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Indonesia a 'paradise' for investment fraud Andi Haswidi, The Jakarta Post, Jakarta The latest and the biggest investment fiasco to be associated with the British Virgin Islands-based Dressel Investment Ltd. proves once again that Indonesia is a happy hunting ground for fraudsters, a senior financial industry figure says. "Indonesia has become a haven for investment frauds because of the lack of knowledge and education of investors. Such frauds also happen in developed countries, but not to such a fantastic degree," Lin Che Wei, the president director of state-owned equity house Danareksa, said Wednesday in Jakarta. Che Wei was referring to the US$385 million (about Rp 3.5 trillion) paid over by some 10,000 investors to Dressel through its Indonesian partner, PT Wahana Bersama Globalindo (WBG), which has now been lost after the company suddenly closed up shop on March 1. The ill-fated victims -- many of whom are public figures, including clerics, leaders of political parties, such as House Speaker Agung Laksono, leading media bosses such as Fikri Jufri, lawyers such as O.C. Kaligis, famous celebrities like Iwan Fals and even poet and author Gunawan Muhammad -- first felt something was wrong in November, when no yield payment was transferred into their accounts. The continued failure to pay led to a rush in the following months when customers tried to withdraw all of their investments from WBG branches in many cities, including Jakarta, and peaked in February when WBG promised alternative schemes to return the money to investors, of which some 5,600 have already formed the Dressel Crisis Center (DCC) to apply pressure for the return of their money. "They offered us various schemes for getting our money back, but suddenly they closed their office on March 1 and the president director fled abroad," DCC spokesperson Dony M. U. told The Jakarta Post on Tuesday. Last Tuesday, Jakarta police confirmed that WBG president director Krisno Abiyanto had been arrested on Friday at Soekarno-Hatta International Airport on his arrival back from Kuala Lumpur. If found guilty, Krisno could be sentenced to up to 15 years and face Rp 15 billion in fines. Commenting on the high status of the victims, Che Wei said that "These people may have apparently sophisticated minds, but financial literacy is another thing entirely." Investment schemes offered by WBG, Che Wei said, were run by people who used what was known as an affinity scheme, where public figures were targeted in order to attract other investors. "We have classified about 13 types of investment fraud scheme. One of these is the Ponzi scheme, taken from the name of an Italian called Charles Ponzi, who promised lucrative yields, which were actually built on the back of new investments made by fresh investors," he said. Dressel portfolios offered returns of between 24 and 28 percent per year. Together with the Capital Market Supervisory Agency (Bapepam), Danareksa held what it termed an education day Wednesday for would-be investors to inform them of the various fraudulent schemes afoot and how to avoid falling victim to them. All information imparted during the education day will soon be made available at www.danareksa.com. Che Wei explained that fraudulent investment schemes often involved sophisticated investment projects that were hard to verify, and the pressuring of potential investors through "once-in-a-lifetime-opportunity" inducements. "Always bear in mind that for every silver lining there is a cloud. Don't be afraid to sleep on it," he said. Dressel and WBG began offering investment products in Indonesia in 1997
