ISLAMABAD, Sept 28: Prime Minister Shaukat Aziz on Tuesday said the government would take strict action against illegal companies defrauding people by promising huge returns on investments of their hard-earned money and asked the people to be vigilant.

"I would earnestly advise the public not to play into the hands of cheats and robbers who are launching various schemes just to deprive them of their hard-earned savings," he said at a function held to distribute cheques among people affected by the Taj Company scam.

Mr Aziz said the government had taken note of the new scam of property and plots as well as advertisements inviting people to purchase property abroad. "I have directed the ministry of law, the Securities and Exchange Commission of Pakistan (SECP), State Bank of Pakistan and the CBR to investigate the matter. The government is vigilant, and so should be the public," he said.

The prime minister said that seeking deposits in an un-authorized manner was a monetary scam depriving uneducated and unwary people of their earnings. "But," he vowed, "we will not let it happen again."

Around 23,000 affected people have been waiting for 15 years to get a refund of their life's savings which they had deposited with the Taj Company. "Deposit taking place in the name of holy Quran was just an exploitation of religious sentiments of people," he regretted.

Mr Aziz said although Taj Company still had heavy liabilities, the affected people with claims of up to Rs75,000 were being compensated. The depositors with claims over Rs75,000 were being paid 40 per cent of their principal amount and the liquidators were hopeful that they would succeed in making more refunds to pensioners and widows.

The government, he said, had allocated Rs75.8 million in the budget, out of which the claims of up to Rs25,000 had been paid through official allocation and a contribution from the company.

He said Rs251 million was distributed earlier this year among the 10,000 people having claims of over Rs50,000. Similarly, Rs110 million was paid to widows, orphans and other hardship cases.

The premier pointed out that over the past three decades the country had faced scams of finance companies, cooperative societies and recently the so-called forex companies.

Most of the people lost their savings as they became victim of attractive marketing campaigns launched by unscrupulous elements, who offered lucrative profits on their investment. After raising heavy deposits, he said, these elements suddenly closed shops and disappeared.

However, he said, now things were changing. "Now you see the regulatory bodies effectively handling such situations in a proactive manner." Mr Aziz acknowledged that interest rates in the market had dropped considerably.

He said that reforms by regulators and the performance of the stock market and the mutual funds industry had been remarkable. He also mentioned special schemes for senior citizens and widows by the National Savings and urged people to consult regulators before making investment in response to attractive advertisements.

He said despite best efforts the liquidation could not be averted due to the huge gap in the company's liabilities and assets. The prime minister praised the Securities and Exchange Commission of Pakistan (SECP) for the role it had played in ensuring refunds to the affected people.

SECP chairman Dr Tariq Hassan urged people to be vigilant of companies dealing in finances and consult the commission before investing their money. He said the liquidators of the Taj Company had disposed of all assets for Rs860 million, of which Rs680 million had been received while the remaining would be received soon.

The Liquidator of Taj Company, Justice Abdul Hafiz Cheema, spoke briefly about the way they had raised funds by selling the assets. -APP