JEDDAH, 12 January — The Saudi Arabian Monetary Agency has warned the public against dealing with an allegedly phony financial company that draws its credibility — and attracts large number of investors — by publicizing the names of well-known businessmen and officials as its shareholders. When approached, these individuals have denied that they have anything to do with the company.

Based in Dammam, the company offers its clients profits up to 66 percent in just one year. It also offers to return the invested money in full on demand and issued its clients checks for the amounts they invested to back up this claim.

The firm has already become a beehive of higher income groups in the Eastern Province as many of them withdrew their deposits in banks to invest with the firm.

However, an official source at SAMA told Arab News that the company was operating without the special permit needed to carry out such business activity.

"No firm or agency in the Kingdom is allowed to receive public money for investment purposes without holding any official permit," the source said and pointed out that the company was carrying only a general commercial registration.

SAMA has closed down a number companies engaged in similar activities before. It tracks down firms that accept investments from the public without official permission.

The Dammam-based company accepted a minimum investment of SR50,000 and claimed that it would reinvest it in various business ventures, mainly real estate in different parts of the Kingdom. It also provided Umrah and Haj services.

An official at the company told Arab News that it offered annual profits of up to 66 percent to participants in its investment scheme, but stated that there were no interest-based activities.

"Our investment activities are approved by Islamic scholars," the official said, adding that the company has been carrying out its activities for more than eight years.

According to the official, the number of investors with the company has reached more than 5,000, and include well-known religious scholars.

Arab News toured the company’s headquarters located on the King Khaled Street in Dammam. There were no signs indicating that it was a private investment company.

The company official pointed out that it had received investments through banks.

However, he said he was not aware of whether the company was holding any official permit to practice such a business.

"I am only concerned about winning clients for the firm," he stated.

A number of Saudis who have invested in the company told Arab News that the firm offered 20 percent profit for a four-month investment, but as much as 70 percent for one year. It also offered to pay a commission to individuals who introduced new clients.

Bankers in the Eastern Province say the level of investment at the alleged phony firm had already reached hundreds of millions of riyals.

"Many people have withdrawn their deposits in banks and invested with the company," they claim.

A bank manager in the region told Arab News that one of its clients had withdrawn SR20 million in one go to invest there.

An investor who has put more than SR1 million in the firm two years ago said he was receiving quarterly profits without fail. His investment included money borrowed from his wife and relatives.

According to the agreement the company had signed with investors, its activities centered on real estate and trade. It claims vast experience in the area of speculative trading and investment.