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Colombia declares emergency over investments

The Colombian government declared a state of emergency in response to widespread unrest after the collapse of pyramid money schemes last week. Thousands of Colombians, many of them poor and without bank accounts, had invested with unlicensed companies that offered monthly returns as high as 150 percent. Four emergency decrees were issued on Monday. Setting out new procedures, to intervene in financial firms operating without authority and the ability to seize their funds. The decrees also aim to ease the return of funds to depositors.

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Colombia declares emergency

Producer: Zaa Nkweta

ZAA NKWETA (VOICEOVER), TRNN: The Colombian government declared a state of emergency in response to widespread unrest after the collapse of pyramid money schemes last week.

FABIO VALENCIA, MINISTER OF THE INTERIOR (SUBTITLED TRANSLATION): As I told you, the government has declared a social emergency and will take measures to stop investors and the development of such non-authorized institutions. We will confiscate the assets of those companies to the investors according to what is possible, according to what we can recover and the criteria of distribution.

NKWETA: Thousands of Colombians, many of them poor and without bank accounts, invested with unlicensed companies that offered monthly returns as high as 150 percent. One outlet, known as Proyecciones DRFE, collapsed last Wednesday amid news that its owner, Carlos Suarez, had left the country and wouldn’t repay clients. The company was thought to have lost $270 million, having collected $181 million during the first nine months of 2008. Furious investors stormed and looted local branches in rioting that left 13 towns under police curfew and two men dead. Government officials vowed to repay the poorest investors and sent police to shut down other alleged pyramid scheme operations. At the same time, loyal clients marched through the streets to defend companies that had offered interest rates as high as 150 percent a month. One such company is DNG.

HERMAN FIGUEROA, DMG INVESTOR (SUBTITLED TRANSLATION): We are marching today to support DMG, a company that has fed the poor, which the government hasn’t done in a long time. The only thing that banks do is take away our interest, the little money we make. Meanwhile DMG has given us to eat. Long live DMG.

NKWETA: Four emergency decrees were issued on Monday, setting out new procedures to intervene in financial firms operating without authority and the ability to seize their funds. The decree is also aimed to ease the return of funds to depositors.

ALVARO URIBE, PRESIDENT OF COLOMBIA (SUBTITLED TRANSLATION): This new crime, which involves not returning all the money back to the depositors, would be a crime with a severe sanction that would include time in prison. And we are studying a rule that would allow for giving back these amounts of money to the depositors through a fast administrative procedure, so depositors don’t have to go through the traditional procedure of judicial liquidation.

NKWETA: So far, the government has seized $42 million in cash and arrested 52 employees of Proyecciones DRFE.

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Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy.