Pyramid schemes threaten economic stability - FitzPatrick
by Irangika Range and Anjana Samarasinghe
Although Gold Quest business is prohibited by the Banking Amendment
Act there may be a risk that operations of this nature from different
ways can begin in Sri Lanka due to a lack of response from the public.
Director Supervision of the Central Bank J.P.T. de Silva said large
amounts of foreign currency was channelled out of the country due to the
operations of product based pyramid schemes or multi level marketing
schemes. Sri Lanka has lost around US$15 million from Gold Quest
operations within one and half years involving 2500 people," he said.
President, Pyramid Scheme Alert, Robert L. FitzPatrick, said that CB is
the primary organisation, which can combat the scheme apart from issuing
public notices. It is law enforcement authorities who could initiate
action against the scheme.
Fitzpatrick said that pyramid type of business is critical for the
country as it threatens both economic and price stability and financial
system stability and could pose a risk of destabilising an economy.
Countries like Albania financially suffered due to pyramid schemes.
Nearly 99.9 percent involved in pyramid schemes will lose their money
and only few may gain profit through this business, he said.
Authorities should educate the people by making periodical public
statements because it is spreads fast in a short time and also
authorities should organise national campaigns against pyramid schemes.
It is important to educate the public rather than prosecuting these
businesses, he said.
He also said that there should be a proper mechanism to monitor any
organisation planning to commence operations in Sri Lanka and ensure
that their business does not involve chain business activity. Director,
Economic Research Department, Dr. H.N. Thenuwara said that the CB has
taken action to stop the Gold Quest scheme through credit cards and
foreign exchange control authorities.
"Banks are not engaged in Gold Quest business transactions and the
law has empowered the Central Bank to conduct investigations on whether
Gold Quest is violating the bank system", he said. |
