Reserve Bank warns of investment scams

SOUTH Africans should take care when choosing investments that offered large returns within a short period, the SA Reserve Bank has warned.

Many of these lucrative options were scams, bank spokesman Hlengani Mathebula said in Johannesburg yesterday.

Mathebula urged the public to “report any suspected Ponzi or pyramid schemes to the SA Police Service or the SA Reserve Bank.”

Though there were several investigations under way into schemes in KZN and Gauteng in particular, the central bank regarded this as a national problem. “Once you focus on a specific area or name, they move. This is a national issue,” Mathebula said.

In total, the bank had investigated 222 schemes in the past five years. Schemes being probed included Realcor Holdings Pty Ltd, Sharemax Investments, and Ingele Mineral Holdings.

To raise public awareness of the issue, the bank had started a TV, radio and print media campaign with the slogan, ”Beware of oMashayana (con artists).”

Mathebula said thousands of South Africans lost money every year to illegal deposit schemes, known as Ponzi or pyramid schemes. “These schemes hook the public by convincing them of high returns in a short space of time.”

The schemes tended to collapse when they failed to recruit new investors. Particu- larly vulnerable were those who had received bonuses or death benefits, as well as pensioners. Those participating in stokvels, or who had benefited from Road Accident Fund payouts, were also targeted, said Mathebula.

Wealthy people were frequently motivated by greed, while poorer people were ignorant of the risks, he said.

The bank was usually only made aware of such schemes after people had already lost money, he said. – Sapa