I recently read about the Singapore Police probing a company run by Western Australia Pilbara businesswoman Veronica Macpherson. The property investment scheme was heavily promoted in Singapore and Malaysia from 2014 until its collapse in early 2016. It was marketed as a way for overseas investors to get in on the strong Pilbara economy and its demand for housing. High annual returns of up to 18% were promised that failed to materialise. The entire investment operations is now alleged to be a Ponzi Scheme.
I find that Ponzi Schemes have become increasingly complex and sophisticated. They are putting more effort into the marketing campaigns to reel in unsuspecting higher value individuals, especially those located overseas. Although the Singapore authorities continue to educate and warn us about Ponzi Schemes, Singapore investors keep putting money into them. Which is unfortunate and even worse when they end up losing their life savings.
By the way, the online forum comments on this incident have been nasty and unhelpful. It’s bad enough that people have lost money on this, there’s no need to laugh and be pleased with other’s financial mistakes and misery. The least we can do is empathize with them and work towards educating everyone on the dangers of Ponzi Schemes. But I have to admit this is a tough endeavor. I can give you a personal example of how difficult it can be.
My parents have farmland in Malaysia that was passed down to them by my grandparents. A section of the farmland was used to grow Gaharu/Agarwood/Aguilaria trees several years ago. Now that these trees have matured, my parents are looking for companies to partner up with to sell and harvest them. Do you remember the overseas Agarwood investment Ponzi Scheme reported in the news last year? Singapore investors put money in companies that bought saplings or semi-matured Agarwood trees in Malaysia or Thailand and were promised very high returns when the trees they purchased were ready for harvesting. That tree investment scheme went wrong.
I know my parents will be on the production side of any deal with such companies, which has a lower risk than the investing side of the deal. However, they have no technical and legal expertise in ensuring that they don’t get screwed over by these companies. What surprised me the most was how difficult it was to convince them to look past the promised high returns (even if more applicable and possible on the production side of the deal) and get them to have a closer look at the likelihood of these returns.
These were just some of the points that we discussed but you can see how it highlights the problem with Ponzi Schemes:
- Having a nice office in a good location does not mean that the company is definitely legitimate and not conducting a Ponzi Scheme
- Sales staff that are well-spoken and look honest does not mean that they are not lying to you
- High returns are abnormal and what’s promised may not always be delivered
- Checking up on the company online (i.e. negative news, placed on any Alert List) is more important than hearing its representatives talk up the company
I reckon Singaporeans are inherently trustworthy by nature because of our upbringing. Although we are in a meritocratic society, trust in the Government and one another was taught to us since young for the current and previous generations. This is not a bad thing except for the fact that the world is changing fast into a place where people will take advantage of others just because they can. It’s sad but the next generation would probably grow up learning to be distrustful just to survive in this hostile environment.
We should work towards educating and helping one another, especially when it comes to avoiding big financial mistakes like that. And when they happen, we should try to emphasize and understand the amount of misery it can cause the person. Even if you don’t think you will ever make such mistakes, how can you be so sure about it? I don’t think any of us are above making big financial mistakes. It’s just a matter of you being in an unfortunate combination of circumstances that can result in that happening. We do what we can to move on and recover and shouldn’t we wish the same for others?