Senate moves to protect Nigerians from Ponzi schemes

The Senate on Wednesday, mandated its joint Committees on Capital Market, Banking, Insurance and Other Financial Institutions, Anti-Corruption and Financial Crimes, and ICT & Cyber Security to conduct an investigative hearing, including public hearing, in all geopolitical zones of the country on the operations of Ponzi schemes.

This followed the consideration of a motion, titled, ‘Investigative Hearing into the operations of Ponzi Schemes in Nigeria, with particular reference to the recent Crypto Bullion Exchange, CBEX incident’, sponsored by Senators Adetokunbo Abiru (APC Lagos East) and Osita Izunaso (APC Imo West) during plenary.

Presenting the motion, Abiru raised alarm at the increasing sophistication of Ponzi scheme operators and the devastating consequences of their actions, and the need for urgent public education to prevent further exploitation of unsuspecting citizens.

The senator stressed the urgent need to protect Nigerian citizens, especially vulnerable groups, from financial predators by investigating the lapses that allowed CBEX and similar platforms to thrive unchecked, and to recommend robust mechanisms for monitoring, prevention, and prosecution.

“The economic wellbeing and financial security of Nigerian citizens are essential pillars of national stability and growth, and that it is the duty of government to protect the populace from exploitative, predatory and fraudulent financial practices and schemes that threaten their livelihoods,” he said.

Abiru, who is the chairman, Senate Committee on Banking, Insurance and other Financial Institutions, expressed concern about the rapid proliferation and alarming rise of unregulated and fraudulent investment schemes-commonly known as Ponzi or pyramid schemes such as MMM Nigeria in 2016; MBA Forex in 2020, to mention a few-which have repeatedly defrauded millions of Nigerians, causing severe financial hardship and, in some cases, driving victims to depression, family breakdowns, and even suicide.

He particularly noted that “the recent 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 N1.3 trillion (about $847 million), making it one of the most devastating financial scams in the country’s history”.

The lawmaker lamented that “despite the scale of operations and visibility of CBEX, it operated for an extended period without facing sanctions by either the Securities and Exchange Commission, SEC, the Central Bank of Nigeria, CBN, the Nigerian Financial Intelligence Unit, NFIU or the Economic and Financial Crimes Commission, EFCC.”

He added that 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, makes the Nigerian population increasingly vulnerable to such schemes;

Abiru argued that Section 88 (1) (a) and (b) of the Constitution (as amended) empowers the National Assembly to conduct such investigations, especially the Senate on 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;

In his remarks, the President of the Senate, Senator Godswill Akpabio, who recalled his experience in the fraudulent investment scheme in the early 90s, commended the sponsors of the motion and other senators, and directed the joint committees to do a thorough exercise and report back in four weeks.

Senate moves to protect Nigerians from Ponzi schemes