the company said to have specialized for creating the astonishing collection of fine art gold products.

According to the press release, Mayer and Vijay Eswaran, managing director, tied up in November 1999 to expand the company and to promote the business around the world. In the last two years, the company is said to have operated its business in Hong Kong, Indian and Nepal.

The scandal of money laundering was revealed few days ago when police arrested two of its promoters in Kathmandu. But they claimed that they did not have anything to do with the illegal business.

How did they convert foreign currency? There is a big gang systematically working behind the group. A group of people collect Nepalese currency and pay it to the relatives whose families are working in Hong Kong as reimbursement. This is like a hawala case where the group simply collect local currency and reimburses foreign currency in Hong Kong.

Although this business of money laundering in the name of collection of the gold coin was initiated nearly two years ago, the administration, which spent most of its time in fighting the Maoist insurgency, never made any effort to nip it in the bud. As million of Nepalese rupees were drained in game, a country already passing through a very critical economic situation has had to lose millions more.