MMM: The stuff of night­mares

Lesotho Times - - Scrutator -

IAM tak­ing a break from the King­dom’s ex­haust­ing pol­i­tics this week. I def­i­nitely need a break. I have had enough of the DC, ABC, DC, LCD, BNP egg dances which are tak­ing us nowhere. I am a po­lit­i­cal an­i­mal and a week is never com­plete for me with­out ad­dress­ing a po­lit­i­cal topic.

But too much of every­thing is not good for any­one’s well-be­ing. I am now over-dozed on our lo­cal party pol­i­tics. I need a break. Let me thus fo­cus this week on a dif­fer­ent set of pol­i­tics; that is pol­i­tics of the stom­ach.

No hu­man be­ing ever wants to go hun­gry. We all want the good life. Who would not want a bit of caviar, oys­ters, cray­fish and the finest wine for din­ner ev­ery day? Who would not want to wear the lat­est iconic fash­ion brands; Jimmy Choo, Ver­sace, Dolce & Gab­bana, Karan, Ar­mani, Givenchy, etc.

Who would not want to zoom around the city in a Maserati or Lam­borgh­ini? We all want the finer things in life.

Even those among us with mod­est am­bi­tions wish to at least have the es­sen­tial ba­sics nec­es­sary for hu­man sur­vival. The big­gest prob­lem is we don’t seem to know how to achieve th­ese.

My younger brother was so ob­sessed with want­ing to make money to af­ford a finer life­style that he used to cross the bor­der ev­ery Wed­nes­day and Satur­day to pur­chase lottery tick­ets in South Africa. Of course he never won.

The very con­cept of lottery is the big­gest scam ever per­pe­trated on hu­man­ity. Af­ter spend­ing sub­stan­tial amounts with­out win­ning, he gave up. Not be­fore my mother had con­demned him with her peren­nial wis­dom and wit.

“There is no sub­sti­tute for hard work. If you want to live like a King, work like a bloody slave. If you want the finer things in life, ac­cu­mu­late the wealth to af­ford them. If you want to ac­cu­mu­late the wealth, work hard, be in­no­va­tive, be wise, use your brain,” opined my mother.

My mother is in­deed a woman of peren­nial wis­dom. Even though she is not well ed­u­cated, she has a good grasp of rudi­men­tary eco­nom­ics.

“For you to earn value, you must cre­ate the value first. For you to cre­ate the value, you must use your brain,” she has of­ten said.

Let’s take the ex­am­ple of one young Amer­i­can man who has changed the world; Mark Zucker­berg. From a tiny bed of his Univer­sity dor­mi­tory, he came up with a very sim­ple idea of con­nect­ing the world. Play­ing with his lap­top, he cre­ated sev­eral dots to­gether and de­vised a sim­ple scheme of en­abling long lost friends to reestab­lish re­la­tions. The world is now over­whelmed with this sim­ple con­cept. From his dor­mi­tory bed, Zucker­berg cre­ated value. His Face­book em­pire is now worth nearly $450 bil­lion, the third largest com­pany in the world af­ter Ap­ple and Exxon Mo­bile. This is just an ex­am­ple. I am not say­ing lets as­pire to this level. It won’t hap­pen. Af­ter all, our oc­cu­pa­tion is pol­i­tics.

I am just us­ing Zucker­berg as an ex­am­ple to il­lus­trate my mother’s sim­ple wis­dom; for you to earn value, you have to cre­ate value or be part of a process of cre­at­ing value.

If you wake up ev­ery day to go and toil in a Chi­nese-owned fac­tory in the in­dus­trial area, you are at least cre­at­ing value. The gar­ments that you pro­duce bear some value to those who buy them and com­pen­sate you and your fac­tory for your sweat. In a nut­shell, we cre­ate wealth for our­selves by pro­duc­ing goods and ser­vices of value to oth­ers who buy them. This is sim­ple Sotho­nomics that a herd boy in the moun­tains should un­der­stand. By rear­ing his sheep and goats, he is cre­at­ing value. The goats and sheep will be sold to gen­er­ate money from which the herd boy’s part wages will come from. Of course the money gen­er­ated by the fac­tory worker or herd boy is never enough to af­ford them caviar, but it might be enough to guar­an­tee them a liv­ing, no mat­ter how mod­est.

What I can never un­der­stand are the hordes of peo­ple who be­lieve they can gen­er­ate wealth with­out a sweat but by sim­ply join­ing a scheme in which they are en­cour­aged to de­posit cash to one an­other with a prom­ise of 30 per­cent RO1 (Re­turn on In­vest­ment).

In a nut­shell, I can never un­der­stand any­one who signs up to a scheme as crooked, silly, stupid and plain fool­ish as this MMM Global non­sense.

Based on the cur­rent pop­u­lar­ity of MMM Global, we clearly still haven’t learnt any lessons about such scams. Scru­ta­tor er­ro­neously thought that af­ter the MKM saga, which left so many of our friends, fam­ily, col­leagues and neigh­bours high and dry, with some of them even be­ing ru­ined fi­nan­cially, we would have been bet­ter able to re­sist the lies of the scam­mers who run th­ese schemes.

But alas, we had Ba­sotho spew­ing vit­riol at the Cen­tral Bank of Le­sotho (CBL) and Consumer Pro­tec­tion As­so­ci­a­tion (CPA) for con­demn­ing MMM Global. The CBL and CPA had rightly warned that like all Ponzi scheme bub­bles, MMM Global would burst sooner rather than later.

The warn­ing was cer­tainly not idle con­sid- er­ing that the scheme’s founder, Sergey Mavrodi, used it to de­fraud Rus­sian in­vestors in the 1990s of tens of mil­lions of mal­oti be­fore be­ing caught, con­victed and jailed for fourand-a-half years. Even though Mavrodi was im­pris­oned for de­fraud­ing 10 000 in­vestors specif­i­cally, in­ter­na­tional press re­ports say more than 15 mil­lion Rus­sians suf­fered and went bank­rupt from deal­ing with him.

How­ever, some sup­port­ers of MMM Global were so in­censed by the warn­ing that they hurled ex­ple­tives at the CBL and CPA on so­cial me­dia, and even ac­cused the two agen­cies of con­spir­ing to deny them of the “riches” that would em­anate from the scheme.

One ei­ther must be an ig­no­ra­mus to be­lieve that they are go­ing to score riches through a Ponzi scheme like MMM Global.

Typ­i­cally with such du­bi­ous schemes, there is no con­vinc­ing ex­pla­na­tion of how the money mag­i­cally in­creases in value by 30 per­cent ev­ery month? Clearly this is a Ponzi scheme, no dif­fer­ent to oth­ers like MKM. The money that some peo­ple re­ceive is just com­ing from the money paid by later join­ers. There are cer­tainly no prof­its be­ing made, no value be­ing cre­ated, but just money flow­ing from one vic­tim to an­other and a crook run­ning the whole op­er­a­tion from a se­cret lo­ca­tion.

It came as no sur­prise, there­fore, for Scru­ta­tor to hear that Mavrodi was re­port­edly on the run af­ter do­ing what he does best; con peo­ple and split af­ter mak­ing his prof­its. Given the gulli­bil­ity of some of us, you might find an MKM vic­tim also join­ing the MMM Global scam. In that case, Scru­ta­tor would have no choice but say they would have got­ten their just deserts if they were swin­dled again.

Here is a time old rule: If it seems too good to be true, then it cer­tainly is too good to be true. MMM Global shows all the signs.

There is a rea­son peo­ple like Mavrodi tar­get poor coun­tries. They know that a lot of peo­ple don’t want to get off their back­side and ac­tu­ally work for a liv­ing. The so-called “mir­a­cle prophets” who have be­come so pop­u­lar in Africa also use the same trick. They say if you “seed” for the “man of God” to buy a new Bent­ley or pri­vate jet, then show­ers of bless­ings will fall on you.

The MKM de­ba­cle should have taught us that in­vest­ments typ­i­cally grow slowly and steadily, if you are dis­ci­plined, and that enor­mous growth is a myth. Hard work and in­no­va­tion is the way to go and not th­ese get-rich-quick schemes. The sooner we learn that, the ear­lier we will start mak­ing progress as a na­tion.

At least from the stand­point of pyra­mid schemes, MKM can be said to have been bet­ter. Its pro­mot­ers were at least try­ing to cre­ate value. Pool­ing re­sources for in­vest­ment, buy­ing and de­vel­op­ing prop­er­ties. Their gen­e­sis of their Ponzi fail­ure was to prom­ise un­sus­tain­able re­turns for in­vestors.

Based on the in­for­ma­tion pro­vided on the web­site, MMM fol­lows a clas­sic pyra­mid struc­ture. The par­tic­i­pants de­rive their in­come or re­turns pri­mar­ily for the re­cruit­ment of new mem­bers. In other words, the re­turns are not based on in­vest­ments or the sell­ing of any prod­uct or cre­ation of any value, but on money paid by new peo­ple join­ing. The phi­los­o­phy is that you of­fer as­sis­tance by pay­ing oth­ers be­fore oth­ers pay you for your in­vest­ment in re­turn. Through bro­ker­age by MKM you are di­rected to de­posit money to an­other per­son. The longer you keep it the more the in­ter­est. When your pay­back time is due, other peo­ple in the pyra­mid struc­ture are mo­bilised to pay you in­clud­ing your in­ter­est. What Twad­dle is this? In the mean­time no value is cre­ated. So what’s the ba­sis of the 30 per­cent ROE?

Iam dis­ap­pointed that many of my Ba­sotho coun­try­men have fallen for this crap. A friend of mine was so happy this week that he had earned 300 in­ter­est from the R1000 he had in­vested. The trail will con­tinue un­til my friend in­vests R50 000 or even more. He may even sell his house to gain more be­fore every­thing col­lapses around him.

Even news that Mavrodi is now in hid­ing af­ter the col­lapse of some of his schemes un­der the MMM Global fraud seems to have done lit­tle to de­ter my fel­low wise Ba­sotho.

The good thing at least is that Mavrodi would never take his schemes to Sil­li­con Val­ley, where the Zucker­bergs and other young­sters have made bil­lions sim­ply out of us­ing their brains to cre­ate value.

He will never take his schemes to Italy, Ger­man and France the re­spec­tive cre­ators of Fiat, Mercedes and Peu­geot. He will take his schemes to places where peo­ple sit on their brains and hope that wealth will sim­ply drop from the skies.

Th­ese are the most gullible of the gullible. Luck­ily Scru­ta­tor is not among them. Mavrodi and his MMM Global rep­re­sent the right stuff for id­iots. For us to cre­ate wealth, let’s get off our big butts, let’s think and cre­ate real value my fel­low Ba­sotho. And if ever Mavrodi vis­its us here, let’s tie him to a tree, pour petrol on him and burn him alive


MMM Global founder Sergei Mavrodi.

Newspapers in English

Newspapers from Lesotho

© PressReader. All rights reserved.