By Jude Kafuuma
THE Bank of Uganda has frozen accounts of pyramid schemes and gift circles in commercial banks due to public outcry after people lost large sums of money.
â€œTwo of the pyramid schemes, COWE (Caring for Orphans, Widows and Elderly) and Triple Nine, have already been singled out and their accounts frozen. We have handed over the case to the Police for investigations,â€ said Juma Walusimbi, the Bank of Uganda spokesperson.
In a press notice yesterday, the bank warned the public against getting involved in such schemes.
â€œThe Bank of Uganda has taken action to close the accounts of pyramid schemes and gift circles in the commercial banks. The general public is strongly advised that they risk the loss of their money deposited with pyramid schemes and gift circles,â€ read the statement.
The bank warned that while the schemes claim to offer business opportunities that can enrich participants, only the owners benefit.
Several such schemes, including Triple Nine, COWE and Dutch International, have been operating in Uganda using banks to mobilise funds from the public.
To join the scheme, people are required to pay money into a series of bank accounts. In return for making these payments, each new member is promised to receive payments from future new members recruited to the scheme.
All pyramid schemes and gift circles eventually run out of new members to recruit, the notice said.
When that happens, large numbers of members fail to receive any payments at all and lose their money.
Since 2003, schemes like TEAM and Dutch International in Jinja, as well as Triple Nine at Arua Park and COWE have been operating illegally without financial licences,â€ Walusimbi said.
Another statement indicated that the Bank of Uganda recently won a case against COWE in which the Court of Appeal judged that the bank has powers to freeze a bank account if it has funds that are the proceeds of a crime.
The court also re-emphasised another provision which protects the bank from any law suit.