x Abu Dhabi, UAETuesday 16 January 2018

Colombians riot over money lost in pyramid schemes

Thousands of Colombians rioted throughout the country after being defrauded in a series of pyramid schemes.

BOGOTA // Thousands of Colombians rioted around the country yesterday, demanding their money back after being defrauded in a series of pyramid schemes and then mocked in some cases by those who took their cash. In some of the nine cities where the protests erupted, police used batons and tear gas to subdue angry mobs. In recent months, a number of phoney loan companies have vanished along with millions of dollars in deposits after promising interest rates of up to 150 per cent. Regular savings accounts are unpopular in Colombia due to high banking fees.

'Dear investors, thanks for trusting us and depositing your money,' read a note posted on the door of a company in the southwestern province of Cauca after its owners disappeared. 'Now, for being stupid and believing in financial witchcraft, you will have to work for your money', it said, prompting depositors to storm the building, wreck the companys offices and loot its computer equipment and furniture.

Some left the scene bloodied after confronting the police. The president Alvaro Uribe called on Congress to pass a law that would penalise the swindlers and the vice president Francisco Santos warned people to avoid the schemes, which have mushroomed on promises of easy money. "When someone promises to double your money in six months they are trying to trick you", Mr Santos said. "Nothing is free in this world and that is not going to change."

Police arrested a group of loan managers as they tried to flee the central city of Pereira with four suitcases stuffed with cash. They were charged with bribery after offering money to the officers in exchange for their freedom. Pyramid scams are common in the developing world where many people have little financial sophistication. The collapse in 1997 of pyramid investment schemes in Albania produced losses of US$2 billion and led to anarchy until an Italian-led European force restored order.

Many Colombians are feeling squeezed as the world financial crisis weighs on the Andean countrys economy, which the central bank says may grow by only 1 per cent next year after a boom driven by record foreign direct investment. Uribe remains popular for driving leftist rebels back into the jungles after decades of fighting that once encroached on the countrys urban industrial areas. * Reuters