Police are hunting down three directors of KWD Digital Marketing, a company running a suspected ponzi scheme in Harare, although two are thought to have already fled to South Africa after taking in huge sums in US dollar cash from gullible people hoping to double their money in four weeks.
Scores of people have over the past weeks been flocking to 147 Freedom Legacy Way (formerly Borrowdale Road) in Gunhill to deposit up to US$10 000 each after being promised that they would receive twice as much back after four weeks, something that is impossible with normal investment activity.
Detectives, working with the Reserve Bank of Zimbabwe (RBZ), have launched an investigation into the operation, with initial charges being contravening the Banking Act as they were offering banking services without a licence, but if, as suspected, the directors were simply paying off original investors with money brought by new investors, while taking a large cut for themselves, then they could face fraud charges as well.
KWD employees, including managers, were picked up by the police for questioning on Thursday, resulting in the closure of the offices and the start of the manhunt for the directors.
National police spokesperson Assistant Commissioner Paul Nyathi said two of the directors are reportedly in South Africa while the other one, Mpumelelo Dube, who was local, is nowhere to be found.
“I can confirm that we are looking for Mpumelelo Dube, who is a director of a company involved in the Borrowdale Road investment. We seek to interview him regarding the operations of the company but we are failing to locate him,” he said.
Asst Comm Nyathi said two other directors were reportedly in South Africa and police were also keen to interview them in connection with the same case.
RBZ has issued a statement saying KWD and another company operating along Lawson Avenue in Harare, Bevern Capital, were not authorised by the central bank to offer banking services taking deposits from the public.
Investment schemes of that nature require a banking licence and the bank’s Financial Intelligence Unit and other law enforcement agents have since launched investigations into both entities.
The central bank has urged potential investors to carry out a due diligence exercise before giving away their money.
“In the past, the bank has issued press statements warning the public not to fall prey to pyramid and ponzi schemes that come in various forms and guises, luring people to invest their hard-earned money, promising unrealistic and unsustainable investment returns.
“These are fraudulent investment schemes under which existing investors are paid returns, not from genuine market investment of their funds, but from contributions made by new investors, until a point when the scheme can no longer attract new investors and collapses.
“Members of the public should always do basic due diligence before they are hoodwinked to part with their hard-earned money. No one should ever conduct financial business with an institution until they have confirmed its regulatory status.
“When someone promises you unrealistically lucrative financial returns within a short period of time, it is likely to be a fraudulent scheme and further due diligence is always advisable, including checking with the authorities,” reads the statement.
Lawyers and experts warn the schemes are either a con, since there is no investment that can double the value of foreign currency in a few weeks, or are the start of Ponzi schemes, where early investors are paid out from the money received from newer investors until the whole scheme crashes.
Both schemes are attracting cross border traders and money changers whose businesses were affected by Covid-19.
The dealers’ premises are not labelled and there are no billboards advertising their businesses.
There has been scarce parking for vehicles at the premises where the owners were trying their luck on instant cash
The daily crowds at KWD were seen jostling to be listed among the first 300 people who are served daily with hundreds going back home grumbling after failing to make it into the top 300.
Most of the potential investors do not know the actual name of the company they deal with.
The forms they fill in before giving away their money, are written in Arabic, which cannot be understood by the majority of Zimbabweans.
Throughout a week-long investigation, The Herald established that none of the investors were aware of the name of the company.
Some said it was “Kuwait Dinar” others said Kuwait Dinar Africa while others only called it “KDW”.
None of those interviewed had bothered to check on the ownership of the company despite having the zeal to invest.
The “agreement”, according to legal experts, does not protect the investors in the event of collapse of business or the disappearance of the company owners.
Top Harare lawyer Mr Wellington Pasipanodya described the document as “a voluntary assumption of risk” on the part of the potential investors.
At Bevern Capital in Milton Park, motorists park their vehicles at Blakiston School car park before walking in a single file to the premises along Lawson Avenue.
The company accepts minimum deposit of US$100 and each investor is expected to pay an administration fee of US$10 for the first US$1 000.
After six weeks, the investors are promised 50 percent interest.
At Bevern, the depositors do not sign any documents. Their names are only captured in the system and they are issued with receipts to be presented on the day they withdraw the money. – Herald