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The phenomenon of bogus companies offering get-rich quick schemes has resurfaced.
These companies attract small investors and individuals seeking to get rich quickly by promising them a 30 per cent monthly interest on their money.
The problem is that people, who seek windfall profits, get easily lured by fraudsters without ensuring if these companies are officially registered.
The question is, why have these companies and individuals surfaced now, after disappearing for the last two decades?
It is noted that these shady activities increase, as fund solidity is available in markets and the savings of small investors are on the rise, where several of them can be easily conned.
The activities of fund investment companies started for the first time in Arab countries with the first oil price increase in the beginning of the 1970's, when oil prices doubled.
Wages and personal savings increased as a result. The second increase in oil prices took place in 1980, but small investors did not profit as a result, despite the short time span between the two increases.
The Souk Al Manakh stock market crash was the result to similar fraud, while in Egypt, the activities of bogus companies led to a real tragedy to tens of thousands of middle income families, dreaming of quick riches.
The new round started now in the Gulf, where oil revenues have doubled, resulting in an increase in wages, the business sector and the increase in soluble funds.
Fund-investing companies and individuals working in the field on their own, do not set out in their activities out of a vacuum. They are completely aware of economic developments and the necessary circumstances for success.
This time, the gap between the second round and the current one has been more than twenty years, which is enough to erase the memory of the 1980's events. A new generation of fraudsters and small time investors make up the two ends of this illegal activity's equation.
Who are those responsible for failing to control fraudster activities that harm the economy and lead to the loss of small investors' savings?
Looking at the issue objectively, we find that the investors themselves are partly responsible.
Investors have to have acquired some sort of investment awareness with fraud cases reoccurring periodically. Many legal investments channels and routs opened up in GCC countries over the last 20 years, and financial markers have bursas, investment portfolios, stocks and bonds that were not available in the past.
The supervisory departments that monitor financial establishments within the central bank are also responsible.
As how can anyone boost his bank account from a few thousands to 400 million in a few days, without the central bank or the bank where the money is deposited takes notice?
It is necessary to activate the supervisory department's role, especially after all the illegal interactions by exchange companies and manipulations of GCC country's currencies.
All this was contained by clear official decisions and decrees, that showed there were no intentions to de-peg currencies from the dollar.
That does not mean exchange companies will not try to make use of rumours among tourists that are increasing steadily.
Increasing investment awareness and realising that these companies cannot make anyone get rich quickly, and activating banks supervision departments will ward off fraud and illegal activities that harp both the economy and individual.
Fund investment companies began operations for the first time in Arab countries with the first rise in oil prices at the start of the 1970s.
The writer is a UAE economic expert.
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