OJK Freezes Three Fraudulent Investment Companies Ahead of Idul Fitri Celebrations

Indonesia's financial service regulator, OJK, said on Friday (29/12) it has revised regulations on municipal bonds to encourage provincial governments to issue them to finance their infrastructure projects.(Antara Photo/Septianda Perdana)

By : Tabita Diela | on 7:32 PM June 21, 2017
Category : Business, Banking/Finance

Jakarta. The Financial Services Authority, or OJK, suspended three fraudulent investment companies claiming to offer shockingly high returns, an official said on Wednesday (21/06).

Tongam L. Tobing, head of the OJK task force assigned to investigating fraudulent companies, said operations at the firms SMC Profit, Smart Global Indotama and Miracle Bangun Indo have been temporarily frozen until the companies gain permission from the authority to resume business.

"This is a form of preventive action against an unauthorized collection of public funds to protect the people from adverse investments ahead of the Lebaran celebration," said Tongam, referring to the Idul Fitri holiday that marks the end of the Islamic holy month of Ramadan.

Most Indonesian workers, by law, are entitled to receive Lebaran bonuses from their employers that typically amount to an extra month's salary. This year, Idul Fitri falls on June 25, though many Indonesians anticipate receiving their bonuses before then.

Because Lebaran bonuses boost the purchasing power of consumers across the archipelago, inflation usually rises around the holiday, as well as the price of gold. To take advantage of the influx of extra cash into the economy around the holiday season, many companies often offer special discounts or promotions.

For instance, SMC Profit claimed to offer three-year time deposits yielding gains of 300 percent interest, though the average interest of rupiah-denominated one-year time deposits is around 6 percent.

Smart Global Indotama, on the other hand, claimed to be a "multinational property development, property agency, online business and networking" company, according to its website.

Despite its claim, the company actually offers advertising space on an e-commerce sites and monthly bonuses for subscribing members, which start at Rp 9,000 and can reach as high as Rp 664.3 million (US 67 cents - $49,800), by just paying a premium of Rp 200,000.

Miracle Bangun Indo, the third company whose operations were frozen by the financial authority this week, only began operations in March this year. The company offered a program that allows members to make a down payment of only Rp 5.5 million to receive a house worth up to Rp 1 billion, 13 months after the initial transaction.

According to Miracle Bangun Indo's website, the company registered 103 members in less than three months.

OJK's special task force has already banned 32 companies since January.

Tongam urged potential investors to use OJK's official list of suspicious or frozen companies before making an investment. The investigator also provided a hotline number and email in his public statement to report suspicious and fraudulent activity.


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