More than 200 people who had invested in local company GoldFX Investment Co, Ltd (GFX) protested in front of the company’s offices in Phnom Penh on Monday to demand their money back after more than $20 million was allegedly stolen from the investment fund.
Around 7,000 investors in total have been reported as having invested in the company, with as much as $27million believed to have been taken.
The company announced a temporary suspension of operations on March 29 after claiming that unnamed foreign staff members had embezzled the money from the firm. In a statement four days earlier, the company revealed they had already filed a lawsuit to the Phnom Penh municipal court on May 19. The company urged investors to join the company lawsuit against the former board members who had allegedly siphoned off the money, and claimed that it had already paid money to 700 clients. They added that discussions with clients willing to join the company in verifying the claimed losses will end on June 11.
Pum Nari, a businessman who invested $50,000 with the company over three years, said that he had received returns of 3 percent a month. The month before the company suspended trading operations, though, he did not receive a single dollar.
“We trust the company because they have a license from the SERC,” he said. “We do not care if there are third parties who have embezzled this money. We invested with the company; we did not invest with the third party. Any loss is the company’s responsibility.”
Another investor, Vorn Anisa, a medical worker in Phnom Penh, said she had collected about $3,000 in returns within three years of investing $10,000 with the company. Anisa said she had decided to invest her money because she believed in the company’s owners.
“I know this kind of investment scheme, and I also know some information about the scams in such an investment, but I trust the company because they are all Cambodians and they are from powerful families,” she said. “I did not expect them to cheat us. I feel hurt, and I will not trust any finance-related companies in Cambodia anymore.”
GFX investment is a licensed company registered at the Securities and Exchange Regulator of Cambodia (SERC) as a derivatives broker. It was incorporated in February 2015. According to its website, there are currently 32 derivatives brokers who have received licenses from the SERC.
The company’s website, which is now removed, listed Ke Suonsophy, the daughter of former military commander-in-chief Ke Kim Yan, as chairwoman. She is also the wife of Sar Sokha, a son of Interior Minister Sar Kheng. The firm’s managing director, Sar Channet, is a wife of Ly Sopheark, vice-president of LY Hour Group, a major conglomerate in Cambodia.
CamboJA was unable to contact either Ke Suon Sophy or Sar Channet. SERC director general Sou Socheat also could not be reached for comment. GFX staff refused to provide any comments or information, saying that it was a decision from the company’s management.
CamboJA attempted to call Sar Sokha and Ke Kim Yan to clarify the accusation against his family members, but their phone numbers had been changed since they were last contacted and were now being used by other people. Customer service staff at Ly Hour Group declined to provide a contact for Ly Sopheark or any of the company’s top management.
Chan Thy, who invested $16,000 and was invited to meet with company staff during the protest, said that the company is not talking about compensation but has continued to lobby customers to join the lawsuit.
“We cannot do this if we join with them, it means that we recognize the company as the victim like us,” she said. “They ask us to find a solution on our own by filing a complaint to the court if we do not join with them. I don’t expect that the court will take action on the case because they are relatives of powerful people, and the court will not dare to touch them.”
Anthony Galliano, group chief executive officer of Cambodian Investment Management Holding, said that Cambodia’s capital markets were in a very early stage of development, having not reached any level of scale. He added that investors have little experience and sophistication.
“I am confident the regulator will learn from this experience and take measures to mitigate further occurrences,” he said. “Educating the investor, ensuring that unattainable returns cannot be promised, requiring an investor qualification process is undertaken, and taking punitive measures against violators are positive necessary steps forward.”