CBL must move swiftly against Ponzi pro­ject

Lesotho Times - - Leader -

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.

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