Kenya: Pyramid scheme that went horribly wrong

pyramid_shemeShocking tales of pyramid scheme investments gone horribly wrong have been laid bare in a report to be tabled in the House on Thursday. The confidential taskforce report seen by the Daily Nation abounds with tales of greed, ignorance and the haste to flee poverty.

One family was completely impoverished when the man of the house mortgaged the matrimonial home in Embu and invested the Sh2 million. But the schemes went under, the banks moved in and now the old man, the report says, lives under a tree.

A son training to be a doctor committed suicide and another fled and has not been seen since 2007. The wife is bedridden after suffering acute depression and the mans sister was beheaded in suspicious circumstances.

Another story details how the taskforce had to raise money for one of the victims who testified before it. The desperation in her voice and the tragedy her family was facing jolted the consciences of taskforce members to hold a mini-harambee (fund raiser) at the end of the hearing to ease her pain.

The taskforce report details the womans sorry tale: A single mother of two, she borrowed Sh10,000 to rush her sick child to hospital for an operation but diverted the money to one of the schemes in Thika. The scheme went under. She lost everything.

The report also tells of a pastor, enticed by the attractive perks as a branch director of a pyramid scheme, abandoned preaching to set up a branch in Embu. The scheme collapsed and the man is now jobless.

Another pastor in Mombasa is said to have been kicked out of his home by his wife and sons after he invested Sh600,000 in a scheme which later collapsed. The amounts sunk in the pyramid schemes are mind-boggling and range from Sh1,000 to Sh22 million.

At least 20 suicides, the report noted, have been committed, and dozens of homes broken when over 270 pyramid schemes collapsed. A taskforce appointed in January to get to the root of the dubious investment schemes also reports that a majority of victims shied away from giving evidence, hence the final report did not give a true picture of the total loss.

The team chaired by former cabinet minister Francis Nyenze says it experienced a number of constraints, more specifically the CBK declining to shed light on the status of bank accounts.

Reported by Alphonce Shiundu, Caroline Wafula and Njeri Rugene

Daily Nation

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