Lessons for investors from Country Heights Growers Scheme
On Feb 8, investors of the Country Heights Growers
Scheme (CHGS) approved its early termination. The investors also
accepted the goodwill package of about RM25 million, equivalent to a 12%
net yield payment, offered by Tan Sri Lee Kim Yew, CHGS founder and
chairman of its manager Plentiful Gold-Class Bhd. This is on top of the
company’s one-to-one buyback offer (totalling RM215.5 million) plus the
net yield of RM78.5 million paid out between 2007 and 2011.
It is always a disappointment when one’s investment does not pan out as expected. But then, the company had in the last five years paid out 48% of return in total, giving 8% return per annum for the first three years and 12% in the consequent years.
Recognising that it could not afford another payout due in Feb 14, it had on Jan 17 said so, and proposed to terminate the clearly unsustainable scheme. If all goes well, and regulator Companies Commission of Malaysia (CCM) is pressured to make sure it does, investors would get their monies back by August.
It is a relatively swift happy ending of sorts, considering how awry this could go.
Take the Euro Deposit Investment Scheme (EDI), for example. The Securities Commission (SC) had commenced probe into the scheme following complaints from investors and on April 28, 2009 issued a notice prohibiting the soliciting of new investments and directing that payments due to clients paid and their assets returned. It had been quiet since, until Feb 7, 2013 when SC announced it had on Jan 23 filed a civil suit against RBTR Asset Management Bhd and seven others over the scheme.
According to SC’s statement of claim, 112 EDI investors had cumulatively invested RM27.71 million between November 2007 and May 2008. From May 2008 to January 2009, only 49 investors, with funds amounting to RM14.18 million, were repaid in full or at all. A total of RM13.53 million, in particular investments maturing February 2009-May 2009, remains unpaid.
The ball has start rolling again with the civil suit but as one investor who had sunk in RM50,000 puts it, “there will only be closure when we get our capital back” and that could take years, if at all.
Meanwhile, the early termination of the CHGS sparked some concern over the viability and sustainability of other interest schemes. That they are registered and “endorsed” by the CCM does nothing to assuage the worry. After all, CHGS was registered with the CCM, and many quarters question whether the regulator body has all the necessary expertise to monitor them all efficiently.
It was reported that CCM admits to having insufficient knowledge in oil palm plantations. As of deadline time, Business Circle was unable to get a response from the CCM to its questions.
CCM’s website lists 171 registered interest schemes that are active, including recreational clubs, property schemes, and schemes involving timesharing, farmsharing and equipment sharing. The list does not seem to be updated as CHGS is still listed as active. CCM did not respond to our queries on whether there had been many complaints over these schemes and what actions it had taken to date.
Interestingly, CHGS’ early termination caused only minimal concern among investors of another oil palm-based investment scheme Golden Palm Growers Scheme (GPGS). According to Andrew Phang, executive chairman of the scheme’s manager Golden Palm Growers Bhd, “our investors are fairly comfortable” with the management and sustainability of GPGS.
He highlights two fundamental differences between GPGS and CHGS – the model and the agricultural practices.
“The CHGS model promised to pay based on external indicators, i.e. the CPO price, regardless of whether its trees are fruiting or not. This led to a mismatch between its revenue and its ability to pay. We promise to pay based on how much we earn. This model will consistently provide solid returns over the 23 years of the scheme and we’ll never have a mismatch issue.” He adds that the cited reasons for CHGS’ failure were agricultural in nature, which a good estate manager would have planned for.
“Rainfall, terrain and wildlife, including elephant encroachments… all these affect us too. At the end of the day, it depends on how good your estate management practices are.”
GPGS currently has some 3,700 investors.
Photo Credit: firdaus usman via Compfight cc
CHGS logo obtained from CHGS official website.
PRESS RELEASE BY THE COMPANIES COMMISSION OF MALAYSIA (‘SSM’) ON THE APPROVAL OF THE RESOLUTION FOR EARLY TERMINATION OF COUNTRY HEIGHTS GROWER SCHEME (‘CHGS’) AT THE CHGS GENERAL MEETING HELD ON 8 FEBRUARY 2013
EN MOHD NAIM DARUWISH
CHIEF EXECUTIVE
COMPANIES COMMISSION OF MALAYSIA (SSM)
CHIEF EXECUTIVE
COMPANIES COMMISSION OF MALAYSIA (SSM)
The decision by the majority of the
Growers to approve the early termination of CHGS should be respected by
all parties. That decision was arrived in accordance with the terms and
conditions as set out in the trust deed and related agreements.
The timeline and manner of repayment to all Growers has been included in the resolution passed by the Growers. The said timeline and repayment are purely contractual in nature between Tan Sri Lee Kim Yew, the management company and all Growers. By voting for an early termination of CHGS, the Scheme has now ceased to exist.
However, pursuant to clause 10 of the Grower’s Management Agreement, the management company is under legal obligation to refund the Grower’s Fee to the Growers. Failing which, action could be taken by SSM against the management company.
Notwithstanding the fact that the Scheme is now terminated, SSM still has a role to ensure that the refund exercise is properly conducted in accordance with the Grower’s Management Agreement.
At the same time, SSM will continue with its probing to determine whether the parties concerned have complied with the Companies Act 1965, in particular the trust deed and related agreements.
Following the CHGS saga, SSM will ensure that investors’ interests in investments under the interest scheme legal framework which is administered by SSM are protected at all times. In the meantime, SSM will continue with its ongoing investors education programme to alert and remind the public on the importance of knowing and understanding their rights in schemes such as CHGS, which come under the purview of the interest scheme legal framework.
ISSUED BY : COMPANIES COMMISSION OF MALAYSIA (SSM)
DATED : 9 FEBRUARY 2013
more on:
http://www.usj.com.my/bulletin/upload/showthread.php?35949-Country-Heights-Grower-Scheme-%28CHGS%29
當你遇到事情，做一個不一樣的自己
