This article first appeared in The Edge Financial Daily on August 9, 2018

KUALA LUMPUR: A group of investors have lodged a police report against a crude oil investment scheme, claiming it has defrauded at least RM100 million from 1,000 Malaysians.

Lodged on July 28, the report was filed against seven companies and two individuals, according to a copy provided to The Edge Financial Daily.

A spokesman for the group told the daily that a separate police report had also been filed in Singapore against the Singaporean promoters on June 26. The spokesman, who requested anonymity, said the rough count of 1,000 Malaysian investors does not include those from Singapore, Japan and Macau.

According to the Singaporean police report, a copy which the daily also sighted, the total fund involved is claimed to be about C$128 million (RM398.76 million) collected from 4,000 investors worldwide. The Malaysian police report singled out a Canadian company called Conserve Oil Group Inc as the scheme’s main promoter. Seven of the remaining parties are the scheme’s promoters in Singapore and Malaysia.

Apart from Conserve Oil Group, the Malaysian companies named in the report are Capital Asia Group Sdn Bhd and Proven Oil Asia Sdn Bhd. The other companies named are Capital Asia Group Pte Ltd; Capital Asia Group Oil Management Pte Ltd; Proven Oil Asia Pte Ltd and Proven Oil Asia. The name of the individuals named are withheld as they could not be reached at the time of writing.

At least two of the other companies named had been on the authorities’ watch list for some time. One is Capital Asia Group Sdn Bhd, which is on Bank Negara Malaysia’s (BNM) financial consumer alert list for activities that are neither authorised nor licensed under the central bank’s relevant laws and regulations.

The other is Proven Oil Asia Sdn Bhd, which is on the Securities Commission’s list of unauthorised investment products. Both companies are owned by the Malaysian promoters of the scheme. They were added to the respective lists in 2015.

The scheme allowed investors to buy oil still in the ground. The capital invested was purportedly used to drill for oil. The scheme basically offered a 3% discount to investors for the bulk purchase of crude oil from a Canadian oilfield. The crude oil drilled from the field is then purportedly sold to oil majors like Shell and Exxon Mobil at market prices, allowing investors to pocket the 3% as their return on investment.

The 3% profit was paid out to investors quarterly on the 15th of January, April, July and October, said the police report.

According to the spokesman, the investors received their quarterly profits without delay for the first several years up to 2015.

As assurance to investors, the promoters claimed that investors have the first charge to the alleged oilfield at an equivalent value to their investment. They were told that should Capital Asia Group Sdn Bhd fail to make the scheduled profit payments, the charge would be activated and the oilfield would be sold within 90 days, with the proceeds distributed back to investors, according to the police report. However, Conserve Oil Group went into receivership in October 2015, the report added.

The police report also noted that while the Singaporean promoter had sent regular emails claiming work is ongoing to return their investment capital, investors had not seen their money back three years on.