EDITORIAL : THE NEW STRAITS TIMES, MALAYSIA

Patsies for Ponzi schemes

 

ACCORDING to the presiding judge in a suit for claims, the victims of Raja Noor Asma Harun's Ponzi scheme are fools. She decided in their favour, nonetheless, and, as a result, they managed to recover some of their losses. However, these are no ordinary fools. They are well-heeled and educated. Numbering some 4,000, they "invested" RM100 million in all, money they considered "hard-earned". One wonders how lawyers -- including a syarie judge -- and others of similar social standing with "hard-earned" cash to spare could give it over knowingly to an unlicensed futures trader, expecting spectacular returns and, when things go wrong, run to the courts for redress. They should be thankful that judge S.M. Komathy Suppiah, who does not suffer fools, did so this time by allowing claims on about RM8.2 million seized from Raja Noor Asmah.

How is that, even while the high profile Bob Madoff case in the United States was unfolding, obviously middle class Malaysians can so willingly walk into scams? Firstly, they should have known that an investment signed over as a loan was screaming to be investigated. To enthusiastically lend money on promises of high returns smacks of greed under cover of ignorance. Secondly, as an investor, it is assumed that no matter how impressive the fraudster, questions must have been asked to understand the mechanism that can guarantee a return of over 30 per cent a month. Thirdly, as one of the victims admitted, he was aware that he was "lending" his money to an unlicensed futures trader. There is reason to suspect, therefore, that innocent gullibility was not all there was to this.

The lawyer, acting on behalf of the victims, faulted the Securities Commission and Bank Negara for not being more vigilant, but the law is certain: to trade in this fashion, one must be licensed. To want more of these regulatory bodies is perhaps to demand the sort of policing that cannot be reasonably provided. They have often repeated the maxim that if it sounds too good to be true, it probably is. The sad fact is that many Malaysians will part with their money on a whim, long odds notwithstanding. The Malaysian susceptibility to con jobs is legendary. The point here is that once burnt they cannot expect the authorities always to rescue them. Ponzi schemes are fraudulent, as Raja Noor Asma's conviction in January amply attests. In the final analysis, no matter how low impact the education received, being foolish is still very distinct from being greedy. The latter is much less excusable.