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Al-Ahram Weekly 11 - 17 March 1999 Issue No. 420 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 11 - 17 March 1999 Issue No. 420
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Focus Special Features Travel Sports People Time Out Chronicles Cartoons Letters Many losers down the pyramid
By Tarek AtiaA few months ago, in cafés, sporting clubs and other public meeting places around Cairo, friends were approaching each other with a proposition. "How would you like to make $87,000?"
That question, sounding as it inevitably did, like some sort of scam or trick, was enough to turn some people off the idea immediately.
But more than a few people wanted to know more. And that's when the glossy Future Strategies folder came out, accompanied by the yellow and blue "Pentagono" certificates with the seven names on them, and the beginning of the by-now infamous spiel: "Okay, first you pay me $40, then you pay the first person on this list $40, and, finally you pay this company in Italy $46. You then get three certificates with your name on them. You sell each of these for $40 and you've made your money back. Then, as more certificates with your name on them are sold, the higher up on the list your name goes, until you are number one and people start sending you $40 cheques or money orders."
The concept is then usually sealed with the following two pronouncements: "So-and-so who works in a bank will tell you about actual people who have been making money, who just opened accounts a few weeks ago and have gotten hundreds of $40 cheques." The second reassurance, always proffered by the true Pentagono believer is, "In any case, all you're losing are the $6 mailing costs. The rest of the $120 you're getting back. So what's there to lose?"
Cartoon by Fathi
It was amazing how fast the idea spread. Everywhere you turned over the past few weeks, someone was trying to convince someone else to try out Pentagono. You'd have thought it was some new sort of Viagra. Friends, neighbours or relatives you never thought would be interested in such a thing might call you up and suddenly say they wanted to talk to you about something very important. Employees of entire companies were selling the certificates to each other, in a frantic attempt to keep the chain going.
"I'm not sure if it's a scam or not, but it's a smart idea," said a high-level banking source. "I noticed three months ago that a lot of $40 and $46 cheques were being handed over. I wanted to get in on that kind of cash. I estimate that 12,000-13,000 people have participated, and that $50 million dollars has been spent so far. About 750 employees from our bank alone have joined in. It's even more at other banks. Entire companies have participated. It's reached Sohag, Damietta and Assiut."
But then, last Friday, the opposition daily Al-Wafd's front page screamed out about a brand new revelation relating to the dollar shortage in the market: "A lottery has funneled $300 million to a foreign company. The Central Bank orders banks to stop all transactions to this lottery."
The source continued: "On Thursday the Central Bank sent a memo to all banks saying that these lottery transactions were in the realm of the 'mahzourat' (taboos). We decided to stop doing the transactions. They were a pain anyway because we didn't make any money off of them. People started complaining: 'What do you mean? I can do whatever I want with my money. I can take it out and burn it if I like.'"
The public's reaction to the banks' refusal to take their transactions says a lot about how rampant the Pentagono craze has become. In other countries where the scheme has been introduced there has been a lot more negative publicity.
A quick search on the Internet reveals several web sites which have been dedicated to warning people about the dangers of such "pyramid schemes". One, operated by the Royal Canadian Mounted Police (the equivalent of the US's FBI), is a public alert designed to warn people that "continued participation in the scheme may result in a charge under Section 206(1) of the Criminal Code of Canada."
Another, run by an Australian law firm, says, "Anyone who generates money from Pentagono does so because someone else goes into debt. They in turn pass on their debt to other people. If you froze Pentagono at this second you would see that there are more people paying than there would be getting paid. If you froze it next week you would see the same thing. Next month, next year, it really doesn't matter when you freeze it."
Regarding the Italian company's claim that they are registered by the Italian Chamber of Commerce (clearly one of the company's main selling points, since they mention it so many times and so prominently in their brochures), the State of Wisconsin (USA) Department of Justice website says, "Beware of statements by the company that it has the approval of a government agency, Better Business Bureau or Chamber of Commerce. None of these organisations ever endorse or approve specific marketing plans."
The protesters argue that Pentagono is really a lottery with very low chances of winning, but that the company deceives potential participants by not printing those odds, indicating instead that it is their effort which will help them win.
In Louisiana, the attorney general sent out a warning last December to consumers regarding a "foreign pyramid scheme that seems to be targeting deaf consumers, among others. The attorney general said, "In reality, pyramid schemes can't work because they require an infinite number of people to keep money circulating. The people who get into such schemes early are the only ones who make any money. People on the bottom levels lose money when there are no more recruits. Another characteristic of pyramid schemes is that they target closely knit groups and encourage participants to bring in friends and relatives, which explains the recent complaints to our office from hearing-impaired individuals."
Leila Sadeq, who says she has won $360 in three months, is probably one of the lucky ones who entered into the pyramid at an early stage. Even so, she says, "At first I didn't agree, on principle. I thought it was like gambling. But then a lot of people I know got into it, and told me that it was alright, that it was like the prizes on TV." Her husband, Youssri Khalaf, a contractor, is the one who got her into it. He claims that Pentagono is "for people who know business, who travel, who know how money can change hands". That's where this type of thing moves fast. "Some people at church," Khalaf says, "were saying it's haram, forbidden, because you're making money without working for it, but I don't agree."
In any case, everyone agrees that the Italian company is the one making the most out of the whole thing, some $46 for each participant, just for organising a few pieces of paper. Which means that if a million people in Egypt join in, Future Strategies will bag $46 million.
One Heliopolis resident who refused to participate said, "I'm upset that so many people who are supposed to be intelligent got in on this, and defend it. This sets a bad precedent for Egypt, that people in important positions have agreed to participate in something like this. It reveals both their ignorance and their greed."
This is not the first time Egypt has had to deal with a pyramid scheme. In the '60s, and again in the '80s, there were games called Sphinx and Al-Masriyyin where people bought and sold shares for five pounds each in the hope of winning LE5,000. But those schemes were eventually banned by the government.
