Cape Town – Stokvel members are being targeted to join the alleged pyramid scheme MMM, according to Andile Mazwai, CEO of the National Stokvel Association of SA (Nasasa).
“They (MMM) have been going around town calling themselves either a stokvel or telling people that their operation is like that of a stokvel,” Mazwai told Fin24 on Friday.
Asked what the difference between MMM and a stokvel is, Mazwai said: “One (stokvels) is lawful and empowering and the other (MMM) is unlawful and ultimately destroys peoples’ savings.
“A stokvel is a common bond among individuals, who save their money for a common purpose. They may save their money to go on holiday, they may save their money to buy groceries at the end of the year, (or) they may raise money for funeral services in times of bereavement.
“It is money that goes into a common pot,” he said. “Everybody knows what it is and it is primarily a savings service or product.”
MMM, he said, is a pyramid scheme which “promises people returns, but the problem with those returns is that they’ve got them from the capital that other people put in”.
“So, it’s not the harvest… but rather the seed that people are getting paid out of,” he said. “Pyramid schemes… masquerade (and) say you and I are not clever enough to understand the genius of this thing; just trust it and you will see it works, the proof is in the pudding.
“The unfortunate thing is that it is not a stokvel,” he said.
PODCAST: Interview with Nasasa CEO Andile Mazwai
Another alleged pyramid scheme that portrays itself as a stokvel is Kipi. Members have complained that it hasn’t paid out money to its members since December 2015. Its website directs its members to MMM, which it markets as a “stockvel” (sic).
Mazwai said while members are being targeted within the stokvel groups, he didn’t know whether those funds are necessarily being pulled out of stokvels or if it’s new money going in.
Nasasa’s call centre has received calls from stokvel members querying schemes like MMM, said Mazwai.
“Often when people are approached… in a stokvel setting, … the recruiter may say: ‘look, instead of putting your money here with each other and it doesn’t grow, rather divert that money into this scheme’.”
The Hawks told Fin24 on Friday that its probe into MMM will soon advance from the cybercrime and digital forensic laboratory to the Commercial Crime Unit, following an initial review of the scheme by the National Consumer Commission in 2015.
Asked if authorities are dragging their feet with the investigation, Mazwai said: “People who run them are smart, they understand the law, and they typically set it up just so that it pushes the envelope… and it can be difficult for the authorities to catch up, especially when it’s a pyramid scheme without a central bank account.
“It’s a difficult fight,” he said. “Take anything that is otherwise marginal. Take tobacco, take alcohol: it’s easy enough to change the law and say: ‘thou shalt not smoke’, but the people that smoke love it, and they are the ones that come back to you.
“(They will tell you): ‘We love our smoking, we love our drinking, we love our gambling. Leave us alone. We’re adults, we know what we’re doing. We don’t need you to play nanny state to us.’
“That example can be extended all the way to drug users. You may go after drug dealers, but it’s the drug users who say: ‘I got it, I know what I’m doing. Leave me alone.’
“In many ways, pyramids can work that way. If we classed people (with)… those who genuinely believe it is legitimate, of course they would be upset with you. You’re stopping a good thing. Then there are those who actually do know this thing is a pyramid and equally, they will be upset with you.
“Nobody ever thanked a doomsday prophet.”