Ponzi Scheme Takes Millions From Rural Myanmar

In the wake of My­anmar’s most wide­spread and finan­cially devastating ‘Ponzi scheme,’ millions of dollars have been lost, thousands of people de­frauded, and a myriad of ministries left pointing fingers.

In December 2016, Sax­on Capital Limited (SCL) began selling shares to residents of Pyay, Bago, Mawlamyine, and other townships promising an 80 percent return on their investment.

Though they registered as a public company in Yangon with the Direc­torate of Investment and Company Administration (DICA) in January, by mid-March their offices were vacant and senior management had disap­peared without a trace.

On March 24, the Bago Ministry of Finance in­formed the Union Min­istry of Planning and Fi­nance that something was amiss and a federal inves­tigation was promptly re­quired.

The Ministry however, took two months to alert the Ministry of Home Af­fairs, the Central Bank of Myanmar, and the Se­curities and Exchange Commission of Myanmar (SECM), which only cumu­lated in the latter issuing a June 27 warning through state newspapers in Yan­gon, Mandalay, Ayeyar­wady and Tanintharyi.

According to a report by Frontier Myanmar, rather than a coordinated inves­tigation by the Ministry of Planning and Finance’s Financial Regulatory De­partment, “investigations by separate ministries and agencies have been conducted with little or no coordination, resulting in overlap and unneces­sary delays.”

In an effort to educate the public on investing and harms of doing so through social media, on August 14 DICA released a list of 55 verified com­panies legally registered to sell shares and deemed safe for investment.

This list includes Yan­gon Stock Exchange listed companies, state-owned companies, and public private partnerships.

Ponzi schemes are not new to Myanmar. Accord­ing the Myanmar Times, in 2015 an outlet called Global Growth Company Limited ran an illegal fu­tures brokering business promised investment in the futures market but after collecting funds, dis­appeared without repay­ing investors.

Before the creation of the YSX, approximately 200 registered companies sold shares and did so di­rectly to investors, which experts say promoted a climate of deregulation and informality that fa­cilitated illegal scams and fraud.

Source: Myanmar Business Today