Muhammad Zulhimi bin Bachok

1300040

A Case Study on ‘HYIP’ of

Geneva Malaysia Sdn. Bhd.

By

Muhammad Zulhimi bin Bachok

1300040

International Centre for Education in Islamic Finance (INCEIF)

Malaysia

March 31, 2013

January 2013

A Case Study on ‘HYIP’ of Geneva Malaysia Sdn. Bhd. ~ Page 1 of 10~

 Muhammad Zulhimi bin Bachok
1300040

A C a s e Stu d y o n ‘HY IP’ o f

Gen ev a M a lay si a Sd n . Bh d .
Muhammad Zulhimi bin Bachok

January 2013

1.0 Introduction

World of investment is very broad and have thousand product to be choose. As in

real world of today, a business in gold actively increase in numbers by giving an excitement

and challenging environment to the existing financial market. The potential Gold to become

investment mania in today’s world is very convincing because of the increasing price within

this decade. Convincingly, since the twenty first centuries1, gold prices in yearly basis had

climbed in drastic way and exponentially positive (Graph 1). Modern says it is speculation,

while in some believed it is related to do with the scarcity resources of the metal itself. So,

in this research the focus will be on High-Yield Investment Program (HYIP2) that related to

gold investment scheme and specifically for Genneva Malaysia Sdn. Bhd. The points that

need to be stressed out are regarding the Islamic view about Genneva’s scheme, the

appropriate techniques in Islam to invest in gold through the specific investment guidelines

from the National Committee Council for Islamic Religious Affairs in Malaysia3.

Accordingly, should make an inspiration to those investors out there as this at least can make

the public aware on the business as overall not only limited to gold. Plus, support them to

carry out their solution through following the best method of Shariah.

1
21st Century carries the meaning from January 1, 2001 included current date, until year of 2100.
2
More clarification:http://en.wikipedia.org/wiki/High-yield_investment_program Accessed: March 20, 2013.
3
Proposed in the research paper entitled Analysis on Shariah Through Gold Investment Products In
Malaysia, (2010), p. 1
A Case Study on ‘HYIP’ of Geneva Malaysia Sdn. Bhd. ~ Page 2 of 10~
 Muhammad Zulhimi bin Bachok
1300040
1.1 Background of Genneva Malaysia Sdn. Bhd.

Genneva Malaysia Sendirian Berhad (Genneva) is a gold based business and

registered a company in SSM4 as their registration number of 592576-A. It is a company

based on the business that dealing in buying and selling gold products. Genneva got their

reporting institution under AMLA 2001 (Anti-Money Laundering & Anti-Terrorism

Financing Act) in the early stage of their establishment. Their vision is to be recognised as

an innovative leader in the gold industry5.

2.0 Literature Review

The literature review will exposed all the definition deeply on the investment

terminology related to the one who invest act as an investor, gold investment under ‘High

Yield Investment Programme’ in Islamic standpoint and the expectation to the investment.

2.1 Definition of Gold Investment from Islamic Perspective

The commodity of gold is actually been declared as valuable material that has its

own significant characteristic, which it contains and hold the value. The high value of gold

is because of the costs are associated with extra works that been exist because the effort of

extracting gold from the earth. Previously back to history, gold had been used as currency.

In Shariah, the concept of business model is based on the principle of Al-Bay’ (Contract of

sale)6. As in the sale is stated in Quran as halal (permissible). In advance explanation is that

sale becomes the method of exchange of a valuable exchanged for another asset, service or

4
SSM is translation to Company Commission of Malaysia.
5
Retrieved from the Genneva’s websites, further information regarding this company can refer to the link:
http://www.gennevaworld.com.my/about-genneva-2/ Accessed: March 17, 2013.
6
Abstract from thesis (Ph.D.) University of Edinburgh, Scotland, 1986. Also been written in the book
entitled ‘Sales and Contracts in Early Islamic Commercial Law’.
A Case Study on ‘HYIP’ of Geneva Malaysia Sdn. Bhd. ~ Page 3 of 10~
 Muhammad Zulhimi bin Bachok
1300040
a certain sum of money/price (Abdullah Alwi Haji Hassan, 2007).

2.2 Expectation on Investment

Conventionally, the motivation for investing in gold obviously is to watch the

increment of the price in value, but to be exact in Islam it needs to involve with the risk of

profit and loss, as in one of the famous hadith:

‫جَ ْل‬
"‫َخا‬ ‫ا‬ َُ‫َّضاْل‬
َ ‫ر‬‫ن‬ َّ " ‫ال‬
َ َ‫ق‬ ‫وسلم‬ ‫عليه‬ ‫هللا‬ ‫صلى‬ ِ‫ول ه‬
‫اَّلل‬ ِ ‫َع ْن ر ُس‬
‫ر ل ر‬ َ
“Every profits need comes with a risk”.7
In reality, for every story of great success, there are many else story that do not end

so well that also relates with Genneva’s issue that lied about scheme be a shariah compliant8.

Under specific terminology of satisfaction is that offers a level of expected proportionate to

the amount of risk involved, also it must be sufficiently profitable – in the sense that investor

would expect it to generate a return that is through some analysis (Gitman & Joehnk, 2010).

The explanation is more related with the hadith above.

2.3 The Investor

Individual who are invest in any types of investment is acknowledged as investors.

Importance knowledge of information really helps investors to know anything going on.

Investment goals are the financial objectives that investor wish to achieve by investing

(Gitman & Joehnk, 2010). In addition, according to Ann, Tiffany and Susan, they stated

that the impacts of the activity of investments are based on consumers' trusting beliefs.

Consequently, whatever risk involve in the investment it should be important for the player

(investor) intentions, if the application can forecast the important information and it then

7
Hadith retrieved from Hasan (Al-Albani), accessed: March 16, 2013.
8
The news stated the company is not Shariah compliant, accessed: March 16, 2013.
A Case Study on ‘HYIP’ of Geneva Malaysia Sdn. Bhd. ~ Page 4 of 10~
 Muhammad Zulhimi bin Bachok
1300040
can help to understand the investment type either high or low risk of investment. Of course,

the risk will always be there whichever loss or get profit.

3.0 Fundamental gold investment scheme by Genneva Malaysia Sdn. Bhd.

Genneva sell the product of genuine gold to their customer by providing list of 999

bar gold9 that contains of different weight such 5, 10, 20, 50, 500 and 1000 grams. They are

promoting a unique wealth sharing platform that allows customer to be able own a gold

through profit sharing concept, thus can maximize their saving ability. They encourage

customer to own and hold the gold physically and claimed they was the first and only gold

company that is follow the rule under Shariah. Genneva also promoting the profit sharing

scheme that explains the consistent of savings that they claimed it follow our central Bank

of Malaysia’s requirements as in BAFIA 198910 and AMLA 200111 as a reporting institution

that play their rule to follow those regulations. Additionally, they claims that it is not Ponzi

or MLM12 scheme as it is very dominant to those people want to get rich faster.

3.1 Genneva Gold Savings Plan

Besides that, Genneva also offer a very good savings plan and option contract as

shown in the appendix (Diagram 1). In the diagram shown the flow process of Genneva on

how they doing their business. The savings plan consists of the next flow. Firstly, the

investor needs to purchase the gold at least 100g, then the physical gold been given. The

investor will receives 999.9 gold of 100g, sales and purchase agreement, letter of hibah (act

as present) and certificate of ownership. Then the details of their return already had been

stated in the letter of hibah regarding the return 1.5% per month.

Three options was offer, first option, the investor can renew contract for another 6

9
999 gold carry the meaning of 99.9% of gold.
10
BAFIA stand for Banking and Financial Institutions Act that existed since1989
11
AMLA stand for Anti-Money Laundering Act established since 2001
12
Ponzi or MLM is well known as Multi Level Marketing
A Case Study on ‘HYIP’ of Geneva Malaysia Sdn. Bhd. ~ Page 5 of 10~
 Muhammad Zulhimi bin Bachok
1300040
months. It is more like extended the plan earlier. Second option, the investor can buy back

100% the guarantee at purchase price and last option is to keep the gold.

3.2 Issues in Geneva Malaysia to transform and follow Shariah perspective

In line with the best referrals for gold investment, there is few steps to be follow if

the gold business can be declare as Halal in Islam. Along the way this is the best approach

to be practice and ensure the business is really moving forward towards practicing Islamic

commercial law on Al-Bay’ (contract of sale) in proper way. In addition, the Bay’ that involve

is more towards Bay’ Al-Sarf (sale using currency)13. The problems involved in Geneva as

mentioned below:

1) The gold been bought with deposit to trust account (illegal deposit taking)

2) Hibah been given earlier before the buyer settle his/her transaction

3) The gold is in packaging method and they force to not open at all

4) The gold been sell higher than the market price, as far been exposed the margin

is around 20-30% more higher than market price

5) Hibah been given around 3-6 months estimated near 2%

6) Genneva Malaysia promised to buy back at the end of certain period

7) Expose to the Multi Level Marketing style by doing the business of gold

8) If the gold want to sell to Genneva Malaysia it sometimes delay the money to

receive by the customer

3.3 The Halal Guidelines towards Better Gold Investment

First best approach of gold by satisfying the condition of the gold need to real exist

particularly on the time the sale involved. It is the ownership issues that suppose the seller

sell something is physically exist and not something hidden, intangible or cannot be seen.

13
Details of the requirement on contract of sale as in research paper entitled Analysis on Shariah Through
Gold Investment Products In Malaysia, (2010), p. 6-8
A Case Study on ‘HYIP’ of Geneva Malaysia Sdn. Bhd. ~ Page 6 of 10~
 Muhammad Zulhimi bin Bachok
1300040
Besides, the sale was goods and prices changeable all together using the spot price. The price

is fluctuation and not fixed, basically if the gold want to be sold on that particular time, so

it needs to follow the current actual price. No khiyar involvement.

As been agreed by the jurists to put khiyar in sale is not allowable in Islam. If khiyar

be present, the contract of sale will be terminated directly as in Hanafi, Maliki and Shafie’s

school of thoughts14. Totally different with the previous statement, from Hanbali’s school

of thoughts15, think that khiyar cannot be terminated, and the contract will be proceed

through binding if only both of the party already retreat from the event of transaction. So, as

the result the requirement only will be terminated. Furthermore, the guideline to follow is

also need to fulfil the unilateral promise only, cash, the price is stated clearly, the

measurement is precise, and the gold through physical delivery (not certificate only) and

ownership by the seller clear enough before transfer to the buyer.

4.0 Conclusion

Gold investment activity really in the condition of picked up pace in Malaysia

because the public aware that world nowadays having unpredictable financial crisis and see

this investment seems to be like an initiative on the solution. Now we can see increasing

numbers of private companies that distribute or trade precious metals. Obviously Genneva

Malaysia is one of them and they really implement the negative way of handling business

and misinterpret on Shariah word to implement in their company, or maybe this is very

negative idea to ensure it attract both Muslims and non-Muslims by creating an equal

opportunity for all Malaysians to purchase gold and involve in their scheme. All effort is

being made to go forward investigate and to make possible an early conclusion to the matter,

that need to follow the right way. Using the perspective of shariah, the techniques to meet

14
Al-Sarakhsi, al-mabsut, (Beirut: Dar al-Ma’rifah, 1414H) , j. 14, p. 23.
15
Al-Buhuti, Sharh Muntaha al_iradat, j. 4, p. 3.
A Case Study on ‘HYIP’ of Geneva Malaysia Sdn. Bhd. ~ Page 7 of 10~
 Muhammad Zulhimi bin Bachok
1300040
the gold investment principles and Islamic law is covered. On top of that the financial

activities of the Muslim society is not overdrawn our beloved religion, Islam.

Besides, gold cannot be traded in short sell because as in the news consultancy

GFMS last month warned that the current upward trend in gold may not be sustainable

should global stimulus packages fail to boost flagging demand in the battered world

economy and inflation fall as a result.(by News Wires, 2009). Further clarification, we can

also see the trend of from 2012 until now as in appendix (Graph 2).

Last but not least, the parameters that been set by the National Council for Fatwa

Islamic Religious Affairs Malaysia as a guide is the best to be the right concept if want

really involve in this investment.

A Case Study on ‘HYIP’ of Geneva Malaysia Sdn. Bhd. ~ Page 8 of 10~

 Muhammad Zulhimi bin Bachok
1300040

Appendix

Graph 1: Price for gold historically from year 2000 until present, 2013.

Graph 2: Price for gold from year 2012 until current date, 2013 whereby the

price is fluctuation in data, does not be too rush (cannot do short sell, or else it is

speculation that not allow in Islam)

A Case Study on ‘HYIP’ of Geneva Malaysia Sdn. Bhd. ~ Page 9 of 10~
 Muhammad Zulhimi bin Bachok
1300040

Diagram 1: Genneva Saving Plan and the Contract’s Options, 2011.

REFERENCES

[1] Abdullah Alwi Haji Hassan. 2007. Sales and Contracts in Early Islamic Commercial Law.

Kuala Lumpur: The Other Press, c2007.

[2] Al-Sarakhsi. (1414H). Al-Mabsut. Beirut: Dal al-Ma’rifah.

[3] E. S. Ann, B. W. Tiffany, M. L. Susan. 2006. How Web Site Investment Increases

Consumer Trusting Beliefs and Online Purchase Intentions.

[4] Gitman, Joehnk. 2010. Fundamentals of Investing.

[5] Lokmanulhakim Hussain, Dr. Fairooz Abdul Mohamed Khir, Mohd Badri and Apnizan Abdullah

Bahroddin. 2010. Analysis on Shariah Through Gold Investment Products In Malaysia.

Website links:

http://en.wikipedia.org/wiki/21st_century

http://en.wikipedia.org/wiki/High-yield_investment_program

http://sunnah.com/abudawud/24#94

http://www.gennevaworld.com.my/about-genneva-2/

http://www.nst.com.my/nation/general/nine-file-suit-against-genneva-1.189576#ixzz2P4r33NTt

http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx

http://www.investopedia.com/university/commodities/commodities8.asp

A Case Study on ‘HYIP’ of Geneva Malaysia Sdn. Bhd. ~ Page 10 of 10~