Ponzi schemes, amnesia and the laws of gold

“Advice is one thing that is freely given away, but watch that you only take what is worth having.” – George S. Clason,

George Clason’s book, The Richest Man in Babylon (1926), remains one of the most auspicious books published on investments and money making. After this, several other groundbreaking books on investments have come, from Napoleon Hills’, “Think and Grow Rich” (1937) to Robert Kiyosaki’s “Rich Dad, Poor Dad” (1997). The central theses of these are; laws of good investment, entrepreneurship, hard work, creative thinking, right planning in making money, and so on. Time-honoured laws have been gleaned from these writings which are even taught in business schools and entrepreneurial classes. However, the more economic circumstances changed, the more there were newer ways of generating money. While some are good, others could be termed bad; while some are ethical, others are unethical. As economic conditions dampened, newer ways arose. Different schemes are beginning to thrive. In today’s Nigeria, there is the rise of Ponzi schemes like never before. Ponzi has taken over the cyberspace with an aggressive popularity and a mouth-watering pledge that any capital put into it would receive an astronomical Return On Investment (ROI). This no doubt would be a soothing balm and a needed magical wand in today’s scorching recession. The interesting part is that the converts are on a geometric rise more than any religious group can claim proselytization and the new followers know little or nothing of the perils of this venture or of Ponzi schemes.

According to the leading online financial dictionary, Investopedia, a Ponzi scheme is, “a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier backers. For both Ponzi schemes and pyramid schemes, eventually there isn’t enough money to go around as the schemes unravel.” Ponzi is named after the first notorious scheme orchestrated by Charles Ponzi in 1919 which eventually crashed after a year. In Nigeria, from late 2015 our public space was awash with different Ponzi schemes. In 2016 a new Ponzi called MMM launched a website to target the Nigerian audience.

“MMM was a Russian company that perpetuated one of the world’s largest Ponzi schemes of all time. It was established in 1989 by Sergei Mavrodi, his brother Vyacheslav Mavrodi and Olga Melnikova. The name of the company was taken from the first letters of the three founders’ surname” and the acronym MMM stands for Mavrodi Mondial Moneybox. Since then, other Ponzi sites have emerged. In fact, 2016 can be called the rise of Ponzi schemes in Nigeria.

In Nigeria, the Central Bank of Nigeria (CBN) has warned consumers not to deposit money in any institution that is not insured by the Nigeria Deposit Insurance Corporation (NDIC) as part of a warning against the rise of MMM and other Ponzi schemes. This warning followed by fierce resistance. Then, the house of representatives ordered a probe into it (MMM) and hell was let loose on the cyberspace. In fact, a number of new Ponzis sprang up ranging from: Ultimate Cylcer which website is ranked the 15th most visited site in Nigeria. There are also Givers Forum whose website was registered only in October 2016 and has become the 47th most visited site in Nigeria. There is also Zar Fund, Icharity, Crow Rising, Get Help Worldwide, and so on. The philosophy of these Ponzi schemes is the same.

The fast growth of these schemes in Nigeria tells us much about Nigerians and their mentality. First, it tells us that we are a people who want to make profit from not working. The mentality of profit without work is not only debasing, it is one of the secrets of financial penury. It is the mentality of seeking a free lunch. Robert Greene’s 40th law in his 48 Laws of power is “despise the free lunch.” It tells us that as a people, for the most, we can gladly and unscrupulously take that which we have not invested in. Once, a man came to me to appeal for assistance and seeing that he was apparently not physically challenged, I offered to give him a job so as to pay him; he walked away sorrowfully like the Biblical Rich Man from Jesus. This explains that there are people who are neck-deep into a give-me-without-work mentality.

Further, Ponzi opens up the fact that we are a nation suffering from acute amnesia. Bishop Hassan Kukah argues that Nigeria suffers from a chronic lack of a sense of history that is not pardonable. In the 90s, there were different and domestic forms of Ponzi in Nigeria. In Benin then, there were “Planwell”, “Goldland”, “Arise and Shine”, and others. There were many others in some other states. However, because Ponzi Schemes thrive as long as there is cash flow, they all crashed, plunging many people into untold and unprecedented hardship and misfortune. The rise of these new Ponzi in Nigeria has come with the same content and new label and we have just forgotten to remember our history on this. We have forgotten to remember the many lotto terminals that have led many pensioners to suicide. We have forgotten the ghosts of coupon centres due to poor patronage and lack of cash flow or winning chances. We have forgotten cases of suicide due to mammoth losses. Yet, some plunge their whole fortune into it. The addictive part of all these is simple, “we don’t quit while we are ahead.”

Be that as it may, for those who are literate or learned enough, they know that since there is no financial base and collateral, for every beneficiary, there is a looser and someone suffers.

Ponzi Schemes tells that Nigerians are great risk takers. It tells us that the harsh economic situations can make us do anything and we can justify it. The basis of entrepreneurship and income generation are frugality, discipline, hard work and wise investment. It is expedient that all who want to venture into investment should venture wisely.

Clason in The Richest man in Babylon, gives five laws of gold. While some of these laws have been contested and reconstructed, it is appropriate to recall the wisdom of some of these laws. Law 3 has it that, “Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.” Law 4 maintains: “ Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those who are skilled in its keep” and law 5 holds, “ Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.”

• Ikhianosime is a priest of the Catholic Diocese of Auchi.