Benin, a Ponzi scheme and a long wait for an­swers

Kuwait Times - - INTERNATIONAL -

Sa­di­a­tou used to be a welloff trader of tra­di­tional cloth at the mar­ket in Benin’s eco­nomic hub of Cotonou but now sells school equip­ment from the doorstep of her home. In 2010 she sank more than five mil­lion CFA francs ($8,700, 7,600 eu­ros) into an in­vest­ment scheme that promised a quick profit. “It’s a de­posit I should never have made,” she said. “My business took a hit and my health as well. I’ve been de­pressed for a long time. “I was count­ing on the sav­ings I’d make to ex­pand my business. But it was use­less. All my money has gone.”

Seven years af­ter what was de­scribed as the big­gest fi­nan­cial scan­dal in Benin’s his­tory was re­vealed, 20 peo­ple this week went on trial. Sa­di­a­tou is one of nearly 150,000 peo­ple that the In­ter­na­tional Mone­tary Fund es­ti­mates were de­frauded of more than 150 bil­lion CFA francs in the In­vest­ment Con­sul­tancy and Com­put­ing Ser­vices (ICC Ser­vices) case. Some es­ti­mates, how­ever, say as many as 300,000 peo­ple were lured into part­ing with their hard­earned or bor­rowed cash and life-sav­ings on the prom­ise of 150 to 200 per­cent per quar­ter re­turns.

De­spite re­peated warn­ings about in­vest­ing in so-called pyra­mid or Ponzi schemes, such scams are be­com­ing com­mon­place through­out Africa. Frank En­gels­man, who heads the Am­s­ter­damand Paris-based Ul­trascan, which spe­cial­izes in de­tect­ing in­ter­na­tional fi­nan­cial fraud, says such schemes are boom­ing. “First, be­cause the in­fra­struc­ture in big cities of Africa is im­prov­ing rapidly, both phone as well as in­ter­net in­fras­truc­ture­and that’s what these fraud­sters need... .”Sec­ond, be­cause in those cities... po­lice are not trained to han­dle in­ter­net in­ter­na­tional com­mu­ni­ca­tion crimes that al­ways cross a bor­der be­tween the fraud­ster and the vic­tim.” In Gabon, a business run by a Pen­te­costal church pas­tor, Yves David Ma­pakou, al­legedly swin­dled up to 30,000 French and Gabonese clients by promis­ing prof­its on in­vest­ments.

A com­plaint was lodged in Paris in Au­gust last year. Africa’s most pop­u­lous na­tion Nige­ria re­mains the undis­puted cham­pion of fraud, hav­ing as­sid­u­ously de­vel­oped “419” scams over the years-a ref­er­ence to the rel­e­vant sec­tion of the crim­i­nal code. Vic­tims from around the world have been duped into hand­ing over bil­lions of dol­lars through a bar­rage of un­so­licited email ap­peals and job of­fers as well as prom­ises of mar­riage. En­gels­man said this type of fraud has “spread from Nige­ria to neigh­bor­ing coun­tries” in West Africa, tak­ing ad­van­tage of the lack of ca­pac­ity of law en­force­ment agen­cies to in­ves­ti­gate.

“Like most bad things like crime, they tend to spread when not put to a halt, widen their scope to im­prove ef­fect/in­come.” he added. De­vel­op­ment can even play a part. “It’s eas­ier when the in­fra­struc­ture is good, in coun­tries where also the cham­ber of com­merce is reg­is­ter­ing com­pa­nies eas­ily and bank ac­counts are opened, based on one or more reg­is­tra­tions,” he added. The Ponzi scheme in Benin-likened to the one run by Bernie Mad­off in the United States that saw the fi­nancier jailed-in­volved pay­ing ini­tial in­vestors with the money of new clients. Tex­tile worker Aline Ak­las­sato said she had “no rea­son at all not to be­lieve” the scheme would not work. “Col­leagues and friends had made de­posits and re­ceived div­i­dends,” she added. “I got div­i­dends my­self for two months of 300,000 CFA francs be­fore the dif­fi­cul­ties started.”

As the case wound its way to trial, few of the al­leged vic­tims were able to at­tend court hear­ings. The cur­rent trial will only look at es­tab­lish­ing crim­i­nal li­a­bil­ity. But for sales­man Le­an­dros Koude­noukpo, “the key ques­tion is re­im­burse­ment”. Benin’s govern­ment in 2010 launched a com­pen­sa­tion scheme for vic­tims through the sale of as­sets seized from ICC Ser­vices. But only a few ben­e­fited. The 20 de­fen­dants in the dock are fac­ing charges of con­spir­acy, de­fraud­ing the pub­lic and prac­tic­ing il­le­gal bank­ing and mi­cro-fi­nance.

Key ques­tions that need an­swer­ing are how were ICC Ser­vices and other firms in­volved are able to pros­per over the years, de­spite hav­ing no autho­riza­tion to run fi­nan­cial ser­vices. Did they have state back­ing? Benin’s pres­i­dent at the time, for­mer banker Thomas Boni Yayi, and sev­eral high­rank­ing of­fi­cials were at the time ac­cused of com­plic­ity but none is of­fi­cially un­der in­ves­ti­ga­tion. Seven years may have passed and Benin’s govern­ment has changed. But more time is still needed for a res­o­lu­tion. The trial opened on Thurs­day but on Fri­day it was ad­journed to a date to be fixed be­cause of a lack of an ex­pert psy­chi­atric wit­ness and doc­u­ments. —AFP

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