MMM: How it affects the banks – Bankers

Sergey Mavrodi of inventor MMM
How it works
If a participant requests to Provide Help of
N20, 000 today, he/she is expected to be
matched within the next 14days with another
participant or participants, and after payment,
the donor gets back a full repayment of his
loan (N20,000) and 30 percent (N6,000) within
the next 15 days. This implies that the donor
gets N26,000 from another participant or other
participants after 30days.
Other financial benefits
However, aside the 30 percent interest on loan,
other financial benefits participants gain from
MMM-Nigeria include a Referral Bonus of +10%
from a contribution amount made by each
member (referral) you invited to the System.
The Bonus is paid and available for withdrawal
as soon as the referral has provided help and
got his Mavro confirmed. For example, if a
referral provides help of N20,000, the
participant who refers him or her will get a
N2,000 bonus.
Also, there is Guider’s Bonus comprising of
four levels in MMM-Nigeria- +5%, 3%, 1% and
0,25%. You may take this bonus out two weeks
after your referral has provided help and got
his Mavro confirmed. It works like Referral
Bonus.
Guider’s bonus is paid only for ‘new’ money.
There is also bonus for Testimonial video.
Bonus for the video in a “Letter of happiness”
is 5 per cent of the amount of received help.
After receiving help you have to send a “Letter
of happiness”. If you attach a video to it, you
will get a bonus. The bonus is credited for
each “Letter of happiness”.
mmm
The scheme looks attractive, no wonder it has
been embraced by even those who belong to
the upper class in the society. Nigerians have
however been warned to steer clear as it is
bound to crash and the consequences will be
tragic. Bankers and stock brokers have also
reacted to the new wonder bank with mixed
feelings
No impact on the banks—–Bankers
A banker, Folashade Amosu said “MMM does
not have any impact on the banks because it
does not involve withdrawal of money from
banks but transfer of money from one bank
account to another. Also, the amount of money
involved per person is usually small, mostly N1
million and below, hence it has little or no
impact on the bank.
In his own contribution, Michael Ilifo, who is
also a banker, said, “MMM is not an
organisation, it does not have staff. It is a
computer application that matches people who
need financial assistance to people willing to
provide financial assistance. The money goes
from one individual bank account to another
individual bank account. Money does not leave
the banking industry, so there is no impact. I
think the problem is that people criticise what
they have not taken time to study and
understand. MMM is not a ponzi scheme but a
pyramid scheme.
Dr. Uju Ogubunka, President, Bank Customers
Association of Nigeria (BCAN) however argued
that “MMM is a faceless scheme, so I advise
people to be careful in their dealings with it
because there will be nobody to complain to if
anything goes wrong.”
A bombshell that will crash——Capital market
operators
Jimmy Okugere of Quantum Securities Limited,
said some brokers who have joined the MMM
community were guided by greed. He said,
“they are cautious though, even some have
told me to also join, but I dismissed it because
personally, I have to understand the risk I am
taking and I must make sure that I balance it
up. For me, I won’t do any business that I
can’t explain the source of funding.
Where is the 30 per cent growth coming from;
because I took money from one place and I
gave help to one person and another person
gave help to me. That is a bombshell that will
crash one day; it will blow and when it blows,
it is going to be deadly. Not after several
experiences we have had in the past in the
days of wonder banks. For most of my
colleagues who are doing it, well sorry; they
are taking a risk.”
Paul Uzum, another stockbroker, said it is true
that some investors recently started selling
their shares in order to invest in MMM. He said
that even educated and financially literate
people are equally taking the plunge. According
to him, “Their argument is that, they have at
some point lost money in shares and they do
not mind losing money.
They see it as financial game where some will
gain, while others will lose. Because of the fact
that some of them are financially savvy, they
feel that give and take they will still make
money. I have some friends in academia who
are even doing it. It is so shocking. For most,
they know that MMM is a zero-sum gamer
wherein the gain of some people is loss for
some people.
mmm
That means that you are transferring wealth
from some class of financially uninformed to
those who understand the game. A lot of
people don’t know it is a ponzi scheme and
those are the class of people that will lose”.
Citing an example, he said that a friend of his
who is a doctorate degree student in
Economics borrowed N2 million from his
Cooperative to invest in MMM and has since
recovered the initial capital and is now playing
with the gain he made.
Another stockbroker, Mr. Charles Fakrogha, of
Foresight Securities and Investment Limited,
said some of his colleagues told him that their
clients were selling their shares to invest in
MMM. He said ”I have heard that a lot of
people are getting involved in it, but it pains
me that in this 21st century when technology
has gone so advanced and awareness about
investment community has become so
advanced, we find that investing public will still
be a victim to this kind of scheme.
It is an illegal scheme and all the financial
regulators have come out to say that they did
not license it; it is still surprising that a lot of
people still get involved in it. We have seen
things like this in our investment history. We
saw that of PlanWell in Benin; we saw that of
Umana Umana in Port-Harcourt in the early
90s. So how come Nigerians are still falling
victim to MMM. For me, it is a clear case of
investment illiteracy.”
Investors should be wise—–Senators
Chairman, Senate Committee on Banking,
Insurance and other Financial Institutions,
Senator Rafiu Adebayo Ibrahim in his reaction
warned Nigerians to be careful in their
engagement with the MMM, saying that it is a
pyramid that would soon burst. He said “any
Financial institutions of any kind that is not
under the regulation of a Regulator such as
MMM is a pyramid that will soon burst.
We engaged the CBN and they have issued a
statement in the recent past. So Nigeria should
be wise and know that there is no free money
any where. One wonders which investment can
yield 30% flat any where in the world.”
Also reacting, a member of the Senate
Committee on Banking, Insurance and other
Financial Institutions, Senator Gbolahan Dada,
APC, Ogun West said, “It is important for
members of the Public to know this fact. ???
was a Russian company founded in 1989. The
company was established by Sergei Mavrodi,
his brother named Vyacheslav Mavrodi, and
Olga Melnikova.
The name of the company was taken from the
first letters of the three founders’ surnames.
MMM could be called a wonder bank. Over 5 to
40 million people lost up to $10billion in the
90s when it was introduced. The company was
shut down by Russian Police in 1994 and
declared bankruptcy in 1997.
“It is unfortunate that some unscrupulous
Nigerians are capitalizing on current economic
hardships to defraud unsuspecting Nigerians
by encouraging them to part with their hard
earned money with mouth-watering interest or
returns. MMM does not contribute or add value
to the economy because the records of such
transactions are not kept and not made open
to the public or regulatory authorities.
It is a product of fraud and nothing good
comes from fraud. The operator pays returns
to the investors from new capital acquired from
new investors and not from legitimately earned
profits. The operators entice investors with
mouth watering offers. The short term returns
are abnormally high and unusually consistent.
They may struggle to pay the first returns but
would bolt away with subsequent capital or
deposits made by investors.”
When Saturday Vanguard asked if there was
any Financial implication, Senator Dada said,
“The money involved in MMM are usually spent
by the promoters on frivolities. The promoters
engage in ostentatious lifestyles. They hardly
have concern for the unsuspecting investors. It
is fool hardy for any members of the public to
fall prey to the scheme despite warnings from
stakeholders. Those patronizing MMM will
have a tale of woes to tell after losing their
deposits.”
On what can the Senate do in the interest of
Nigerians, Senator Dada said, “The House of
Representatives has taken a step to condemn
the Scheme and also promised to investigate
the scheme. Secondly, the CBN and majority of
the Banks have warned members of the public
from participating in the scheme. The EFCC
also issued warnings to arrest perpetrators of
that scheme.
My take is simple. Any Nigerian who decides to
participate in the scheme is on his own and
should blame himself in the event of any loss.
The only thing the Senate can do is to advise
Nigerians to shun the temptation of getting rich
quick so as not to lose their meager resources.
Also in his contribution, a member of the
Senate Committee on Banking, Senator Adesoji
Akanbi, APC, Oyo South who attributed the
rush for MMM by Nigerians to the present
economic situation in the country, however
warned Nigerians to be careful, just as he said
that those involved are civilized and educated
people who actually know the consequences.
Senator Akanbi said, “first and foremost, every
Nigerian has the right to embark on any
investment, it is a choice of anyone. The
question is, is MMM real, is it actually
threatening the financial institutions in Nigeria;
is it posing a security threat and is it capital
flight? Those questions need to be looked into.
I believe that it is the consequence of
recession, it is not MMM, but about the
desperation of Nigerians looking for survival
and nobody needs to be blamed.
If we see the kind of people that patronize
MMM, they are civilized, educated people who
actually know the consequences of failed
investment, but they still take the risk and go
into it. The only advise I can give them is to be
careful, they have the right to go into it, it is
their right, but they must be careful.”
It is a scam—-Reps
The House of Representatives apparently
disturbed by the experience of such ‘wonder
banks’ in the 1990s had on November 10
moved that the activities of ‘MMM’ should be
investigated in Nigeria.
In his ruling, Speaker of the House, Yakubu
Dugara, mandated the Committee on Banking
and Currency to investigate the scheme with
the view of saving Nigerians participating in it
from financial disaster. The Central Bank of
Nigeria ,CBN too had admonished Nigerians on
the MMM scheme, saying it was fraudulent.
Subscribers almost asked for the head of the
CBN Governor, Godwin Emefiele for describing
the scheme as fraudulent.
Most Members of the House of
Representatives who spoke to Saturday
Vanguard gave a unanimous verdict that the
pyramid money spinner was a scam that
Nigerians need to be more careful about.
Hon Austin Chukwukere, APC, Imo, in his
reaction said”we’ve seen this kind of scam in
the form of the Umanna Umanna wonder banks
in the 1990s. Many Nigerians fell victim then
and got their monies pocketed by the smart
criminals. The negative effect is that it will
further make Nigerians poorer, it is purely a
fraudulent act because there is no business
that can yield that margin of profit in one
month.
Chairman Nigeria US Congress Relations,Hon
Ehiozuwa Johnson Agbonayinma, PDP, Edo in
his opinion observed that”it’s too real to
believe because in the past it happened, it has
reared its ugly head again and we are
embracing it. We Nigerians forget too soon
when Plannwell was collecting N1m and
paying back N1m interest what happened?
People became overnight millionaires and
suddenly became poor people because they
claimed then that the less you look the more
you see. In this scenario it’s now the more you
look, the more you see, it’s unfortunate that we
believe anything in Nigeria.
Also, speaking almost in the same vein,
Chairman House Committee on Police Affairs,
Hon Haliru Jika simply said”it is extortion of
the highest order. Nigerians should beware!