Shady in­vest­ment scheme di­rec­tors van­ish

The Herald (Zimbabwe) - - Front Page - In­ves­ti­ga­tions Ed­i­tor

PO­LICE are hunt­ing down three di­rec­tors of KWD Dig­i­tal Mar­ket­ing, a com­pany run­ning a sus­pected ponzi scheme in Harare, al­though two are thought to have al­ready fled to South Africa af­ter tak­ing in huge sums in US dol­lar cash from gullible peo­ple hop­ing to dou­ble their money in four weeks.

Scores of peo­ple have over the past weeks been flock­ing to 147 Free­dom Le­gacy Way (formerly Bor­row­dale Road) in Gun­hill to de­posit up to US$10 000 each af­ter be­ing promised that they would re­ceive twice as much back af­ter four weeks, some­thing that is im­pos­si­ble with nor­mal in­vest­ment ac­tiv­ity.

De­tec­tives, work­ing with the Re­serve Bank of Zim­babwe (RBZ), have launched an in­ves­ti­ga­tion into the op­er­a­tion, with ini­tial charges be­ing con­tra­ven­ing the Bank­ing Act as they were of­fer­ing bank­ing ser­vices with­out a li­cence, but if, as sus­pected, the di­rec­tors were sim­ply pay­ing off orig­i­nal in­vestors with money brought by new in­vestors, while tak­ing a large cut for them­selves, then they could face fraud charges as well.

KWD em­ploy­ees, in­clud­ing man­agers, were picked up by the po­lice for ques­tion­ing on Thurs­day, re­sult­ing in the clo­sure of the of­fices and the start of the man­hunt for the di­rec­tors.

Na­tional po­lice spokesper­son As­sis­tant Com­mis­sioner Paul Ny­athi said two of the di­rec­tors are re­port­edly in South Africa while the other one, Mpumelelo Dube, who was lo­cal, is nowhere to be found.

“I can con­firm that we are look­ing for Mpumelelo Dube, who is a di­rec­tor of a com­pany in­volved in the Bor­row­dale Road in­vest­ment. We seek to in­ter­view him re­gard­ing the op­er­a­tions of the com­pany but we are fail­ing to lo­cate him,” he said.

Asst Comm Ny­athi said two other di­rec­tors were re­port­edly in South Africa and po­lice were also keen to in­ter­view them in con­nec­tion with the same case.

RBZ has is­sued a state­ment say­ing KWD and another com­pany op­er­at­ing along Law­son Av­enue in Harare, Bev­ern Cap­i­tal, were not au­tho­rised by the cen­tral bank to of­fer bank­ing ser­vices tak­ing de­posits from the pub­lic.

In­vest­ment schemes of that nature re­quire a bank­ing li­cence and the bank’s Fi­nan­cial In­tel­li­gence Unit and other law en­force­ment agents have since launched in­ves­ti­ga­tions into both en­ti­ties.

The cen­tral bank has urged po­ten­tial in­vestors to carry out a due dili­gence ex­er­cise be­fore giv­ing away their money.

“In the past, the bank has is­sued press state­ments warn­ing the pub­lic not to fall prey to pyra­mid and ponzi schemes that come in var­i­ous forms and guises, lur­ing peo­ple to in­vest their hard-earned money, promis­ing un­re­al­is­tic and un­sus­tain­able in­vest­ment re­turns.

“Th­ese are fraud­u­lent in­vest­ment schemes un­der which ex­ist­ing in­vestors are paid re­turns, not from gen­uine mar­ket in­vest­ment of their funds, but from con­tri­bu­tions made by new in­vestors, un­til a point when the scheme can no longer at­tract new in­vestors and col­lapses.

“Mem­bers of the pub­lic should al­ways do ba­sic due dili­gence be­fore they are hood­winked to part with their hard-earned money. No one should ever con­duct fi­nan­cial busi­ness with an in­sti­tu­tion un­til they have con­firmed its reg­u­la­tory sta­tus.

“When some­one prom­ises you un­re­al­is­ti­cally lu­cra­tive fi­nan­cial re­turns within a short pe­riod of time, it is likely to be a fraud­u­lent scheme and fur­ther due dili­gence is al­ways ad­vis­able, in­clud­ing check­ing with the au­thor­i­ties,” reads the state­ment.

Lawyers and ex­perts warn the schemes are ei­ther a con, since there is no in­vest­ment that can dou­ble the value of for­eign cur­rency in a

few weeks, or are the start of Ponzi schemes, where early in­vestors are paid out from the money re­ceived from newer in­vestors un­til the whole scheme crashes.

Both schemes are at­tract­ing cross bor­der traders and money chang­ers whose busi­nesses were af­fected by Covid-19.

The deal­ers’ premises are not la­belled and there are no bill­boards ad­ver­tis­ing their busi­nesses.

There has been scarce park­ing for ve­hi­cles at the premises where the own­ers were try­ing their luck on in­stant cash

The daily crowds at KWD were seen jostling to be listed among the first 300 peo­ple who are served daily with hun­dreds go­ing back home grum­bling af­ter fail­ing to make it into the top 300.

Most of the po­ten­tial in­vestors do not know the ac­tual name of the com­pany they deal with.

The forms they fill in be­fore giv­ing away their money, are writ­ten in Ara­bic, which can­not be un­der­stood by the ma­jor­ity of Zim­bab­weans.

Through­out a week-long in­ves­ti­ga­tion, The Her­ald estab­lished that none of the in­vestors were aware of the name of the com­pany.

Some said it was “Kuwait Di­nar” oth­ers said Kuwait Di­nar Africa while oth­ers only called it “KDW”.

None of those in­ter­viewed had both­ered to check on the own­er­ship of the com­pany de­spite hav­ing the zeal to in­vest.

The “agree­ment”, ac­cord­ing to le­gal ex­perts, does not pro­tect the in­vestors in the event of col­lapse of busi­ness or the dis­ap­pear­ance of the com­pany own­ers.

Top Harare lawyer Mr Welling­ton Pasi­pan­odya de­scribed the doc­u­ment as “a vol­un­tary as­sump­tion of risk” on the part of the po­ten­tial in­vestors.

At Bev­ern Cap­i­tal in Mil­ton Park, mo­torists park their ve­hi­cles at Blak­iston School car park be­fore walk­ing in a sin­gle file to the premises along Law­son Av­enue. The com­pany ac­cepts min­i­mum de­posit of US$100 and each in­vestor is ex­pected to pay an ad­min­is­tra­tion fee of US$10 for the first US$1 000.

Af­ter six weeks, the in­vestors are promised 50 per­cent in­ter­est.

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