PESHAWAR, Feb 11: Many illegal finance companies and business houses have cropped up in the city of late which openly fleece people by promising them huge profits due to negligence on the part of law enforcement agencies, it is learnt.

Recently, the FIA arrested three employees of the fake Prime Bank which had offered its services only through the Internet. The fake bank had promised to give five-gram gold coins to all those who opened account by depositing Rs3,000 through its gold card after six months through the Internet, sources said.

The bank, which deprived about 35,000 people of their hard-earned money in the Frontier province, had stopped functioning here, but the company was still continuing its illegal activities in other parts of the country, they added.

Before the FIA action against the illegal online bank, the Prime Commercial Bank had written a letter to the Peshawar office of the Securities and Exchange Commission of Pakistan (SECP), seeking action against the fraudulent people.

Despite admitting that the online bank was working illegally throughout the country, the SECP high-ups in Peshawar did not take any action and advised the management of the Prime Commercial Bank to contact the head office of the fake bank in London, the sources maintained.

Inaction on the part of the SECP helped flourish the illegal business of the online bank, the sources maintained. Many other unregistered companies were still functioning in the country and fleecing the people, but the SECP officials said they could not take action against them as this was the job of the law enforcement agencies.

"Yes, we received the complaint of the Prime Commercial Bank and later we informed our headquarters in Islamabad as we cannot take any action directly against any of the unregistered companies according to the law," said Shaukat Hussain, joint registrar of the SECP.

Talking to Dawn, he said according to the Companies Ordinance, 1984, the SECP could only keep a check on the illegal activities of registered companies. He said most of these illegal companies operated through the Internet, with the claims of having offices in foreign countries.

The SECP had recently established a cell at its headquarters in Islamabad to deal with the illegal activities of these unregistered companies and coordinate with the law enforcement agencies to stop them fleecing innocent public, Mr Hussain said.

"None of the law enforcement agencies has so far been contacted by the SECP to check the illegal activities of the unregistered companies despite the fact they received many complaints from the general public," officials in the police and FIA said.

Xianle is another unregistered company which deals in health products in the local market. The sources said the company provided most of its information through its website which showed that the company had its head office in China and branch offices in major cities of Pakistan.

They said the company had offered membership cards to the general public for which reference of a member was necessary. The more number of people a member referred the more chances he stood to win prizes like car, motorcycles. However, officials believed the whole business was illegal.

Two other companies - BC Gold and CNI Gold - have also offered huge incentives to the public to make them their members. Both the companies were unregistered and their activities throughout the country were illegal, official sources said.

"These companies mainly operate through the Internet and offer incentives to the general public to make other people members and win prizes," the sources maintained.

FIA officials said they had planned to take action against all these companies and would soon expose illegal activities of some other companies involved in fleecing the masses.

A SECP official said the commission had sent a comprehensive report about the functioning of unregistered companies which operating through the Internet to its headquarters and was awaiting instructions to draw a line of action against them.