MUSCAT // When each of the 20 people were swindled out of 1,500 rials (Dh14,300) by a jomeea financing scheme, they had no option but to report the "crime" to the police. Even before they made the complaint, they knew they had little hope of getting their money back.
Jomeea is a tradition practised in Omani communities to raise funds for individuals to finance the purchase of a property, such as a farm, or the construction of a house. Each member of the jomeea, on a rotational basis, collects a fixed amount of money from the other members each month. Members in a jomeea group can be as few as five but regularly number more than 30. The amount of money changing hands ranges from 50 rials to 2,000 rials a month, depending on the financial status of participants. Each member receives the amount he contributed when his turn comes. The person receiving the money continues to contribute until the round ends.
Jomeeas are completely legal, though susceptible to dishonest members, and frowned upon by bankers here. Hundreds of people across the country have been swindled over the years, but there are no statistics because the jomeea is not an officially sanctioned practice and the government has repeatedly said it does not get involved in private financial arrangements. The Central Bank of Oman, in a recent statement, refused to regulate the practice, saying it was an arrangement incompatible with standard international financial practices.
For Mohammed Shaikhan, 36, a mechanical engineer, the jomeea due would have been 28,500 rials with which he planned to partly finance his house in Muscat. Mr Shaikhan said a member of his jomeea left the country for Africa after collecting the money in his round - and never returned. "The man just disappeared with our money and we believe he is out of the country. I suspect he is somewhere in Africa, where he cannot be found," Mr Sheikhan said. "It is embarrassing to talk about it that 20 people can be swindled by a seemingly nice man."
Mr Shaikhan and his friends' case was rejected by the court since there was nothing in writing about the arrangement. The judge said that the matter "must be solved amicably between the concerned members of the jomeea, like it always has been over the years". They are not the only ones whose cases have been rejected by the courts. Cheated people do not usually talk about their predicament because of the shame.
In rare circumstances, courts have convicted people for defrauding their jomeea partners. Laila Moosawi, a nurse, who was swindled out of more than 3,200 rials by a jomeea, said she and other members successfully prosecuted the man responsible for the crime, but she did not see a penny of her investment. "Though we had nothing in writing between us, we paid by cheques and the bank easily traced the money in his account when it was his turn to receive the cash. We managed to put him in prison on that basis. It helped because he was in the country and admitted what he had done," Mrs Moosawi said. "We did not get our money because the criminal said that he spent it. Though we had the satisfaction of seeing him get a two-year sentence, we are severely short of cash. The man will come out eventually from jail to spend the 16,000 rials."
The man said he spent it, although it is possible he had secreted it away. Failure to pay back the money factored into his sentence. In many instances of jomeea fraud, swindlers stop paying once they receive their portion of the money and either disappear or cook up stories of their houses being burgled. Despite the risk involved, jomeea financing remains prevalent. "Taking a bank loan, according to Islam is haram [forbidden] because of the reebah [interest]. Jomeea offers people interest-free financing, which gives them assurance that the money they receive is not tainted with usury," Jalil al Badai, a tribal elder, said.
There are no Islamic banks in Oman. Deeply religious Omanis decline interest on their savings and give instructions to their bank managers that the interest be given to charity. They almost never take bank loans, and this is why the practice survives. Not all people who participate in a jomeea group join because of their religiosity. Some do it to avoid paying steep interest on bank loans. Omani banks at the moment charge up to eight per cent interest per year.
Mr al Badai has written to the Central Bank for jomeea financing to be recognised by the government and regulated by its financial laws. He has not given up hope that the government will one day regulate jomeea. "This is not Islamic finance nor is it the conventional western one that we see being practised. Jomeea is an Omani tradition to raise money for the community. It has been practised for centuries and only in the last 10 years do we see people with bad intentions joining. I think the Central Bank must play its role to encourage this tradition from going out of extinction," Mr al Badai said.
Financial analysts said the local banks' shareholders saw jomeea as a threat to their business, and some believe that this was the reason it would never be regulated. "If jomeea is accepted and regulated by the government, then that may well restrict the profitability of the local banks in the long run," Jassim Battash, a financial analyst with Seeb Investment Services, said. According to Central Bank statistics, more than 70 per cent of the credit sanctioned by local banks are classified as personal loans.