Once again, there is an angry public uproar over a swindle, this time involving nearly UGX2 billion. The people behind Capital Chicken, promised armchair investors, interested in the potentially lucrative poultry business, to trust them with their money and wait for generous returns on their investments.
Their calling card was: ‘Capital Chicken is a contract farming company which has opened doors to all individuals and those who want to have extra income are welcomed (sic) to farm with us.’
Farming with Capital Chicken also meant that you didn’t have to get your hands dirty, which was an added incentive to sign up. The general satisfaction level of the early days however, soon turned to worried queries during recent months, even as the number of investors had substantially grown since 2020.
Worryingly, the Capital Chicken people were now playing hide and seek, forcing many investors out of their armchairs and hot-footing to the nearest police station or other seats of authority.
The last straw came in the form of a public statement by the Capital Markets Authority, distancing itself from any regulatory responsibility over Capital Chicken, because it was not licensed.
It is not a funny story–just another damning reminder despite repeated lessons, of our gullibility, and yes dare we say it— our greed.
Quite possibly, the Capital Chicken owners were sincerely set on making good on their promises. Then later found themselves splashing about in the deep end, because they did not know how to swim. But this seems unlikely when you sample bits of their marketing campaign. It clearly played on people’s psychology and the fascination to ‘get rich quick’.
Social media was used to create a buzz. For instance, on the company’s Instagram account were three striking boasts that should have set off alarm bells. ‘Did you know? Fuel is high, everything is high, but with Capital Chicken you can bank UGX200,000 on a daily bases (sic); Farm with us.’ ‘Did you know? With Capital Chicken you can make UGX600,000 a month; Farm with us.’ ‘Did you know? Be your own boss and make UGX1,500,000 every week; Farm with us.’
These returns depended on how much you were willing to invest. Clearly, a big carrot was being dangled before our eyes and few thought of the bigger stick that is usually associated with easy pickings.
Capital Chicken was like a Godsend. It emerged onto the scene during the period of the Covid-19 pandemic when incomes were slashed and savings being rapidly depleted under lockdowns. Uncertain economic conditions tend to nudge us into the welcoming arms of such ventures as Capital Chicken.
Some investors however, caught on quickly and pulled out, labeling the venture a Ponzi scheme. The CMA unofficially muttered some concerns, but the majority held on and gamely swallowed the excuses from the Capital Chicken management about delayed payments. As is common in such cases, investors were desperately fighting off the sinking feeling that they had made a terrible mistake.
Others will swear they visited the farm, forgetting perhaps that if one is determined enough you can stage manage circumstances to suit your ultimate objectives. Some of you may have even seen the small panel trucks with Capital Chicken emblazoned on the sides. Then came the announcement by the Financial Intelligence Authority that the company’s accounts had been seized ended all hope.
There are suggestions that the CMA should have done more in protecting the Capital Chicken investors. This is unfair. The regulator cannot protect people who willingly risk their money in ventures without doing adequate due diligence and a Ponzi scheme thrives on the excitement of you not missing out on a ‘fantastic opportunity’.
Charles Ponzi, is believed to be the inventor of this type of scam. In 1920, Ponzi convinced investors that they would get a 40% to 50% on their investment in International Postal Reply Coupons within 90 days. Early investors received payouts as promised because Ponzi was using funds from later investors to give the promised payouts to earlier investors.
The scam continued to grow, as more and more investors, lured by stories of huge payouts, invested their money in IPRCs. Eventually, the scheme collapsed, but not before investors paid Ponzi several million dollars.
A Ponzi scheme demands that early investors will receive their payouts as promised then spread their tales of success to unwittingly entice new ones. Ponzi schemes may continue to grow for several months, or possibly several years, before people eventually catch on, and the scheme collapses.
For 20 years until his arrest in 2008, Bernie Madoff , the former NASDAQ chairman, America’s technology stocks exchange, ran the largest Ponzi scheme in history, estimated at $64.8 billion. He died in 2021 at a prison medical centre, but to date, less than $15 billion has been recovered.
Three balancing factors deliver an almost perfect Ponzi scheme: new investors constantly adding funds; investors are not immediately asking for their repayments and both parties confident that they will get back their money back plus interest. It is understandable if the Capital Chicken founders are in hiding, probably recovering from the mental strain of keeping it all together.
On his arrest in 2007, Madoff said: “As the years went by, I realized that my arrest and this day would inevitably come.”
The people behind the Capital Chicken scam have reportedly taken off with UGX1.7 billion of their investors’ cash. It is unlikely they will see much of this money ever again and equally doubtful the chickens (if any), are worth anywhere near this amount. This is not the first scam in which Ugandans have been swindled nor probably the last, bearing in mind the American saying, ‘There’s a sucker born every minute’.
Swindlers are skilled at convincing you that what they offer is real, the returns are high and the risks are low. Almost suddenly, we become fixated with the future profits at the expense of using just a little common sense. “Ifadeal is too good to be true, then it probably is not true,” actor, Michael Douglas and star of the Wall Street movie once said.
Yes, in hindsight, it is always easy to give good advice after the fact. But you can be surprised just how many people do not listen even when that same advice is given to them before they jump.