Investors are calling for the director of an agricultural company running a pyramid scheme in Laos to step down after defaulting on repayment of millions of U.S. dollars, saying he no longer has the trust of the firm’s stakeholders.
The PS Agriculture and Industry Promotion Import-Export Company of Laos ceased providing promised interest payments in January this year and as investors sought to withdraw their capital, they were told it had been used to build infrastructure and attract new deposits through high rates of return, leaving them little recourse.
At a meeting on Wednesday, PS Agriculture director Por Her told investors that the company plans to repay the nearly 100 million kip (U.S. $12.14 million) it owes them, although not before a July 6 deadline ordered by the Bank of the Lao PDR—the country’s Central Bank.
Once the debts are repaid, he said, the company plans to list on the Lao Securities Exchange, adding that the roughly 50,000 investors who have kept their deposits with the firm will be invited to purchase the shares of those who withdrew them following a government warning last year.
“When the company is registered on the stock market, I will try to kick out people who do not want to remain [with the company],” Por Her said at the meeting.
“Now we are opening up opportunities to others who would like to buy the shares of investors who do not want to stay [with us].”
Por Her added that PS Agriculture “will sell everything” it owns to clear its debts.
PS Agriculture’s chairman Souknaly Thepsymueang, meanwhile, said investors who seek to withdraw their capital from the company will be given rice instead of cash, though they will “have to wait,” even to receive that.
And an investor who attended the meeting told RFA’s Lao Service on condition of anonymity that PS Agriculture will not be paying stakeholders who invested between 2014 and 2015 because “they have already received dividends,” adding that the company will provide further details at a later date.
Following the meeting, an investor named Keovisian Xaiyasith slammed Por Her for misleading stakeholders and demanded that he step down as director of the company.
“Por Her should stop saying things to promote his profile, because nobody trusts him anymore,” he said.
“The company cannot move forward because no one will join you. They do not listen to you, they do not trust you and they will not follow you. This fraud is the result of your management.”
RFA’s Lao Service attempted to contact Arkhom Pasert, the director general of the Financial Institution Supervision Department under the Bank of the Lao PDR, for additional details about PS Agriculture’s operations, but an official who answered the phone at the agency said he was in a meeting and unable to take the call.
PS Agriculture and Industry Promotion Import-Export Company of Laos registered as an agricultural company in 2012 with 900 million kip (U.S. $109,240) of capital to produce purified drinking water, noodles, run a rice mill, and farm organic chickens and vegetables.
The company solicited deposits of between 500,000 and 5 million kip (U.S. $61 and $608) per person for an expansion fund, promising monthly interest payouts of at least four percent, and bonuses of 24 percent to those who maintained their deposits for a year—far surpassing rates offered by Lao banks.
PS Agriculture’s fund grew to include more than 200,000 investors with deposits worth more than 900 billion kip (U.S. $109.3 million), but after the government issued a warning at the end of last year calling the investment scheme illegal because the company was not registered as a financial firm, stakeholders began to withdraw their money.
After the Bank of the Lao PDR earlier this month ordered PS Agriculture to repay its debts by July 6, the company requested an extension, saying it would be impossible to meet that deadline.
Sources have acknowledged that investors were at least partially to blame for pursuing what they saw as a get-rich-quick scheme, without fully researching how PS Agriculture’s expansion fund operated, and that many who decided to contribute to the fund based on the advice of friends or family “didn’t understand the contract” behind their investment or even the “basic procedures of the company.”
But a Laos-based legal expert recently called PS Agriculture a “scam” that operates by “taking money from one person and paying it as interest to another,” with an elaborate network of brokers who “hunt for innocent investors as victims” in exchange for commissions.
In a meeting with the Bank of the Lao PDR last week, officials from PS Agriculture acknowledged that they had committed fraud by operating the firm as a financial institution after registering it as an agricultural company and pledged to undergo an audit to report its prior business dealings.
In a memo signed at the conclusion of the meeting, company officials promised to amend PS Agriculture’s business registration status, provide complete and accurate information on the firm’s operations to the government, repay their debts to investors, and hold a meeting with stakeholders to address their concerns.
Reported by RFA’s Lao Service. Translated by Ounkeo Souksavanh. Written in English by Joshua Lipes.