In an article focused on the scandal of the American investor Bernard Madoff – who squandered more than fifty billion dollars of investors' money entrusted to him – the French newspaper “Le Monde Diplomatique” tackled this issue under the title “The Violations of the Financial World», and considered that the current economic crisis “is often attributed to the risks arising from financial innovative products (such as sub-prime mortgages, securitization, etc..). However, this view ignores that huge sums were also squandered in the more classical capitalist mechanisms, such as in the Madoff affair, whose main perpetrator was sentenced to a hundred and fifty years in prison. The scam he used was the old technique known as "Charles Ponzi's pyramid scheme”, which took advantage of the gullibility of his victims, who believed that the peaks of these constructs can pile up and reach the sky ...” In fact, Le Monde Diplomatique's close examination of the subject opens the door for us to analyze the temptations of Ponzi's schemes: Almost a century ago, he would purchase an international postal reply coupon worth one cent in Spain, and then sell it in America for six cents. He then started his company and offered investors 50 percent returns on their equities in 45 days. There are many of those who operate “pyramid schemes” around the world, from Bernard Madoff in the United States, to Salah Izzeddin in Lebanon. Nonetheless, every country has its own proportional volume of funds invested, and subsequently, of profits made until the scam is exposed, or losses to the investors are incurred. The methods of profiting from these schemes, meanwhile, and the hoarding of virtual wealth in a short period of time, are all nearly the same. This is true even in the case of those electronic websites which claim to make profits in return for small investments, or that sell inexistent products where the vendors often hide, and scam the customers who respond to their deception. Whatever amount of profits made by these “scamming business men” is, and whatever “good reputation”, and “high and secure position” they might have, dealing with them must always be coupled with an inevitable sense of scepticism about their “genius” in making money and earning profits. In fact, not even the large financial institutions are capable of generating such profits, despite their organizational structure and their immensely skilled human resources. This is not to mention that the same is true for the most profitable and lucrative stocks belonging to global companies. The methods of these fraudulent individuals, who set up companies that do not have the organization of legal companies, must be examined before participating with them in uncalculated adventures. This examination must also focus in particular on the taxability of these companies, and their conformity with rules and regulations related to taxes and auditing, in addition to the number of their workforce when these companies are investing millions, and sometimes billions of dollars or their equivalent sums: For instance, Charles Ponzi, who founded his company 90 years ago, was “the company's founder, main shareholder, and sole employee”. When compared with this pattern of fraud – supported by rules and regulations abroad – the Lebanese example seems different. This is because between Georges Sayegh in the 1980s and Salah Izzeddin, a number of those who exploited other people's savings collapsed, and went bankrupt, depriving the people from their life savings. Despite the many examples and instances of fraud around the world, a large number of savers are still taking the bait of those investors who “venture” using other people's capital. In fact, there is no law in Lebanon that regulates “financial trading”, which is a trade that must be subjected to the provisions of the monetary authorities. It is well known in this regard that the businesses dealing in currency exchange and the like are regulated by the monetary authorities, while the individual initiatives to trade in finances, and to invest others' savings, then distribute dividends that exceed the returns offered by commercial banks on their customers' deposits, are not subject to the any regulatory laws, unlike commercial banks. As such, the banking system audits the sources of the funds deposited even if these are by the thousands, while “financial traders” are never questioned, even when their only goal is to amass virtual fortunes regardless of where the money is coming from. Consequently, these traders do not need to insure the money invested with them; on the other hand, there are deposit insurance funds in the banks' case. Were it not for the fact that Izzeddin was a partner in a financial company, the investigation committee at Lebanon's Central Bank would not have been able to question him after a major bank informed on him to the banking supervision commission at the Central Bank. He was thus referred to the investigation committee, and then the latter issued its report judging that Izzedin had managed his investments in a personal manner, and not in the manner of investment banks. Here, naiveté played a big role in getting the investors into the arms of Izzedin: The aim of making large profits blinded perceptions, and obscured reason from analyzing how large profits can still be thus made, when the global financial and economic crisis has been at play for nearly 15 months. While spending decreased in the developed world and emerging countries, with people there resorting to saving, due to the erosion of trust in financial institutions, this did not happen in Lebanon! Finally, it remains for the Lebanese government to take advantage of the current crisis ensuing from the lack of regulations in financial trading, in the same manner that it took advantage of the collapse of Intra Bank and issued the Monetary and Lending law at the time (which guaranteed deposits and protected banks from bankruptcy). It must now thus benefit from the successive bumps that wasted the savings of those individuals who were tempted by the prospects of high returns offered by the insecure, or dishonest, adventurers for the last thirty years. Or perhaps the authorities should enforce the laws already in existence, and lift any “political protection” such individuals may have.
