Black clouds over the pyramid schemes, and “Populli” shuts down
Driza: “I have money; I’ll pay out when they give it to me”
The State Bank “betrays” the pyramid schemes: Fear of inflation?
Driza’s official decision on the foundation. “Suspended until further notice” State Bank “betrays” the pyramid schemes: Fear of inflation?
Andrea STEFANI
The successive shocks of these past days are crystallizing the realization that the State’s honeymoon with the “pyramid scheme” business is over. And although it seems we are experiencing the end of a financial “era,” we cannot say exactly what we are leaving behind. Just as it was difficult, around five years ago, when the unrestrained firms began to sprout and flourish on the sunken soil of the Albanian economy, to say what these pyramids essentially were—money-laundering machines, serious investments, or a mixture of all of them.
The veil of mystery has been impenetrable, and no one can get beyond the name “fajde” that anonymity has given this “business.” And now, as the agony of the “fajde” has begun to unfold and even become palpable, another party responsible for them appears: the Bank of Albania.
For about five years the Bank of Albania—and indeed the entire banking system in Albania—has remained silent about the “fajde,” which openly and “legally” absorbed, in geometric progression, a considerable portion of the people’s savings and income. The banks kept silent for years, even when the firms and foundations, by then their regular clients, began depositing money in banks in the form of very substantial current accounts.
Why the banking failures? Unable to obtain an explanation from the Bank’s leaders, a hypothetical answer must be sought in the sphere that encompasses the Bank’s mission: maintaining moderate levels of inflation. Could it be that the absorption of money by the “fajde” business through bank counters had grown so large that the resulting monetary equivalent threatened the stability achieved by the Bank of Albania?
In fact, the recent shocks are believed to have caused the flow of money leaving second-tier banks to become stronger than the flow of money going from the “fajde” counters into banks. But why should the banks now be so cautious with other people’s money, unlike the time when their counters were dispensing extraordinary sums of money without restraint, “forgetting” that one day this money would flow back out through those same counters and overturn the “macroeconomy”?
There are many questions that need to be clarified transparently, but sadly, so far even the Transparency Commission on the “fajde” has offered the worried public only “megjul,” and with great hesitation. In time, the “State” avoided placing any burden on this “business” through restrictions that would have legally limited the “fajde” interest rates, or through a legal requirement for firms and companies to publish not only dizzying advertisements, but also balance sheets. But these practices, inherited from the war of ’97, as well as the “action” by the State’s financial departments, boil down to a threatening message to people: “We didn’t bring the ‘fajde’ here; we found them already in place.”
And now, on the threshold of a crisis, when hundreds of thousands of people wait, pray and cry beside counters that have lost their former magic, the Bank of Albania takes a somewhat unusual step. We hope its judgment will make this a realistic “soft landing” from the heights to which the super-interest rates have lifted us. Meanwhile, however, a large part of the public, which is not to blame for having no access to the “secret” financial ledgers, perceives the Bank’s move as a blow intended to hasten the “fajde” schemes’ descent from the “autumn season” into the abyss of winter.
TIRANA—Yesterday, the “Populli” foundation officially declared that it was suspending its activities until further notice. A notice posted yesterday morning at all the foundation’s agencies caused thousands of people to experience one of the darkest days of their lives. Its president, Bashkim Driza, explained in the notice that the bank, by imposing limits on the amounts of money he could withdraw, had forced him to suspend operations until the bank lifted the freeze. Meanwhile, yesterday morning Driza once again confirmed to Gazeta his willingness to pay people their money, if the bank provides the funds. Meanwhile, sources at the Commercial Bank say this decision has been taken for all firms and foundations.
and “legally” convert a considerable portion—how much is not yet known—of the savings and income of the wealthy population into a geometric progression. The banks remained silent for years, and the foundations’ requests—now their regular clients—began depositing considerable sums in lekë and foreign currency with the banks in the form of current accounts. The Bank of Albania also chose to issue this order: that second-tier banks must not provide clients—including “usurer” clients—with a service involving more than 30 million lekë from their deposits. The first to “blockade” the premises was the “Populli” foundation, which said it would take the matter to court. But, judging by the firms gathered at the counters, other companies and foundations may soon join this protest. And now the questions arise: What compelled the Bank of Albania, alongside the state’s powerful financial measure, to lash the “usury” banks so harshly precisely when they are experiencing a crisis? What compels the Bank of Albania to order state-owned second-tier banks to violate, “on the basis of [law?],” their relations with clients, displaying a shamelessly cavalier attitude toward payment
Yesterday, the closed counters of “Populli”