The government Togo says it is taken strong measure to cracked down on companies that exploit investors with unsound financial schemes, commonly referred to as "ponzi" schemes.
These types of money-making schemes operate by the initiator recruiting investors. The pyramid works so long as new people can be found to join the scheme and who can generate the cash to pay the dividends for those who joined earlier. The set up means that people who are last in the scheme lose their investment.
Togolese authorities are taking steps to ensure that its citizens do not get caught up in financial ponzi schemes like the one that recently occurred in neighboring Benin.
Togolese Minister of Justice, Kokou Touzoun, says they recently closed a company called Network for the Development of Mass without Resources, or REDEMARE, which they said was operating a pyramid scheme.
He said authorities found that there was mismanagement and if it had continued, it would have been disastrous. Their goal is to make sure that all members can benefit from the positive assets that remain at "REDEMARE," he added.
The company director of was arrested and jailed after claims they were swindling members.
According to the government, more than 50,000 people were already taking part in these schemes and they have the potential to defraud victims of millions of dollars.
But Ousmane Ali, a member of REDEMARE, said the government is prosecuting the company unfairly.
Ali called the government's decision clumsy, because it has been compared to the ICC system in Benin. He said the Benin case is different, because the man who stole the money could not pay its members and this is not the case with REDEMARE.
Economic analyst, Noouroudine Mensa, said the company was taking advantage of Togolese citizens.
He said the schemes are exploiting the poverty among the people, who then resort to joining such networks, because it allows them to cope with their daily expenses.
In July, Benin's President Boni Yayi fired his interior minister, after accusing him of involvement in a financial scheme that may have swindled thousands of people out of more than $190 million. Afterward, 100,000 people took to the streets to demand that the government help them reclaim their money.
The names of members of REDEMARE were posted to enable them to make claims as the government moved to reimburse their money.
