PNG susceptible to more ponzi schemes
PNG's resources boom could leave the country more susceptible to fraudsters and ponzi schemes.
Papua New Guinea's resources boom could leave the country more susceptible to fraudsters and ponzi schemes, according to new research by the Australian National University.
John Cox has been studying the effect of fast money schemes like the U-Vistract scheme a decade ago, and why so many members of PNG's educated middle class fall for them.
He told Jamie Tahana that over 500 million kina has been lost to such schemes since 1998.
JOHN COX: I guess one thing I want to say at the start is that people fall for these kind of scams all over the world. You know, Australians send a lot of money to Nigeria, a lot of Americans fell for the Bernie Madoff scam so I guess these kinds of scams happen wherever money goes and wherever finance flows. So I'm not saying that Papua New Guineans are more gullible than else. So what I've discovered from the interviews that I've done with lots of Papua New Guineans is there's an element of greed but underneath it all there's also a really strong moral dimension to it.
JAMIE TAHANA: Just take us through what you've found with this research. Because it started with this thing in Bougainville didn't it?
JC: Yeah, the biggest scam was called U-Vistract and it's still kind of running out of Bougainville. So it was set up by Bougainvillians and spread through church networks, it spread through professional groups and it was really able to present itself as a way to make fast money and I guess the way these scams operate - they pay a few people out at the beginning, usually high level people so everybody knows them, everybody hears a story that this person made 10 thousand and the word gets around and people flood in and eventually they can't pay anymore and so they had to make explanations as to why. So I guess I looked at 'how can this scam keep going for 15 years and hasn't paid anybody since the year 2000?' But part of the stories these people started to tell their investors was 'look, it's not us. The government's stopped us from paying you, we've got our money overseas in a bank account in Singapore or somewhere and we want to transfer it into PNG but the government won't allow us to because they're corrupt, or because they're jealous of us' and that kind of stuff. So they're able to play on peoples lack of trust in the PNG state and manipulate them in that way.
JT: We do have a lot of development projects going on right now in PNG, especially with the mineral and resource projects going on right now. Does this make them kind of more susceptible?
JC: The resource projects certainly do create expectations that everybody should be wealthy, so what I'm hearing from the people that I speak to is 'PNG's a rich country we shouldn't need to have aid programmes, we shouldn't have poor people here, there's something wrong with our system' and they often blame it on corruption, sometimes they'll blame it on the Australian colonial history, but more often it becomes a what we call a negative nationalist account. They say 'we're underdeveloped it's because our politicians are corrupt.' What I'd say is background conditions don't necessarily create scams in themselves. So this U-Vistract scam really was a very, very ingenious and well thought-out attempt to defraud hundreds of thousands of people and that had an organisational structure, it had networks of influence that really drew people in and made itself seem real to them for quite a long time.
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