Politics and policy
Pyramid scheme cheats face 10 years in jail
Posted Wednesday, August 29 2012 at 20:20
- According to the Bill, promoters of pyramid schemes and usury will be fined Sh10 million or be jailed for up to ten years on conviction.
- They will also be required to compensate victims and risk having their properties seized.
Promoters of pyramid schemes face up to 10 years in jail under a new law passed by Parliament on Wednesday to protect Kenyans from dubious investments.
The private member’s Bill by Ikolomani MP Boni Khalwale will go through the committee stage for fine-tuning before it is sent to the President for assent.
According to the Bill, promoters of pyramid schemes and usury will be fined Sh10 million or be jailed for up to ten years on conviction.
They will also be required to compensate victims and risk having their properties seized.
Responding on behalf of the government, Forestry minister Noah Wekesa said the government accepted the Bill.
“We have had so many schemes where Kenyans have been defrauded and nothing happens,” Dr Wekesa said.
The Bill was motivated by the loss of Sh7.4 billion by Kenyans between 2004 and 2006 to dubious investment schemes which promised high returns.
The schemes mostly registered under the Societies Act and the Companies Act collapsed, leaving more than 20,000 victims nearly destitute.
Rarieda MP Nicholas Gumbo said he would move amendments at the committee stage to include shylocks — illegal money lenders — who usually offer credit at usurious terms.
“Shylocks are among those who rip off Kenyans. They can’t charge 30 per cent per month for money they give illegally, ” Mr Gumbo said.
Attempts by pyramid scheme victims to pursue those responsible for their losses hit a dead end after it emerged that it was not a crime under any law.
Those arrested were charged for obtaining money through false pretences, which attracts a sentence of three years under the penal code.
“The billions are not lost; it is only that there is no law that can be applied to unlock this investment. We have identified the accounts and assets held by some of the schemes,” Dr Khalwale said.
A taskforce report on pyramid schemes headed by former Environment minister Francis Nyenze recommended that those named in the report be prosecuted.