I-chqs issuer under CAD probe
(SINGAPORE) I-chqs, the restaurant 'currency' popular with consumers because it offers up to 30 per cent discount, could be in trouble. Indigoz Exchange, the company that sells i-chqs is being investigated by the police.
And sources said that the Monetary Authority of Singapore is moving to regulate multi-purpose stored value or prepaid instruments that might give some protection to consumers should companies that issue these prepaid instruments suffer financial woes.
In a brief statement released yesterday evening, the police said its white-collar unit, Commercial Affairs Department (CAD), has started investigating Indigoz, a company which counts the Economic Development Board as an investor, for alleged fraud under the Companies Act.
In the course of the investigation, the CAD has seized monies found in the company's bank account that relates to the alleged fraudulent business conduct.
'Holders of i-chqs are advised to wait for further updates on this case,' the police said.
I-chqs had been sold via 7-Eleven stores, SingPost, Standard Chartered Bank and HSBC Bank.
A call to Indigo was answered by a recording which said: 'Welcome to Indigoz Exchange. We are closed for a stock-taking exercise today. Any inconvenience caused is regretted. Please call us again on another day.'
Founded by former banker and forex trader Patrick Teng, Indigoz was seen as innovative when it first appeared a few years ago, though certain quarters in the past year had begun questioning its business model as 'too good to be true'.
According to the HSBC and Indigoz website, i-chqs are accepted at face value without any restriction and have equivalent Singapore dollar value.
About 260 restaurants and cafes here have signed up, accepting i-chqs in which the customers get discounts.
Contacted by BT, the managers of Lawry's the Prime Rib and the Esmirada Mediterranean Restaurant & Wine Bar at Orchard Hotel said that they would continue to accept i-chqs until further notice from the authorities.
They had not heard of the police action. The Esmirada manager said that he had declined to extend its contract with Indigoz when approached recently.
Spokeswomen for HSBC and Standard Chartered, who were also caught by surprise when told about the investigation, said that they had no comment.
HSBC had been promoting i-chqs aggressively, offering customers up to 30 per cent discount. That meant a customer only pays $70 for every $100 of i-chqs.
As i-chqs have a validity period or use-by date of six months from the time of issue, the company made money from those customers who do not manage to use all the i-chqs they had bought in time, explained a banker.
Separately, sources told BT that the Monetary Authority of Singapore (MAS) has been consulting the financial industry for some time on regulating the increasingly popular use of multi-purpose stored-value instruments.
'They (MAS) are about to come up with legislation, a kind of 'Payment Act' that should make it clearer who is subject to the law,' said a financial services executive.
He expects legislation to also deal with the advanced payments of consumers such as requiring the money to be kept in separate trust-type accounts.
In Singapore, money paid in advance for pre-paid cards such as the cashcard or the transport ez-link card is held in banks.
But the money paid for the popular prepaid phone cards issued by telecommunication companies is held by those organisations.
In other countries, prepaid phone cards are not just used for phone calls.
'The multi-purpose stored-value card can take the function of paper money and if it becomes popular, it's tantamount to printing money, it can replace the entire nation's currency,' said the executive.
A check with BizNet showed that in 2002, Indigoz posted a net loss of $863,914 and shareholder's funds of $700,000.
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