Private Investment companies out of the Blue: Life and Death for the People’s Money [Archives:1999/41/Business & Economy]
By: Imad Al-Saqqaf & Farooq Al-Kamali
Yemen Times, Taiz
In the 70s and 80s of the twentieth century, a big fuss was made in Egypt about private investment companies which came as a show to collect people’s money under the pretext of investing and making healthy profits. However, they ended up in the ruin of families who lost all they had in a tragic end. Alrayan was the biggest of these companies and the most famous. Great number of people, the haves and the have-nots, invested their money in this company. To their dismay this company closed down and its owner melted into thin air. Since then Egyptians have beenrunning from the pillar to the post but to no avail.
This tragic scene has also been enacted here in Yemen but with another setting, different characters, and different unhappy ending. Yemenis have heard many Egyptian stories as well as seen films about these mercenaries who have no conscience or scruples to stop them doing these evil acts. Furthermore, the people in Yemen have never put the companies owners’ credibility, claims and attitudes to test. These companies appeared in the 90s of this century with a new propaganda and under the cover of Islamic legislation and pretext of fighting usury.
These companies have emerged to take away people’s money, dreams, as well as hopes and let them build castles in the air. However, all of a sudden all these castles and palaces were shattered to pieces when these companies wound up their establishments, and their owners disappeared. The shareholders could not find any person in charge to ask or to be accountable for their lost money. The people’s money have vaporized as water vaporizes due to the heat of the sun’s rays. The people thought that these companies would give them a chance to earn their living and make bothends meet in these difficult times. However, they found themselves in a deplorable situation. This reminds me of a well known proverb which says “Out of the frying pan into the fire”
These companies came to being after the 1994war, the first one being Ghalab Investment Company. It used to collect the people’s money and then start buying lands and construct buildings. The company used to give around 20% to 30% interest. The main branch of the company was in Taiz and there were branches in Aden and Sana’a.
In 1995 Al-Monked Company for Trade and Investment appeared from nowhere. It used to give people fabulous interests extending to 60%. This has never been paid before by any company throughout the world. Al-Monked Company is considered to be the biggest company that has ever been established in Yemen. So shareholders reached a total number of 20,000 from all the governorates of the Republic. The company activities were focused on buying lands and then selling them for fancy prices as there was a prosperous investment drive. The company bought very big stretches lands in Aden for millions of riyals. However, later on they discovered that these lands belonged to the Free Zone. Obviously, these lands as well as the money of the shareholders vanished.
The Third company that came out of the blue and went out like a passing arrow was Al-Emad Trade and Investment Company. It was established with a capital of 45 million riyals. They started their activities with a slogan to combat usury and to apply the principles of Islamic legislation in investment. They used to attract people’s attention by such slogans. It is worth mentioning that the people in charge of these companies belonged to the Islah Party, the leader of the religious movement in Yemen.
The reasons asto why these companies became so much popular among the public are the following:
1) At the beginning of floating these companies ,the founders have beengiving lucrative profits to shareholders up to 60% as was done by Al-Monked Company within a period of 3 months and upto 50% by Al-Emad Company within 6 months period, a rate that has never been given before by any local or international bank. This made people compete to gain quick profits. Many sold all they had in life and put their money in these companies.
2) When the immigrants got back during the aftermath of Gulf War, they dared not take the risk of establishing new projects. Moreover, they thought that these companies would be the only way to be assured of financial gains without exerting much efforts.
3) There was a strong propaganda campaign on the TV, radios and the print media for these companies. These companies became the talk of the town among the people, the rich as well as the poor.
4) The owners of these companies exploited the poor villagers’ simplicity and tempted them by profits they may get if they invested in their companies. The villagers could not stand the temptation and as a result they handed all money they had to representatives of these companies. Many of them sold everything precious they had so as to gain profits from these companies. Some forced their wives to sell their jewelleries to invest the money in these companies.
5) A number of high officials in the government including ministers, member of parliament, military leaders and sheikhs have also participated in these companies. This gave people encouragement and guarantee that their money was on safe hands.
6) The companies slogans were cleverlymodelled on the Islamic religion that propagated combating usury.
7) The government was favourably disposed towards these companies. Besides, there was no surveyallance on these companies’ projects by the government. Such companies that have emerged in the country have been characterized by nothing other than manouvering the landed activity. Lands were very expensive at that time. When all of a sudden their prices came down dramaticall, this had negatively affected the capitals of these companies. Furthermore, these companies were run without any sound objectives and policies and without any accurate accounts. Even profits, paid to shareholders, were not real profits as they were taken off the shareholders’ deposits. Furthermore, there were no accounts that might be referred to when necessary. These companies could have done better things for the people as well as for the country’s benefit. Instead of helping people and improve their situations, they have just made the situation worse; poorer people and more deplorable economy. Finally, these companies disappeared after damaging the people as well as the country’s economy. The negative impact of these companies have also reached even families who had no means to keep their body and soul together after they lost everything. Besides, most of these families had social problems. There are real woeful stories of some families that have been destroyed as a result of these companies. One of these stories is the story of a man who was an immigrant from Saudi Arabia. He used to burn the candle to both ends and did all that he could so that he would be assured of a secure and good life for his family in Yemen. Five million riyals was all that he could amass after a long struggle of living abroad. This money was with his wife who used to build castles in the air until these companies came to light. She was infatuated by the idea of investing this five millions till her husband was back home. She thought of surprising him when he came back by showing him that the five million was multiplied to eight or even ten million. When he came back there was a surprise for him, however. It was not a nice one. He found that all his money has gone with the wind as the company closed its doors. In a moment of fury he divorced his wife. Thus, he lost everything; the money, wife as well as destroyed his family. Stories with similar tragic ends are frequently reported in our day to day life.
* Saeed Mohammed Bin Mohammed, one of those who invested in Ghalab Investment Company, said ‘ I have sold valuable and precious things and invested around 300,000 riyals. However, I received nothing for the company is closed and its owner disappeared. I used to pin my hopes on the profits I would get, the wife I would marry, the prosperous future I would have, etc. Now I am baffled and do not know what to do.’
* Abduh Ali Saeed, another one who put his money in the same company, with a tone choked with grief as well as sadness said that he put 600,000 riyals in Ghalab Investment Company which has vanished with the money. He also asked the government to interfere to save the poor in their catastrophe. The government should do something to punish those frauds and swindlers who stole our money under the cover of Islam.
* Fawziah Al-Homidah said’ these crooks have swindled us out off our money’. She also said that she had invested around 1,100,000 riyals in Al-Monked Investment Company and so far she has been still following the people of this company up who have always been giving hallow promises.
* Abdul Malek Al-Kamali said that these companies have smuggled as well as blackmailed people under the cover of applying the Islamic principles and fighting usury. This was done in front of the government’s eyes which did nothing to stop this farce and arrest these swindlers. He also added that it was because of the lack of economic culture, pitfalls facing plans for development and small range of investment that made the occurrence of such phenomena feasible. He also said that owners of such companies had transferred the money of shareholders to their accounts; some established private schools and supermarkets, some worked in the contract business with the money of shareholders and for their personal benefit.
* Ahmad Ali Hassan said that when immigrants came back during and after Gulf War there was unemployment, high inflation and continuous deterioration of our currency. All this had given rise to these companies which at the beginning gave fancy profits. He also said ” despite my strong belief that such companies were just a fake, I invest around 155,000 riyals in Al-Monked as I found all doing so.”
* Ahmad Mahyoob Ahmad said ” I invested around 300,000 riyals in Ghalab’s Company which was all I had made in life. However, I got nothing.” He also said that the owners of the company, the brothers, Kasem as well as Abdullah Ghalab got the money divided up among them.
* Abdul Azeez Abdullah Khalid also said the following: “I sold my own car for 400,000 riyals and hurried to invest my money in Ghalab’s Company. Now I live a life of regret.”
* Daif Allah Saleh Mohammed said ” I was deceived like others thinking that I would earn money without exerting efforts. He said “Now we are regretting things but after everything has gone.”Thousands of people who invested in these companies are now crying over the spilt milk. Now that four years have passed we find that there are many cases filed against these companies in different courts. In regard to Ghalab Investment Company we find that the East Court of Taiz passed a verdict to close the company down and bring its owners to trial. However, neither the company was closed nor its owners were committed to trial. They rather got what they swindled divided up among them and the company’s building was changed into a clinic and an institute for teaching computer. Obviously, the courts’ verdict to arrest such powerful ones and support such poor as well as weak ones is bound to remain a far cry. The second of these companies and the largest is Al-Monked Investment Company which has declared its bankruptcy after two years of its establishment. It was closed after a judiciary verdict in 1997. In regard to the lands bought in Aden for millions of riyals by this company we found that they were later declared to be owned by the Free Zone. After a long course of pursuing people in volved as well as officials , the General Public Court issued its verdict last August charging area officials and State Registration and owners of Al-Monked Company of forging official documents and using lands owned by the government. The verdict was passed to imprison 13 people for a period that extends from a year to year and a half. Some of those who wereconvicted included the Deputy of the Area Authority, and Deputy of the State Registration in Aden and the Manager of the Lawful Affairs in the Authority and the ex-Manager of Al-Monked Company, Mohammed Ismaeel Abdul Raheem and its current Manager Anass Al-Ahdal. This verdict has created big controversy and widespread reactions. It has also terminated the flicker of hope the shareholders used to dream about.
Stay tuned till the following issue to know the complete story that includes the following:
1) Mr. Hamood Hashem Al-Tharehi’s comment on the verdict.
2) Lawyer: Abdullah Abass’ statement on the case filed against Al-Emad Company.
3) Lawyer: Farook Abdoh Ka’ed talking about the attitude of the law in regard to these companies.