Basotho have vowed to continue “investing” in MMM Global—a pyramid scheme which has taken Lesotho by storm but has since been condemned by the Central Bank of Lesotho (CBL) and Consumer Protection Association (CPA).
MMM Global promises its members unrealistic returns of upwards of 30 percent and bears an uncanny resemblance to MKM, which promised investors unsustainable returns until it went bust in 2007, leaving about 400 000 Basotho high and dry.
However, the depositors argue that MMM Global calls them donors and not investors so the CBL cannot regulate the scheme because there are no returns or profits from donations.
They also argue the CBL cannot control the scheme and call it illegal especially without a central point where transactions are conducted. MMM operates online, making it difficult to track transactions. One registers on its website and is allocated a personal office code which they use to log in.
Investors are then paired with one another and enabled to transfer money to each other. Successful transactions between the anonymous investors are followed by notifications saying the investments would grow by 30 percent monthly.
MMM Global was founded by Sergey Mavrodi—a Russian convicted and jailed for four-and-a-half years for defrauding 10 000 investors through a similar Ponzi scheme in his home country.
But after the CBL warning, Basotho reacted angrily through social media and rallied behind MMM Global, which now has more than eight facebook pages of over one million followers.
Tlady Blankbelly Loliwe Sera, was one of the many Basotho, who vowed to support the scheme and wrote on facebook: “What is a bank? A bank is an institution that takes all money from society and keeps it behind glass doors. When you want your money, you have to go through tough questions. They borrow you your money so that you go and hunt more that is still left in society and bring it back to them, but MMM is the solution. MMM takes money out of the banks and it rotates within society. We start to see houses built, we start to see kids go to school, we start seeing cars, we start to see businesses grow, not just bank buildings!
Another facebook user, Tsietsi Mathang, who also feels strongly about MMM Global, posted: “The MMM saga; Well, it’s a threat! Lesotho’s economic history has really never seen either a boom or a slump. Basotho have always been modern-day slaves since the start of organized civil society in the early 1900s.
“We (our leaders) have never really been able to draw a line between the aspect of politics and economy. This led to a vicious cycle of economic segregation whereby those elected into power manipulate the system to their benefit.
“This would mean our economy virtually had no private sector and the rest of the cashflow belonged to the ‘public sector’. MMM comes through, ‘the real public sector’, and tables turn. Now that we are a threat, this is our chance to hit them and hit hard. With that said, the fact that our economy’s development has been ‘purposely’ prohibited from reaching a boom, then maybe it’s time we hit a slump. Destroy what was once built against us and rebuild it into a new Lesotho. Lesotho is turning 50 this year and it should be a turning point for her. I mean, the motherland should be over her mid-life crisis by now!”
On the other hand, callers to different radio programmes alleged bank employees were possible shareholders in such pyramid schemes as they always allowed them to take off and later disown them after they have had their shares back.
But the CBL is still warning Basotho about such schemes, and noted in a statement: “Currently, the public is specifically warned against activities of MMM Global, MMM South Africa, KIPI, World Ventures and other similar schemes.”
The bank has also called the schemes “very old forms of fraud”, “and yet modern technology has significantly increased their potential for harming those who may be lured to invest. The internet, in particular, offers pyramid promoters a multi-lane highway to rapidly attract customers from all over the world. The public is warned that these schemes remain illegal in Lesotho,” adds the CBL statement.