[ALBSA-Info] Fwd: FT.com Albanian pyramid savings gone

[irma spaho]

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>             Albanian pyramid savings gone
>             By John Mason and Kerin Hope
>             Published: August 16 2000 17:31GMT | Last Updated: August 17 
>2000 16:02GMT
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>             Investors in Albania's notorious pyramid schemes will get 
>little of their money back, the Albanian government has been told by 
>financial investigators hired to track down $1bn lost in frauds that 
>wrecked the economy and tipped the country into anarchy.
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>             PricewaterhouseCoopers, the professional services firm asked 
>by the government to investigate the schemes, has concluded that only $50m 
>is recoverable.
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>             The PwC report, which is also critical of the help offered by 
>Albanian officials in locating the money, has never been published, despite 
>being submitted to the Albanian ministry of finance last January.
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>             The socialist government under Ilir Mehta, the pragmatic prime 
>minister, is attempting to draw a line under the scandal that prompted 
>violence which claimed more than 2,000 lives and cost many Albanians their 
>life savings.
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>             Under pressure from western lending institutions to adopt 
>credible economic policies, the government has retracted promises that 
>investors would be compensated in full. It is now trying to put the scandal 
>firmly in the past while putting the blame on the previous government of 
>Sali Berisha under which the schemes flourished.
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>             Much of the PwC report will come as little surprise to 
>Albanians, particularly its conclusion that the 17 schemes, which collapsed 
>in early 1997, were "thoroughly dishonest businesses".
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>             The schemes typically promised returns of about 8 per cent a 
>month and proved irresistible to a population that only recently had 
>emerged from communist orthodoxy. At their height, they had liabilities 
>equal to half the country's gross domestic product, according to the 
>International Monetary Fund.
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>             Tracking down the missing money proved difficult. According to 
>Rick Helsby, the head PwC investigator, the bulk of the money was taken out 
>of the country in cash in lorries bound for Greece and other countries.
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>             Between $50m and $100m has been found in overseas bank 
>accounts, mainly in countries such as Greece, Turkey, Hungary, Macedonia, 
>Germany, the UK and the US. However, Albania lacks bilateral agreements 
>that allow this money to be recovered.
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>             Less well known is the extent to which those behind the 
>schemes benefited. PwC was able to identify many of the assets that went to 
>Vehbi Almucaj, the principal operator of Vefa, the largest scheme, which is 
>also understood to have had close links with the Berisha government.
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>             One Tirana-based banker said: "There was strong evidence of 
>collusion between Vefa and the government. Vans owned by a state-controlled 
>bank used to transport Vefa cash across the border for deposit in Greek 
>banks."
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>             Some $9.5m of Vefa's assets were traced to Almucaj's personal 
>accounts with $141m more paid to employees and other individuals associated 
>with the scheme.
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>             Investigations into Gjallica, the second-largest scheme, 
>showed that $17m had been paid to Shemsie Kadria, its operator, and her 
>husband Gani.
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>             However, in both cases, much of the money traced remains 
>abroad and out of reach.
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>             Many of the difficulties facing investigators arose from the 
>lack of accounts kept by the schemes, presumably deliberately, Mr Helsby 
>said. However, he was critical of the help given by some officials meant to 
>co-operate with the PwC investigation. In particular, public prosecutors 
>hindered attempts to inspect documentation relating to Vefa, seriously 
>limiting the extent of the inquiry, he said.
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>             The report said the Albanian people were likely to be 
>dissatisfied by the Vefa inquiry and to expect further investigations.
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>             Whether this will happen seems uncertain. The Mehta government 
>has acted against the perpetrators of the schemes. Vehbi Almucaj received a 
>five-year sentence for fraud but the government rejected the sentence as 
>too lenient and has ordered a fresh hearing. Mrs Kadria's trial on fraud 
>charges continues.
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>             Otherwise, it is playing down the issue as it attempts to 
>restore stability and attract foreign investors. The legacy remains, 
>however. One western economist said: "The pyramid schemes still come up in 
>every discussion with a potential investor. Confidence is only starting to 
>recover."
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>             Meanwhile, most Albanians are resigned to accepting their 
>losses. Ilir Cani, who now works as a gardener in Athens, lost $20,000 in 
>the collapse of Vefa. He said: "We sold our apartment to invest more when 
>the monthly interest rate was increased to 8 per cent. Now my whole family 
>is in Greece trying to save enough money to build a house in Tirana."
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