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Exposé

   
 

First Gold Quest and now Golden Key, Nivard Cabraal is a man who loves Gold…


Nivard Cabraal

Goldfingers 

By R. Wijewardene

Last week the Governor of the Central Bank found himself mired in the Golden Key scandal as The Sunday Leader uncovered evidence that he was responsible for terminating an investigation launched into Golden Key by the Central Bank in 2005.

The dismissal of a report that could have stopped the Golden Key scam in its tracks in 2006, was masterminded by a nexus of influential politicians and businessmen with Cabraal who is at once a politician, a businessman and a banker firmly in the middle.

By preventing the investigation from proceeding and scuttling the inevitable Monetary Board action against Golden Key, Nivard Cabraal managed to exacerbate the magnitude of the Golden Key disaster.

Despite having before him a report which stated quite clearly that Golden Key was in complete breach of the Financial Companies Act the Governor chose to allow the unlicensed company to continue operating, and as such was involved in perpetuating Golden Key’s criminal fraud.

The idea that the Governor of the Central Bank despite being fully aware of Golden Key’s criminal activity, used his influence to allow the business to keep operating is simply shocking. Or at least it should be, but Nivard Cabraal is something of a special case and its common knowledge that the Governor is no stranger to golden schemes.

Gold Quest

Long before he was Central Bank Governor Cabraal had acquired a reputation for poking his golden finger into profitable pies and in 2003 the ‘banker’ was embarrassed when he was discovered to have been at the bottom of another pot of gold, this time Gold Quest.

The notorious pyramid scheme duped investors into buying overvalued gold and then encouraged them to sucker more friends, relatives and colleagues into investing with Gold Quest, in exchange for commissions.

Investors paid a fixed dollar sum for membership of the scheme and in exchange received gold tokens, watches, and trinkets.

Typically the gold they received was worth substantially less than their initial payment however they were assured that it was a sound investment and were constantly told that by joining the scheme they had become independent businessmen.

 Each member was asked to persuade at least two new members to join Gold Quest, and each of these new members was in turn required to recruit another two participants.

For every four members that entered the pyramid under them, investors received a substantial commission.

As each new member continued to add yet more recruits to the scheme, those at the top of the pyramid received substantial commissions, but the ultimate profit was reserved for Golden Key – which made millions on the sale of overvalued gold baubles – that had little or no real value.

Left with nothing

Gold Quest was a quintessential pyramid scheme with new investments financing the commissions received by previous investors, and like all pyramid schemes those nearer the top — who joined the scheme earliest made substantial profits from their investment receiving commissions for all those who joined under them.

The vast majority of investors however were left with nothing but vastly overvalued gold trinkets. Some at the very bottom of the pyramid even paid for Gold Quest membership and received nothing at all.

Pyramid schemes operate in every part of the world but Gold Quest is one of the most organised. Headquartered in Hong Kong it specialises in taking advantage of underdeveloped, poorly regulated economies such as India, the Philippines and of course Sri Lanka.

While the Gold Quest scheme preys on investors’ dreams of easy money for minimal effort, the ultimate losers are not only money hungry investors but also the country’s economy as a whole as the scheme deprives nations of valuable foreign exchange. Those who invested had to, illegally, remit dollars to Gold Quest’s Headquarters in Hong Kong in exchange for membership of the scheme.

Notorious scheme

The scheme is notorious and banned in several countries including the Philippines. In Sri Lanka it was found to violate both regulations concerning gold imports and exchange control, by remitting foreign exchange to the Gold Quest parent company in Hong Kong.

But for our golden man, Nivard Cabraal the allure of so much easy money was simply too much to resist.

The Sunday Leader this week has evidence that the Central Bank Governor was intimately involved with Gold Quest.

We have documents in our possession which prove that an independent investigation found that Capital Reach, a company chaired by Nivard Cabraal and in which both his wife and himself were shareholders, was a front in Gold Quest’s Sri Lankan operations.

In order to run their scheme, Gold Quest operated through various front companies. Gold Quest acquired struggling tea exporter — Fern Tea and used the company’s export connections to clear gold through customs. Additionally Gold Quest took a stake in Rhythm Collection, a retailer based in the Premier Pacific shopping center which it used to deliver various gold tokens to customers, and to remit money received from investors back to Hong Kong.

The Cabraal family was involved in the scheme through Capital Reach Holdings, a company owned by Cabraal and his wife.

In 2003 Capital Reach Holdings took control of the ailing Vanik Leasing Company, and shortly there after Suntex International, a front for Gold Quest based at the same address as Gold Quest in Hong Kong, invested heavily in the Cabraals’ business.

Suntex

Suntex bought a major stake in Capital Reach Holdings and therefore the Cabraals co-owned a finance company with Gold Quest. Suntex Holdings also bought a controlling stake in Gold Quest’s other major local front company – Fern Tea.

A finance company however was an ideal vehicle for Gold Quest’s expansion in Sri Lanka and it is impossible that Nivard Cabraal was unaware of the intentions and activities of his disreputable business partners.

In fact it was reported that Cabraal received and responded to invitations from Gold Quest which offered the Governor and his family the chance to attend the glamorous Monaco Grand Prix at Gold Quest’s expense.

The involvement and association between Cabraal and Gold Quest was clearly an intimate one typical of Gold Quest’s strategy to co-opt influential business people and government officials in vulnerable Third World countries.

Rhythm Collection

However there was also a personal dimension to the relationship — Anura Fernando who was chairman and CEO of Fern Tea and the owner of Rhythm Collection, Gold Quest’s principle fronts in Sri Lanka, is a close friend of the Governor’s. Therefore through his family, his friends and his business interests Nivard Cabraal was connected to Gold Quest. In fact he only resigned as chairman of the company he jointly owned with Gold Quest, when he was appointed economic advisor to the President.

However even at this point the Cabraal family did not sever their connection with Golden Key and his wife assumed control of Capital Reach Holdings.

Their involvement with Gold Quest was simply too deep. Gold Quest were major investors in a company jointly owned and chaired by the Cabraals, it offered the family invitation to glamorous events, and a close friend was the head of Gold Quest’s operations in Sri Lanka.

While Cabraal’s close connections with a criminal enterprise are damning his initial wheeler-dealing with Gold Quest pales in comparison to his actions once he was appointed Central Bank Governor.

By 2005, the activities of Rhythm Collection and Fern Tea had aroused the suspicion of the Central Bank and an investigation had been launched into the companies. Rhythm Collection was found to be illegally remitting vast sums of foreign exchange out of the country while Fern Tea was discovered to have been a front used to effectively smuggle gold though customs.

A Manager of Rhythm Collection, a Mr. Weeraman was arrested, he was only small fry however and the net was fast closing around others involved in the Gold Quest scam, particularly Cabraal’s close friend Anura Fernando.

The 2005 Central Bank investigation, a copy of which is now in the possession of The Sunday Leader, produced an enormous volume of information regarding the illegal activities of Gold Quest and its local collaborators and the Cabraal family were facing the prospect of answering some uncomfortable questions regarding their association with Gold Quest.

Pure golden luck

However just as things were starting to look bleak for the Cabraals our golden man hit upon a streak of pure golden luck and the faintly dubious businessman and qualified chartered accountant found himself appointed Governor of the Central Bank.

Elevated to such a lofty position the golden boy sprang immediately into action using his new found powers to terminate the investigations into Gold Quest. Its even reported that he disbanded the crack investigative team who had compiled the investigation.

Sweeping the potentially damning report under the carpet was a shocking abuse of power. The conflict of interest between the Central Bank Governor’s responsibility to enforce financial regulations and his personal involvement with companies clearly violating these regulations is clear.

And faced with this intractable dilemma the honourable Governor turned to a device he clearly believes is worth its weight in gold – the paper shredder, consigning the relevant investigations to the shredded paper basket.

The sins here are manifold – by preventing the investigation from continuing Cabraal allowed senior members of the Gold Quest scheme including his friend Anura Fernando, and quite possibly himself, to escape inevitable legal action.

Through his involvement with Capital Reach he had already effectively aided and abetted an illegal company that clearly violated the country’s exchange control laws.

Ultimately he came to the aid of those involved in a pyramid scheme that is expressly prohibited by the Central Bank he is the head of, raising profound questions about his commitment to the laws he is duty bound to uphold.

Two instances

Together with the discovery that he quashed a report that could have put an end to Golden Key, there is now evidence Nivard Cabraal has twice used and abused his power as Central Bank Governor to dismiss reports that would have embarrassed his friends and associates.

Again these actions hardly inspire confidence in the man tasked with managing this nation’s troubled economy.

At a time when the nation is facing a dire foreign exchange crisis should we really have a man involved with a scam that for years illegally leached foreign exchange out of the country at the helm of our economy?

Sadly the problems confronting the nation’s balance of payments today cannot be solved by the paper shredder – Cabraal’s main area of expertise.

And of course the ultimate irony in all this is that a man who clearly loves gold — to the point that he embroiled himself in not one but two palpably criminal schemes, has as Central Bank Governor, let the country’s reserves of gold and foreign exchange diminish to their lowest levels in history.

The sad fact that the country’s problems can’t be shredded into nonexistence now leaves us with no option but to beg for a change of heart on the part of the Governor; and the country’s golden man must now use his deep and sincere love of gold to increase the treasury’s squandered reserves or else resign and return to the business he knows best, the pursuit of golden schemes and golden dreams.


 
 
 
 
 

 

 


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