Mauritius | Finances

May 19, 2013

Mr. Yusuf Mohamed: "The Ponzi System Is Not Illegal"

Mauritian law is silent regarding the Ponzi system says Senior Counsel, Yusuf Mohamed. He argues that companies active in this sector are within the law and do not need a license from the Financial Services Commission (FSC) to operate as it is a civil contract between two parties and the investors do not perceive interest but 'dividends'.

For Mr Yusuf Mohamed there is nothing illegal if companies invest the money obtained 'in good faith'. He noted that police accused his client Bhimla Ramloll of 'conspiracy to defraud' and 'financial institution operating without license from FSC', which are only temporary loads. The police must be able to prove the charges, he said. Other companies can operate in the same way as long as their purpose is not to steal their investors, said the lawyer.

The scammers are very smart

Mr. Yusuf Mohamed says that his "knowledge, no complaint has been registered against my client."

For the economist Chandan Jankee there are several flaws in the Mauritian law are exploited by unscrupulous manager fictitious companies in the financial sector. He noted an increase in the number of companies operating in the Ponzi system. The increase, he said, is the result of difficult access to bank finances.

Banks offer low interest rates with very high bank charges. Number of people are tempted by the easy money and did not hesitate to invest huge sums in return for receiving 'dividends' can vary between 5% and 15% monthly highlights economist.

Often scammers are very smart and grab the names of well-placed people or govern to lure investors. They usually attract investors by offering them higher that any legitimate business can offer returns. He blames the government and society to the current situation.

According to him, there is too much corruption and the law is not sufficiently severe. There is no follow-up regarding large cash withdrawals by individuals. This could have prevented many people to invest in the system 'Ponzi'.

Since the outbreak of the Whitedot case, the Central CID opened several investigations into ten companies operating in the financial sector. The police arrested sixty people involved in these cases. To this day the police made the seizure of approximately Rs 130 M.

 

Text by Le Matinal
 

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