Reader: What is Minibonds?

I have received an email from reader to ask me about what is exactly Minibonds. I am in the process of doing a comprehensive write up on what exactly Minibonds is all about, for the benefits for both my English as well as Chinese readers.


Dear Mr. Goh Meng Seng

I had the pleasure of exchanging a few words with you last sat. at speakers corner,
and had met you previously in WP's hq. just before the last GE.

I had invested 80k of my retirement funds into this product and wish to learn from my mistakes. Up to now nobody could tell me the true intent and nature of this product called MINIBOND.
Most of us have been deceived by this word and thought we had invested in a basket of bonds.
I tried rereading the prospectus to get some answers but ended up confused and bewildered by the terminologies, technical jargon & legalese. ( I had retired from the construction sector )

These are some of questions, hope you can help :-
1) What was sold to the unsuspecting and gullible investors ? Is it a Credit Default Swap
( CDS ). What is a CDS ?
2) What is the purpose of REFERENCE ENTITIES ( REs ) ?
the REs are prominently displayed in the brochure and fooled us into thinking we
are investing in their bonds.
3) The money collected from investors, what did they do with it.
I saw the swapping chart in your blog in chinese. Can you kindly prepare one in english
and email to me so that I can photocopy and distribute this sat. at speakers corner
to help investors achieve some understanding.
4) The REs have not defaulted,but the value of our investments have plumetted to almost
zero. What is the rationale behind this incomprehensible senario.?
5) Did the distributor :-
a) misrepresented this product ( not aware of it's true nature and operating mechanism )
b) concealed the material fact ( they knew but did not tell us )

I have come across anecdotes where complainants were bullied and brow-beatened at the
interviews by reps of the banks and brokerages.
Without a proper knowledge and understanding ( in Hindsight ) of this product, this will always be the norm at such interviews.

Mr. Tan Kin Lian and your goodself have selflessly contributed your time and efforts to
help us, the ordinary citizens, and for that we are eternally grateful to you gentlemen.
I had initially wanted to send this email to Mr. Tan but do not wish to burden him
unnecessarily and also hope this is not the case with you.

Thank You

Peter