CBL must move swiftly against Ponzi project
Anyone with the most basic inkling of even Grade One economics will know that any promises of return on investment (ROI) upwards of 30 percent are always pie in the sky, particularly in light of the current political and economic vicissitudes impacting negatively on any sustained global economic growth.
Even in the best of times, it is not possible for any fund manager to achieve such an ROI rate monthly as promised by MMM Global, the latest Ponzi scheme to rivet Basotho. There is something always troubling about people who think money can be so easy to make. If indeed this was the case, why would any of us need to bother working? Wouldn’t we all sit back and enjoy the fruits of such easy rich pickings. Reality however isn’t that simple.
Call it naivety or just anthropological stupidity or both, there is never a scarcity of people who live in their makebelieve world, where anything is possible. Where they believe they can extract fabulous wealth without working. Nothing seems to have been learned from the MKM debacle wherein hundreds of thousands of people lost big time, some their entire lifetime savings.
It would be perfectly understandable if it was only the herd-boys from far down in the mountains who fell for this scheme. But even the well-enlightened among us are never far off from delusions of grandeur spawned by Ponzi schemes. One would have thought the fact that the chief promoter of the MMM scheme is a convicted criminal, who was jailed for several years for defrauding thousands of investors in Russia, would prove to be an adequate warning and deterrent for all of us to steer clear of his renewed Ponzi scheme. But, disappointingly, that’s not the case. Perhaps in the quest for easy wealth and in the quest to get rich quickly, nothing stands in the way of human lust and longing.
That a scheme promoted by a criminal scumbag who has already been convicted of fraud using the same scheme can attract so much traction as witnessed by the multitudes of people who attended the MMM’S event at Maseru Club last weekend speaks volumes of our capriciousness as humans. It points to our gullibility and vulnerability.
Unfortunately, for those who believe and partake in these schemes, it always ends up in tears. Those who are the first to participate will always get the initial returns as more investors are mobilized. That creates a veneer of legitimacy for the schemes. But as more investors come in, the schemes become unsustainable and implode.
Apart from its criminal promoter, the MMM scheme is even more dubious as there don’t seem to be any form of investing, no matter how shadowy, taking place. Investors are grouped to pay each other with absolutely no value creation. What happens when the investor register increases and those at the latter end, who must of necessity constitute the majority to keep the scheme going, expect their returns? The schemes inevitably implode.
It does not need the wisdom of a rocket scientist to see that the MMM venture is the biggest scam of scams as well as being the scum of scums. That its name bears strong resemblance to MKM is even revealing. We have no option but to wholeheartedly agree with Consumer Protection Association Director and social activist, Lehlohonolo Chefa, that the authorities, mainly the Central Bank of Lesotho and the Ministry of Finance, must move decisively to take action against this patently fraudulent scheme.
The tragedy of Lesotho, as Mr Chefa correctly observes, is that it does not have basic effective laws to protect consumers. South Africa has done a lot to try and protect its consumers. Apart from establishing a statutory body for that purpose, South Africa has gone as far as decreeing that schemes that promise investors returns above a specific realistic threshold are automatically condemned as Ponzi schemes to facilitate appropriate action. A plethora of other laws have been enacted to protect consumers. In Lesotho, similar action to protect consumers is desperately needed. Aggressive action to educate consumers on the futility of schemes such as MMM is desperately needed. Lessons learnt from the MKM debacle should have spurred our authorities into action.
But we seem, too often, to get caught up and consumed in politics at the expense of other critical interventions.
However, from whatever legal and policy framework available, the CBL and Ministry of Finance, must collaborate and ensure that the work of MMM is halted in Lesotho and Basotho are barred from pouring money into a scheme which will eventually bankrupt them. We are in the middle of an economic crisis spawned by the worst drought in decades. We need every Loti to be invested productively.