KUALA LUMPUR – There is no doubt that the Covid-19 pandemic has disrupted the rice bowls of countless Malaysians.
In such a situation, many may be tempted to turn to a time-tested way of raising some hard cash – a kootu fund.
But several lawyers have advised the people to exercise caution when participating in kootu funds, lest they be caught on the wrong side of the law.
Lawyer Teeruvarasu K. Muthusamy said a kootu fund is loosely defined as a pool of money raised from contributions by a group of individuals at regular intervals, on a weekly or monthly basis.
The money is then withdrawn from the pool by the kootu group leader and given to a participant, mainly by a lottery mechanism.
He said while playing the traditional kootu fund among friends and family is legal according to the Registrar of Societies (RoS), it can become illegal in two ways.
“It becomes an offence when the kootu leader charges a fee of membership from the participants to subscribe or join the kootu scheme. It also becomes illegal when the kootu leader claims profits from the contributing members to enrich himself,” he said.
Teeruvarasu said the other scenario that would render the activity illegal is when the fund is advertised or promoted among the public.
He said this would violate Section 3 of the Kootu Funds (Prohibition) Act 1971 (Act 28).
“Act 28 clearly states that it shall be unlawful for any person to carry on the business of promoting kootu funds and any person who carries on such business shall be guilty of an offence,” he said.
He said matters pertaining to Act 28 are under the purview of the Domestic Trade and Consumer Affairs Ministry, and any irregularities on kootu can be reported to the Registrar of Companies (RoC) and the police.
Another lawyer, Nor Zabetha Muhammad Nor, advised people against joining kootu funds, saying they risked losing their money or getting into trouble with the law.
“There are so many ways that kootu funds are being carried out today, and they’re even being run through WhatsApp groups. There are many who join these schemes without even knowing who the ‘ibu kutu’ (kootu leader) is.
“The more a kootu group’s funds increase, the more it becomes black money and that’s what usually turns it into an offence,” she said.
Prominent criminal lawyer Datuk N. Sivananthan echoed Zabetha’s sentiment, saying in the event a member lodges a report against the group leader, both players and the leader could be charged.
“Theoretically, the police can charge the player for playing and the chief for collecting (money), and also for theft or cheating, depending on the facts,” he said. – Bernama, February 7, 2021
