Senate Knocks, SEC, EFCC, NFIU For Rising Cases Of Ponzi Schemes

…Says Ponzi Schemes Undermining Investors Confidence In Nigeria’s Economy

The Senate has come down hard on the nation’s financial regulatory bodies, as well as anti graft agencies for their failure to stem the growing cases of Ponzi schemes in the country.

The lawmakers, during plenary on Wednesday, specifically knocked the Security and Exchange Commission (SEC), Economic and Financial Crimes Commission (EFCC), and the Nigerian Financial Intelligence Unit (NFIU) for being remiss in their responsibilities.

According to the senators, laxity on the part of the apex monitoring bodies and their counterparts in the anti-financial crime enforcement agencies has continued to embolden perpetrators of Ponzi schemes.

The legislative body rued the consequences on Nigerians who are continually falling victim to the fraudulent schemes.

While contributing to the debate on the issue, many of the senators cited instances where some victims of the schemes lost their entire life savings, forcing some of them into depression while some others committed suicide.

Falling short of accusing the apex financial regulatory and anti financial crimes agencies of complicity in the scheme, the senators said they have been creating an enabling environment for such schemes to flourish through their inaction.

They regretted that the situation has continued to erode public trust in legitimate financial institutions among Nigerians thereby posing systemic risks to the economy.

The senators also blamed the unchecked activities of the Ponzi fraudsters for the lack of investor confidence in the Nigerian economy, which has forced foreign investors to exit the country in droves in recent times.

Senator Tokunbo Abiru, whose motion sparked the debate, insisted that it’s the responsibility of the Nigerian government to protect its citizens from such exploitative, predatory and fraudulent financial schemes.

Abiru said the schemes pose serious threats not only to the victims’ livelihoods, but also their lives, as some of them had resorted to suicide when they could not bear the burden.

While presenting the motion, Abiru expressed deep concerns over the rapid proliferation and alarming rise of such unregulated and fraudulent investment schemes.

He listed such Ponzi schemes that had robbed Nigerians of their hard earned resources in the past to include – Pyramid, MMM Nigeria in 2016, MBA Forex in 2020 among others.

Abiru’s motion, “Notes in particular the recent case of Crypto Bullion Exchange (CBEX), a digital investment platform which lured millions of Nigerians with the promise of outrageous returns, before suddenly collapsing and resulting in investors losing over N1.3tnn (about $847m), making it one of the most devastating financial scams in the country’s history;

“Also notes that the CBEX incident is not an isolated case, but part of an existing and growing pattern of unregulated and fraudulent schemes leveraging technology, and social media to deceive the public, often using tactics such as referral commissions, celebrity endorsements, and fake testimonials to build credibility and drive recruitment.”

The motion was co-sponsored by Senator Osita Isunazo.

Sponsors of the motion said it is shocking that despite the scale of operations and visibility of CBEX, it operated for an extended period of time without facing sanctions by SEC, EFCC or NFIU.

On his part, Senator Sadiq Umar noted the greed and the thirst door quick financial gain on the part of victims. He however insisted that the Nigerian government still owed them a constitutional duty of protecting from such fraudulent schemes.

The lawmakers recognised the growing sophistication of such fraudulent platforms, combined with high youth unemployment, widespread poverty, low levels of financial literacy, and a lack of access to formal investment opportunities.

These, they noted have exposed the Nigerian population to increasing vulnerability to such schemes.

Continuing, Abiru’s motion read, “Conscious that Section 88 (1) (a) and (b) of the Constitution of the Federal Republic of Nigeria 1999 (as amended) empowers the National Assembly to conduct investigations into any matter or thing with respect to which it has power to make laws, and the conduct of affairs of any person, authority, ministry or government department charged, or intended to be charged, with the duty of or responsibility for executing or administering laws enacted by the National Assembly.

“Also, conscious that these constitutional powers empower the Senate to investigate the failure of regulatory agencies to monitor and prevent the CBEX fraud, as well as to propose necessary legislative or administrative reforms to forestall future occurrences”.

Consequently, the Senate, through a resolution, mandated its Joint Committees on Capital Market; Banking, Insurance and Other Financial Institutions; Anti-Corruption and Financial Crimes, and ICT & Cybercrime to conduct a comprehensive investigative hearing, including public hearing, on the operations of Ponzi schemes in Nigeria, and report back in four weeks.

Senate Knocks, SEC, EFCC, NFIU For Rising Cases Of Ponzi Schemes is first published on The Whistler Newspaper