Tajiks Stung by Investment Scandal

Monday, 21 February, 2005

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Nargis Zokirova

The collapse of a get-rich-quick scheme has left tens of thousands of Tajiks out of pocket and may prompt a new wave of civil unrest.

Only around 1,500 investors - those who had handed over less than a thousand US dollars - have been given their money back since the company running the scheme, Dushanbe-based Jamal & Co Ltd, was closed down by the authorities last month.

The firm's director Jamshed Siyaev and his main accountant Vyachaslav Tsoi are currently under arrest and have been charged with of tax avoidance, money laundering, false enterprise and illegal banking.

The arrests prompted the first spontaneous protests the capital had seen for a decade, with disgruntled investors demonstrating outside the general prosecutor's office to demand their money back, while a crowd that had assembled in front of the presidential palace was beaten back by police using truncheons and water jets.

Economist Asliddin Sokhibnazarov believes that the Jamal & Co scandal may become a catalyst for a socio-economic crisis in the country, still recovering from a devastating civil war that ended seven years ago.

"Tajikistan needs real economic improvements, otherwise a socio-political crisis is unavoidable. The people are tired of the blunders by the incompetent government," he said, alleging that the authorities' peacetime record has been marked by a series of miscalculations that have brought the economy to the brink of collapse.

The former Soviet republic's economy is now so depressed that more than 80 per cent of its population live below the poverty line - leaving many citizens vulnerable to get-rich -quick schemes such as that allegedly offered by Jamal & Co.

The firm operated a bead-stringing business. It required people to pay up front for equipment needed to make jewellery and other items out of pearls, which the company would then buy back from them.

Analysts believe that tens of thousands of Tajiks were involved, many of whom handed over their entire life savings or mortgaged their property in the hope of making money through the scheme.

Dushanbe resident Mukhammad Teshebaev sold his car - which was used as a private taxi, and was the family's main source of income - after his wife talked him into taking part in the investment offer. "The taxi business wasn't much, but at least I earned 50 dollars a month and could afford bread and cereals," he told IWPR. "I listened to my wife, paid 2,000 dollars for the pearls, and have been left with nothing."

Teshebaev and his wife invested money just before the arrest of the company chief, and have virtually no chance of being refunded. Now the family, which has an invalid child, will struggle to get by. "I am prepared to do anything to get my money back," said Teshebaev.

Shoira Makhmadalieva, who invested 3,000 dollars, told IWPR that she mortgaged her house to a high-interest moneylender in order to take part. "Now my family of six may be thrown out on the street. I am prepared to do anything, even to go the presidential palace and stand there for days. If that doesn't help, I am prepared to take the most extreme measures - I have nothing to lose," she warned.

Azizmat Imomov, the country's first deputy general prosecutor, told the media that the prosecutor's office had retrieved around 2.3 million dollars from the defunct firm. But this will not be enough to compensate every out-of-pocket investor - and at present nobody is sure exactly how many people lost money.

As the investigation into the affair continues, the authorities have been criticised for the way they handled it. Sokhibnazarov, who is deputy head of the opposition Democratic Party of Tajikistan, alleges that the law-enforcement bodies understood from the start that Jamal & Co's activities could be risky, but did not take any measures.

Sokhibnazarov even suggests that the authorities may have had some involvement in the investment offer. "Otherwise, how can you explain the fact that the scheme was built in full view of the law-enforcement bodies, who had a great deal of information about such firms' activities in neighbouring countries, and did not take any action?" he claimed.

This is not the first such financial scandal to hit Tajikistan. At the end of last year, around 400 people in the northern Khujand region fell victim to a firm offering a similar pearl-stringing money-making enterprise. Over the course of three weeks, the company's owners raised 50,000 dollars before disappearing without trace.

Nargis Zokirova is an independent journalist in Tajikistan