|
|
|
 |
 |
|||
|
[September 09, 2004 - 6.00 GMT] President Chandrika Kumaratunga has endorsed and approved the action taken by Authorities and the proposal to introduce legislation to halt the operation of any Pyramid Scheme in the future. The Central Bank’s action in this regard in creating the awareness of the public is also laudable she said. The President assured her Government will soon introduce legislation in Parliament to put a stop to this rising menace. Full text of President Kumaratunga’s statement; At Present, a number of multilevel and network marketing schemes which resemble pyramid schemes are in operation in Sri Lanka. Pyramid schemes come in many forms and guises to avoid recognition, but their main characteristic is that they promise participants large returns based on the recruitment of other participants to the scheme. Some schemes involve a sale of a product and create an illusion to the public by offering unrealistic gains in the form of bonus payments or commissions for further recruitment of persons to such schemes. Most developed countries have their own specific regulations aimed at prohibiting these types of schemes and therefore, operators of these schemes are now attempting to exploit the public of developing countries such as Sri Lanka which do not have adequate legislation to prevent such schemes. It is reported that these schemes have already attracted a large number of customers in Sri Lanka within a very short period of time and caused, in the case of one such scheme, a considerable drain of foreign exchange out of the country estimated to be around US $ 50mn. I am made to understand that in addition to the promoters of these schemes, employees of banks, financial institutions, and also the Government has been supportive of these schemes. Such action violates the job description of the officers concerned and would make them subject to disciplinary action. Normally, any “Referral/Pyramid” scheme (i.e. a scheme which is heavily dependent on new participants to fund the earlier participants) would collapse when it reaches a point where further recruitment of participants is not feasible. When a “Pyramid” collapses, persons who have invested heavily in the scheme using perhaps borrowed money from financial institutions to join the scheme, with the intention of repaying such borrowings out of expected commission earnings, would suffer a loss and are likely to default on their borrowings, posing a danger to the entire financial system. Further, if the public joins these types of schemes which facilitate the acquisition of unproductive products such as gold coins, medallions, wrist-watches, etc, it would not help the country to increase the well-being of the people as is claimed by the promoters of such schemes. The public is also cautioned against the attractive advertisements these schemes insert in both printed and electronic media displaying individuals whose proper identities, except the name, have not been disclosed. The claims made by such a handful of individuals in a country of millions of people as to the riches they have earned from these schemes should be viewed as mere fiction, aiming at luring gullible victims. I fully endorse the action taken by the Customs and the Controller of Exchange against the promoters of such schemes for violating the respective laws. The Central Bank’s action in this regard in creating the awareness of the public is also laudable. This Government will, therefore, soon introduce legislation in Parliament to put a stop to this rising menace. I earnestly request the members of the public of Sri Lanka as well as officials of the public service including officials in Ministries and Public Corporations to refrain from participation in and promoting these types of pyramid schemes operating under the guise of multilevel or network marketing schemes.
Signed
|
|
Contact Information: Send mail to 