Thousands in despair as they hear of the domino-like collapse of firms they trusted with their life savings.
By THE MEDIA LINE NEWS AGENCY/ ABDULLAH OMARjordan stock market 224 88(photo credit: AP)
Thousands of small investors across the economically challenged Kingdom of Jordan have been struck by disbelief, despair and self-pity as they heard of the domino-like collapse of firms they had trusted with their life savings.
Nearly $2 billion of hard-earned money was siphoned from the pockets of tens of thousands of ordinary citizens on promises of making big bucks in a short period of time.
Amateur investors were lured by companies that claimed to be dealing with foreign exchanges, including speculative foreign currency, oil, gold and other items, promising staggering monthly returns of between 10-25 percent.
"Some of these firms were genuine but the majority were bogus," said Companies' Comptroller Sabr Rawashdeh a few days after he referred some of the firms to the State Security Court for trial on suspicion of fraud.
The bubble was burst when the government passed a law to regulate the function of companies dealing with foreign stock markets, and banned any company from receiving further deposits before rectifying their legal status.
In the past, the companies in question used to operate under simple trade licenses from the Ministry of Trade and Industry without being regulated by either the central bank or stock exchange regulatory bodies.
The introduction of the new law led one company to file for liquidation, a move that was seen by the Ministry of Trade and Industry as an attempt to "defraud" investors, said Rawashdeh.
"When the companies stopped taking money they were exposed, complaints started arriving, prompting us to take a tough stance against those that were fake," said Rawashdeh.
Within 24 hours the news had spread like wildfire, with investors from the northern city of Irbid down to Jerash, Amman, Zarqa and further south trying to collect their money from the companies.
Um Muhammed, a widow and mother of three, sat outside the doors of a company that was recently shut down.
She had deposited with it all her life savings of JD 1500 in the hope of providing a monthly income for her sons and daughters.
"I am sitting here since the morning and will not leave until they give my money," said the frail-looking 56-year-old woman, who comes from Baka refugee camp.
Officials suspect most firms, which preyed on the dire economic needs of citizens as the kingdom goes through a daunting recession, used pyramid schemes to operate, while others operated legitimately.
Some investors were able to retrieve part of their investments, while thousands of others were left empty handed.
Police had to intervene in the popular area of Sweleh, when thousands attacked the headquarters of a Masfoufah firm after learning the manager was imprisoned.
In the northern city Jerash, one of the most affected by the collapses, thousands gathered in front of a building turned into a local stock market in foreign trade.
A sign reads, "Profits between 15-25%."
In the busy street downtown, all the offices that used to offer financial services via the Internet have closed their doors.
According to Prime Minister Nader Dahabi, the government has so far referred eight companies to the state security court for "committing economic crimes."
"By referring them to the SSC, there is the possibility of issuing a decision in these cases faster and to regain people's financial rights at a faster pace," the premier told a meeting attended by the heads of the financial committees at the House of Representatives and the Senate, as well as economic analysts.
The people dealing with these companies were not just laymen, he said. They included economists and professionals from different walks of life who were all after fast profits, added the prime minister after the issue became the talk of the town in recent weeks.
The issue has become politically sensitive at a time when the kingdom suffers from the repercussions of high oil prices and economic slowdown. Inflation has jumped to more than 13.5%, unemployment is 14.5% and poverty is at an even higher rate.
Officials have said they need to take swift measures to absorb growing public anger after fingers of blame have been pointed at the government for licensing these firms without examining their financial and personal records.
Observers say many investors are reluctant to report some of the companies in the hope of recovering their money and for fear government seizure of assets will further complicate the situation.
In the meantime, Abu Abdullah waits for news of the fate of the company owners, who have been arrested pending investigation and trial. Abu Abdullah, who invested nearly JD 70,000 after selling his house and car in the hope of improving his living conditions, comes every day to the office of the Matrix Company, hoping to see company officials open the doors and return his money.
"I have only myself to blame. I should have checked the company before putting all this money into it," he told The Media Line.
Dahabi said that the government, through the companies comptroller, tried to block the licensing of these firms, but they contested the decision at the High Court of Justice, which ruled that citizens could register companies for the purposes they wanted.
Economists say the impact of this mass fraud scheme hit Jordanians hard when the kingdom and other parts of the Muslim world celebrated the 'Id Al-Fitr' holiday period, when people indulge themselves in a bonanza of spending, but this year many met the event with concern over the fate of their life savings.
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