The Parliament today passed the Kootu Funds (Prohibition) (Amendment) Bill 2011 which provides for a heavier sentence against companies organising the kootu scheme.

The amended law provides a fine of up to RM500,000, from only RM5,000 previously, and jail of up to 10 years, from three years, on offenders.

Domestic Trade, Cooperatives and Consumerism Minister, Ismail Sabri Yaacob, said the law was not subjected to organisers of kootu which involved small groups or amount of money, but companies which turned the scheme into a form of business.

“The government will not take action against those who organise normal kootu, where 10 people get together, put up RM100 each every month and they take turns to receive the RM1,000 collection every month.

“But if a company is formed and money is collected from tens of thousands of people and there is element of business, like when the organiser charges a commission, for example 10 percent, as service charge,” he said when winding up the debate on the bill.

The Kootu Funds (Prohibition)Act 1971 was drawn up with the objective of preventing the registration or licensing of businesses which aimed to organise or promote the kootu scheme.

- Bernama