This article first appeared in The Edge Malaysia Weekly on October 14, 2024 - October 20, 2024

THE acronym MBI if spelt backwards is IBM, the US-based computer main frame technology company with a global reach.

Tedy Teow Wooi Huat, the prime figure behind the disgraced MBI, wanted a global reach similar to IBM. In his talks to members, he would always drive home the point why the acronym MBI was chosen, which was to expand its reach beyond Malaysia.

Teow’s selling point was a pyramid scheme called MFC, which he masqueraded as a platform for a digital coin called M-Coin. It started in Penang in 2012 and by 2016, the MFC pyramid scheme had expanded to China, Taiwan, Japan and even New Zealand.

But in May 2017, the scheme started to flounder following a raid by a team of enforcement agencies led by Bank Negara Malaysia. Hundreds of bank accounts were frozen. The following year, MBI collapsed, leaving thousands much poorer.

MBI’s trail of wealth destruction starts from Penang and goes right up to China and Japan. Thousands in China who had invested with the MFC scheme lost their life savings. About 100 of them staged a protest in Malaysia in 2019, which is rare considering that mass protests are banned in China.

The outcome in China so far is that several cases have been heard in court with a few people, who recruited investors to join MBI, going to jail. Finally, after two years of court battle, in August this year, China had Teow extradited from Thailand to face charges in its courts.

Back home in Malaysia, the remnants of MBI are still evident. Penang Times Square located in the heart of George Town is now a ghost mall.

Only a pair of security guards stand at the escalators to keep an eye on the mall, which used to be the main meeting point for investors of MBI.

“The uncompleted portions of the Penang Times Square project were placed under receivership last week. MBI was the anchor tenant of Penang Times Square. Now, it is vacant,” says a property agent.

The mall opened its doors in December 2015 and was known as M Mall 020. In the following three years until late 2018, the mall was the primary meeting point and shopping spot for locals who were MBI investors, as well as members from China.

“Every Wednesday was known as China tourist day. Cruise ships from China would stop at the Penang jetty. There were easily 50 to 80 buses ferrying the Chinese tourists to the mall, where they swooped up handphones, jewellery and other luxury items. The medium of exchange was M-Coins, which they got by being part of the MFC scheme,” says an investor known as Nasir.

The tourists were housed in hotels owned by MBI. One of them was the Vouk Hotel. Some went on to stay in the MBI Desaku housing project in Karangan, which is about 20km away from Kulim, Kedah.

“MBI Desaku was a rather active place with a lot of lights and shops to cater for tourists, both locals and people from China. There were shops specially selling products from China. Even houses in MBI Desaku were up for sale for MBI members. They could pay the deposit using M-Coins,” says Nasir.

Today, the MBI Desaku housing project is a pale shadow of itself. Houses with the logo “MBI RumahKu” are empty. The shops and food court are empty. The MBI showroom in the housing estate is closed, with letters strewn all over.

The landowner and developer of the project, ECK Property Development, has distanced itself from MBI even though the housing estate is still known as MBI Desaku.

“The Desaku project in Kedah is not an MBI project. ECK owns the land,” says a spokesperson of the property developer when contacted.

MBI Desaku is only one of at least three developments experiencing a “hangover” due to MBI’s collapse. Two other major property projects have stalled following the MBI fiasco.

Ivory Properties Group Bhd’s (KL:IVORY) Penang Times Square project is under receivership. The project comprises five phases, with phases one and two already completed. The third phase is uncompleted while work on the fourth and fifth phases have not started.

The other project is the Penang World City involving 102.6 acres in Bayan Mutiara, near the Penang Bridge. Ivory Properties Group secured the project through a tender in 2011. Tropicana Corp Bhd (KL:TROP) came in as a joint-venture partner later.

The project was supposed to have been completed by 2020 with a gross development value of RM10 billion. But in 2019, it was reported that Hemat Tuah Sdn Bhd, which is substantially owned by Teow’s brother and brother-in-law, took over the project. (See “Penang World City and the MBI effect” on Page 68.)

MBI was sold as a “financial management” platform, where investors were promised they could get back their capital within six months. The transactions were all based in US dollars and new members could only join the scheme by being introduced by an existing member, also known as the upline.

In Penang, investments in MBI ranged from US$1,000 to US$35,000. Those who had invested US$35,000 were known as “Platinum Card” holders while those who invested US$15,000 carried the “Gold Card”. These two categories of cardholders were promised superior returns.

In China, the minimum investment amount was as low as US$100.

Teow used technology, big names and celebrities from Hong Kong and Taiwan to add credence to the legality of MBI as an approved issuer of coins. In reality, the scheme had not been approved by Bank Negara.

As MBI was an anchor tenant of Penang Times Square, the mall was named M Mall O2O, where MBI members could exchange their M-Coins for goods and services.

“Even house renovations could be paid for using M-Coins. The company offering house renovations was based in the mall,” says investor Palani, who had two “Platinum Card” memberships with MBI.

Members could purchase almost anything from the mall, he adds. “At the last stages in 2017, we even placed deposits for Hyundai cars using M-Coins.”

Many, including Palani, knew it was a pyramid scheme. But he still put money in with the view that the scheme would last for at least 10 years.

“It was different from other schemes. There was a website where we could see the points in their accounts. We could also see the points accumulated by the upline and downline,” he says.

“The website also had a daily price for the units. The minimum price was 21 US cents and went up to 36 US cents. The more units were bought and traded, the higher the price. At 36 cents, the units would undergo a bonus, or what is known as a split.

“In the early years, the split was two times. So if an investor had put in US$15,000 to get 15,000 units, it would become 45,000 units within six to eight months, depending on the volume of trades.”

Another investor, who only wants to be known as Loo, says the points could be sold on the platform for between 21 US cents and 36 US cents.

“It could also be converted into M-Coins to buy goods, or converted to MCredit points and sold to uplines and downlines. There were several options for investors to cash out,” says the early investor who put his money into the scheme in 2014.

The start of MBI’s collapse was in May 2017, when a combined team of enforcement agencies led by Bank Negara raided M Mall in Penang and several offices in the Klang Valley. Several people, including Teow and his son Ee Meng, were detained.

Hundreds of accounts with a total of RM177 million were frozen. The two primary companies being investigated were MFace International Sdn Bhd and MBI Marketing Sdn Bhd.

But MBI’s activities continued despite the May 2017 raid.

“It was business as usual at M Mall. The meetings were ongoing in Penang and Danok in Thailand. And investors from China kept flocking in every week. However, the locals started to shy away from MBI and its MFC scheme,” says Ven, an investor in the scheme.

According to an investor from China, they were not aware that MBI had already been blacklisted by Bank Negara in 2016 or that the premises had been raided in May 2017.

“External information is hard to come by in China due to internet restrictions. Even in May 2017, MBI was still collecting money from investors. Only in mid-2018 did investors in China realise that the MFC scheme was a pyramid system that had collapsed. Investors only knew about it when the website stopped updating,” says the investor, one of many who have filed a civil suit to seek the return of his money.

According to news reports, more than two million victims in China are estimated to have been deceived into investing in MBI. The investments reportedly totalled RM300 billion, way more than what was siphoned away in the 1Malaysia Development Bhd (1MDB) scandal.

A banker points out that it would have been difficult for so much money to come into Malaysia without attracting the attention of Bank Negara.

“This incident happened after 2015, when Bank Negara was already under scrutiny for not raising a red flag when money came into the account of former prime minister Datuk Seri Najib Razak. Surely, if that kind of money flowed into MBI’s accounts in Malaysia, it would have caught the attention of the central bank,” he says.

Bank Negara investigated companies under MBI and its principal officers for money laundering activities and other offences related to financial services. Finally, Teow, his son, another director and two companies — MFace International and MBI Marketing — were fined a total of RM20 million in August 2018 for undertaking unauthorised payment activities.

MFace International was the key entity that received the bulk of the money coming into MBI. For the financial year ended December 2012, its revenue was RM252 million. By 2015, it was raking in RM532 million.

Between 2012 and 2017, MFace International’s revenue was more than RM1.4 billion. In 2018, following the raid and its principal officers being hauled to court to face charges, its revenue fell to RM48 million.

As for MBI Marketing, it received a total revenue of RM240 million between 2013 and 2017.

An investor from China says many of his countrymen had ploughed money into MBI in a big way, thinking that it was a legitimate scheme. “They were duped into parting with their life savings, which is why we are going after Teow’s assets to recover their principal,” he adds. (See “400 Chinese investors demand RM170 mil in class action against MBI” on Page 69.)

Whether they get any of the assets is left to be seen. But with Teow’s extradition in August, the race to recover what’s left of MBI is on.

The assets are not only in Malaysia but also in Danok. There will be many more who would want to get their money back, considering that the likelihood of Teow returning to Malaysia is remote.

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