Page last updated at 09:48 GMT, Tuesday, 18 November 2008

Colombia declares scam emergency

People outside the office of DRFE in Cali  on 14 November
Many people put their life savings in the investment schemes

Colombia's government has announced four emergency decrees in response to widespread unrest after the collapse of pyramid money schemes last week.

A state of "social emergency" has been declared under which police can seize money from firms accused of illicit activities to reimburse investors.

Thousands of people took to the streets in several cities last week when the finance firms closed without notice.

The companies had promised investors huge returns of up to 150% per month.

International arrest warrants have been issued for the heads of the pyramid schemes who have been identified.

But some feel that the government's actions are too little far too late, says the BBC's Jeremy McDermott in Medellin.

Many of the bosses of the biggest schemes are believed to have fled the country, having taken hundreds of millions of dollars with them, our correspondent adds.

Emergency decrees

At the weekend, President Uribe had vowed to help poor investors to recover their money after many of them lost their life savings.

Mr Uribe said that police had already seized some $40m (27m) held by pyramid schemes and that some of the finance companies had begun returning money to investors.

Clients of the DMG investment company protest in Bogota
Clients of one company took to the streets to defend it

The authorities were criticised for not acting sooner and Mr Uribe has said he himself should have examined the issue more closely.

The emergency decrees published on Monday set out new procedures to intervene in financial firms operating without authority and seize their funds.

The decrees also aim to ease the return of funds to depositors.

Mayors and local police are given authority to take preventive steps, such as closing suspect businesses, while the prison terms for running pyramid schemes are increased to between 10 and 20 years.

Police have sealed the offices of most of the 240 pyramid schemes they have tracked down, which between them collected well over $200m, our correspondent says.

Most of that money appears to have already disappeared along with the founders of the schemes.

Angry investors took to the streets last week when news spread that the finance firms, among them one known as DRFE (Quick, Easy, Effective Money), had closed suddenly.

The protests turned at times violent and curfews were declared in several cities.

But on Monday there were also demonstrations by people angry that police had occupied the offices of one of the biggest finance companies, DMG, which operates across much of Colombia.

Investors gathered in Bogota to defend DMG and its owner David Murcia Guzman, saying the police action threatened their investments.

Print Sponsor

Colombia scam: 'I lost my money'
18 Nov 08 |  Americas
Colombians riot over pyramid scam
13 Nov 08 |  Americas
Country profile: Colombia
19 Jul 08 |  Country profiles

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Sign in

BBC navigation

Copyright © 2019 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific