People who lost money they had invested in local company GoldFX Investment Co, Ltd (GFX) are still seeking intervention from Prime Minister Hun Sen as pressure mounts on the government to restore trust in the nation’s financial sector. Around 7,000 investors in total have been reported as having invested in the company, with as much as $27million believed to have been stolen. The company is claiming that a number of foreign shareholders embezzled the money from the firm.
On Sunday, more than a hundred people tried to gather in front of the prime minister’s house in Phnom Penh, but were banned by authorities. On Monday, they went to protest in front of another one of Hun Sen’s houses in Kandal province’s capital of Takhmao, but were also turned away.
Nhem Thearith, who invested a total of $8,000, said that he was demanding at least 70 percent of his total investment capital back.
“The company is offering us only 30 percent, and we do not agree,” he said. “We ask help from Samdech Hun Sen to intervene in the issue. Only Samdech can help us.”
Thearith told CamboJA that he first decided to invest with the company because he believed in the company’s management team, which was mainly drawn from family members of several senior officials within the government.
“Firstly, my neighbors invested with the company and received high returns in profit,” he said. “In that time, I did not decide to join, I took some time to study the company. Then I noticed that the company’s leaders are from high-ranking government members’ families, so I decided to invest my money — I trusted them.”
Thearith told CamboJA that he believed the scandal would affect the country’s capital markets as well as damaging investors’ trust in the sector.
Another victim, Sophal, who declined to give her full name, told CamboJA that she had invested $7,000 with the company. She said that people had already submitted a petition with 700 fingerprints to the prime minister calling on him to intervene.
“For me, I believe in Samdech Hun Sen, because Samdech is the top leader in Cambodia and the only person that can help the people, whatever [it may be], only Samdech can solve it,” she said.
Ho Sothy, Hun Sen’s chief of cabinet, could not be reached for comment. Duong Dara, a close aide of the prime minister, declined to comment.
Chheang Christophe, who was listed as GFX’s managing director on an earlier version of the company’s website and who is also the son of Cambodian People’s Party lawmaker Chheang Vun, also declined to comment. Instead, he said the company had put together a committee to deal with the money’s disappearance.
“If you need information, please ask for information at the company office,” he said.
The company’s original website, which has since been taken down, listed Ke Suonsophy, the daughter of former military commander-in-chief Ke Kim Yan, as chairwoman. Suonsophy is also the wife of Sar Sokha, a son of Interior Minister Sar Kheng. The firm’s director, Sar Channet, is the wife of Ly Sopheark, vice-president of Ly Hour Group, a major conglomerate in Cambodia. A new GFX website that has since gone online makes no mention of the company’s management.
On May 19, GFX filed a lawsuit to the Phnom Penh Municipal Court against a number of former board members who had allegedly siphoned off the money. The company publicly urged investors to join the suit.
The company said in a statement issued on August 15 that so far, more customers had joined the company in the lawsuits, although they did not give a number. It said the company has shown its commitment to dealing with customers and will continue to work until justice is found.
Pech Pisey, executive director of Transparency International Cambodia, said the country’s weak legal system is leading to fraud schemes such as this one.
“I wonder why we allow foreigners to be able to withdraw large-scale sums of money from banks without the consent of local shareholders, this is a huge loophole in law enforcement,” he said, adding that the government needed to solve the issue directly.
“If we allow this [fraud scheme] to be solved in a non-transparent and unfair manner, Cambodia’s efforts to promote the securities and public fund management sector will be lost and the government is the loser,” he said. “The government must act immediately and fairly to rebuild the public trust.”
Pisey said if this is a foreign fraud, an international investigation should be carried out to catch the perpetrators and bring them to justice. Otherwise, he warned, more scams aimed at countries with weak laws like Cambodia will continue.
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.
On July 16, the SERC urged the company to settle their payments to clients immediately while also continuing to work on legal proceedings on the matter with the judiciary, requesting further investigation into the company’s suspected operations. SERC director general Sou Socheat could not be reached for comment. So far, the SERC has received complaints from 800 investors.