Windhoek — Pyramid schemes are very common and come in so many forms that they may be difficult to recognize immediately. However, they all promise consumers or investors large profits based primarily on recruiting others to join their programme, not based on profits from any real investment or real sale of goods to the public.
The Bank of Namibia has probed various schemes in the recent past and last year it completed an investigation of some business models whose activities have been found to be in contravention of section 55A (1) of the Banking Institutions Act, 1998 (Act No. 2 of 1998), as amended.
The Bank of Namibia has declared Gold Prime Time, U-Care and Penta Stream Investments (under the concept of Pin Code & Penta Gold), illegal since their activities were found to be in contravention of section 55A (1) of the Banking Institutions Act, 1998 (Act No. 2 of 1998), as amended.
The Bank of Namibia gave directives to these business entities to repay money to the rightful owners who did not receive any promised reward within 14 days. The bank has also requested members of the public who became victims of such schemes to register their particulars in order for the bank to ensure that proper facilitation of refunds by these pyramid schemes happen.
"Gold Prime Time and Penta Streams Investments have responded positively to the directive and promised to pay back monies to the rightful owners," said Ndangi Katoma, the Bank's Director of Strategic Communications and Financial Sector Development. However, U-Care indicated that they will not honour the directive and opted to settle the dispute in a court of law.
Thus far, only 15 people are alleged to have received re-payment from Penta Stream Investments while none of the other two schemes reported any repayments made as directed. This primarily happened due to the fact that Penta Stream Investments initiated their repayment plans without presenting the Bank of Namibia with a detailed repayment schedule, on how and how much of the refunds they will have to execute.
"Consequently, this resulted in some delays in effecting the repayments. Given the above, the bank has resolved to proceed with legal action against the three pyramid schemes in accordance with the provisions of the Banking Institutions Act of 1998, as amended," said Katoma.
There are scores of Namibians who lost money through various illegal pyramid schemes. The public is said to have paid approximately N$2.8 million to the three schemes alone. However, this amount is expected to increase as members of the public are still registering their details with the Bank of Namibia.