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The Ponzi Scheme

The Ponzi Scheme
pic courtesy of imageafter.com

pic courtesy of imageafter.com

The discussion about the Ponzi scheme allegedly run by Barry Tannenbaum and possibly others has been extensive, but one significant point seems to have been missed entirely, and that is the morality of the scheme let alone the legality.

From newspaper reports the scheme apparently promised returns of above 200% per annum by importing the Active Pharmaceutical Ingredients or API’s and then selling these at very high margins to drug manufacturers Aspen, Adcock Ingram and others. Lots of high profile people like Sean Summers former CEO of Pick ‘n Pay and Norman Lowenthal former JSE chairman have been reported as being among many prominent and wealthy people who were apparently were duped into ‘investing’ large sums of money, as were many ordinary investors. Allegedly the transactions with the drug companies were fraudulent, with forged documents, and the returns of 200%+ pa were paid by using new investor’s money.

There are many grins at their expense – how could they be taken like that? But isn’t there another question which should be asked?

The raw materials were for the manufacture of AZT and other anti-retrovirals, used for treatment of people with Aids. So if the investors really were taken in by the scheme they believed they would triple their money each year by grossly inflating the price of lifesaving drugs, prescribed mainly to very poor people. It is true the Government paid for most of those drugs, and so they would have been the ones ripped off had the scheme been genuine. But let’s not forget this scheme was running during the time the Free State stopped issuing ARV’s because they had run out of budget. Even the Government does not have an infinite supply of money, and so the eventual losers would have been AIDS sufferers. I wonder how many of them died during that time – and whether any ‘investors’ had tiny pricks of conscience?

So not only were these investors apparently naïve, but if  they believed the scheme to be genuine it seems they were willing to take obscene profits at the expense of poor sick and dying people. Nice one.

Sadly all the commentary has been about the so-called ‘victims’ of the scam – the investors. Pity there is not a bit more focus on those who would have been the victims had the scheme been genuine. And the morality and ethics of the ‘investors’.

©copyright  Ed Hatton. All rights reserved. You may republish this article or extracts from it provided you acknowledge me as the author and acknowledge my copyright.

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