Why Nigeria is a scammer’s paradise, by Osmund Agbo
In the aftermath of World War 1, the cost of postage in Italy expressed in United States dollars fell precipitously due to the high rate of inflation in that country. That meant that an international reply coupon (IRC), something that allowed a person in one country to pay for the postage of a reply to a correspondent in another country, could be bought relatively cheaper in Italy and exchanged for US stamps of higher value.
The stamps could then be sold for profit in an arbitrage. Charles Ponzi, an Italian immigrant in America, sold this idea to his clients, making the bogus claim that the net profit on these transactions, after expenses and exchange rates, was in excess of 400 per cent. He was able to convince several of his clients that he would double their investment in just three-months. In fact, he later shortened it to 45 days at 50 per cent interest.
Investors from all over America came beating a path to his door. Of course, Mr Ponzi knew from day one that no such return is even remotely feasible but he understood how to exploit human greed nonetheless.
As with any pyramid scheme, he lured investors by paying profits to earlier investors with funds received from more recent investors. That made his victims believe that profits were coming from legitimate business undertakings, not realizing that the entire scheme was an act of “robbing Peter to pay Paul.” His world came crashing when authorities started to question how he was able to rake in such a huge return at a time when banks were offering just 5 per the return.
This worried his investors, many of whom came to cash out in droves leading to the collapse of the scheme. Charles Ponzi was arrested. He later confessed to his crime and served prison sentence. In the end, he died a miserable man on 18 January 1949, in Rio de Janeiro, Brazil, a place far removed from his home. Though Mr Ponzi had come and gone, his pyramid scheme, now christened Ponzi scheme exploded. It has now become a popular “business model”, gaining new customers (insert victims) every day, all across the world and of course, including Nigeria.
In May 2021, the Economic and Financial Crimes Commission (EFCC) arrested one Amos Olugbenga Olaniyan for allegedly defrauding Nigerians to the tune of approximately 128 million naira.
As the CEO of DHIL Nigeria Limited, he ran a weekly radio program where he promised a monthly 30 per cent returns to anyone willing to invest in his entity called Crime Alert Security Network. In the end, he neither paid any interest nor returned the principal to his clients which included artisans earning daily pay and civil servants living on minimum wage. At the time of his arrest, he was living large and seen in possession of five exotic cars and choice real estate.
It was barely three months after Mr Olaniyan was busted when in September 2021, another 24-year-old Nigerian named Adewale Jayeoba, who owns and operates a company called Wales Kingdom Capital Limited, was also declared wanted by the EFCC. Wale took the game a notch higher and allegedly helped himself with a whopping N935 million in customers’ funds.
Of course, we are pretty familiar with the story of one Phillip Akor, the CEO of Abuja-based Benignant Forte, a criminal enterprise fronted as a real estate investment company. His wedding was over the top and included a splurge in the amount of 4.5 million naira on cake alone, obviously paid for with investors’ money. He had since disappeared without leaving a trace. Stories like these are so commonplace in Nigeria’s crooked investment landscape, causing a crisis of confidence that works against genuine businesses.
The losses incurred in the situations described above though huge, however, pales in comparison to an estimated N18 billion, Nigerians lost to the Russian originated Mavrodi Mundial pyramid scheme within a space of just two-years. Even with the tough economic situation in the country, Nigerians continue to lose billions by the day to these blue-collar criminals. There has to be something in our DNA that renders people susceptible to get-rich-quick scams.
If you have ever thought of victims of Ponzi schemes as a bunch of dim-wits, lacking in brainpower to process facts needed in making sound judgements, think again. You might be totally wrong. It turns out that greed and sleaze, have a way of clouding human sensorium and completely filling our cerebral cortex with a lethal concentration of endorphins.
Or how else to explain that a university professor of repute, would invest his entire life savings in a business that promises a consistent 30 per cent return. Why so gullible? Did he do his research and what happened to due diligence? Where in the world is that even remotely possible?
Every major problem plaguing the Nigerian society at every level, public and private could be traced to a common denominator, namely; our poor value system: the type that celebrates quick wealth without work and glorifies ostentation.
A society of everything goes where the end is what justifies the means. That explains why Nigeria is world-famous as a Mecca for advance-free fraud syndicates. We have since defaulted to a Hobbesian state of nature where there are no enforceable criteria of right and wrong; where life is “nasty, brutish and short.” Shouldn’t we know better and do better?
If someone pitches to you this revolutionary, one-of-a-kind business idea, have your guards up and ask questions. Every once in a while, a genius is born but the fact remains that there is hardly a monopoly of wisdom. Oftentimes, someone else may be known or have even tried that same idea if indeed it’s that good.
We should cultivate the habit of always seeking out the opinion of one or two persons that we trust when investing in a new business venture. It’s a little harder for two to be caught in the euphoria of the moment. Forget the idea of taking the world by storm when the windfall drops. If you are lucky to have business mentors willing to take you in their wings, by all means, grab them and follow their leads.
For aspiring scammers, think about the fate of Charles Ponzi, Bernie Madoff and what became the lots of fugitives like Olugbenga Olaniyan, Adewale Jayeoba and Phillip Akobi. Decide the kind of life you desire to live and ask yourselves if one or two years of luxury offered by these schemes is worth a lifetime of misery.
Above all, our youngsters need to realize that there are no such things as quick money, except when the subject is a criminal or a Nigerian politician. Wealth takes time to build. We need to be constantly reminded of the golden rule that, in business as in life, if it sounds too good to be true, it probably isn’t true.
Dr Agbo, a Public Affairs analyst is the coordinator of African Center for Transparency and Convener of Save Nigeria Project can be reached via Email: Eagleosmund@yahoo.com
Why Nigeria is a scammer’s paradise, by Osmund Agbo