


Tumbling pyramids

A state of emergency is declared after swindled investors take to the streets

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Readers' comments



The prostitution and drug dealing bussiness are nor directly mentioned. The only fact is that the main initial funds of DMG were laundry money. I am not saying people invested in the drug dealing or prostitution, people invested money at incredible interest knowing that it was illegal. Those kind of interests do not exist in a legal scheme, most of the people were not tricked as you say. They just took the risk. Although, I agree with the governement issue, the money that belongs to DMG should be returned to the people, but the government should not spend money they don't have in a bunch of gamblers.


I do not think that the easy money culture is responsible for all that happened. Easy money is wanted anywhere in the world, and using this ideology to explain narcotraficantes and prostitution in Colombia does not seem accurate. People go to casinos everyday and make bets and lose their money, and there are TONS of drug dealers in the United States, and worldwide for that matter. I think this whole situation is just as easy as a scheme that tricked people into it. What we have to remember though is that some people did get returns, which was the difference. Most schemes promise some type of return, but in the end never deliver. This one however, promised a return, returned to some, and for the most part took the money of the majority. I do not think the government of Colombia should be completely obligated to return the money. I think that the government should punish the individuals who are responsible for this, and seize the returns given to many people (or sell all their luxury vehicles) and try to repay as many people as possible.


I totally agree with Casiodoro, the easy money culture in Colombia is the main problem. Most of the people knew what they were getting into and decided to "invest", they took the risk, and in my opinion the government should not pay anything. At least not with the money of my taxes!


... Greed and Corruption has always being the cancer of the free market economic ideology. In countries of South America and Central America where the mechanisms for fair distribution of wealth is so ineffective, it is easy for well informed individuals with low scruples to take advantage of misinformed and poorly educated populations. These individuals need to be severely punished and the Columbian government need to do a better job at policing the financial industry.(In the United States too.)


As you may see, President Uribe has spent six years looking to the wrong side, ie, populist meetings (Consejo Comunal, a meeting that equals or even surpass Alo Presidente in Venezuela) were petty issues are treated as a matter of great government concern . This kind of micro-management has allowed the President not to look at, nor to ask to to be informed about what is really happening. The Banking Superintendent is a kind of delegate of the President itself, so the President may be held fully accountable of the biggest omission in financial supervision in Colombia. It is not true, not even doubtful, that legal instruments were lacking; but even if this were the case, there is not excuse for not having issued, a long time ago, the rules needed. The problem with the "piramides" was probably well known and actively ignored. Everyone but Government knew about it.


Even though Mister Prado, the financial supervisor, could have been more diligent in stopping this mess, he did not have any legal faculties or power to stop it. His sacking is more a political maneuver to fuse out the government's political exposure, rather than an exercise of accountability. However, the General Attoney's Office (Fiscal General)did have all the powers, legal faculties and tecnical tools and personnel to stop this mess on time. In fact, the financial supervisor requested the General Attoney's Office assistance as early as February this year (and investigations and inquirements did start around such month). It was the negligence of the General Attoney's Office that enabled this mess to grow, and so much people to loose their money, but the press and the president are so afraid of the General Attoney's Office and judiciary in general, that they tend to point in the wrong direction or simply ignore the facts. Moreover, there were evident signs of money laundring since the beggining, even to the untrained eye, such as the coca growing region were the pyramids started, the exponential increase in the wealth of its leaders and the surprisingly long terms during which such schemes operated. Its sad to say, but President Uribe's drive and will to govern has been deeply undermined by the Kafkian use of the judiciary by its polical opponents.


Mr. Gomez, there is no need to get contentious. Not everything that's said here is meant for you. The fact that I agree with the government on this one does not mean -at all- that I haven't analyzed this. But well my friend, the great thing about democracies is that you don't have to share my opinion and I don't have to share yours. By the way, living in Bogotá does not mean that you necesarily know Colombia.

German Vives

Mr. Gomez, I do not believe my comment pretends to stop people from expressing their opinions. In fact, my comment starts saying: Everybody is entitled to her own opinion. In fact, I did not have your commment in mind when I wrote what I wrote. Nevertheless, I did ask people to make educated comments instead of trying to spread their "prejudices." Opinions, the good ones, are based on facts, regardless of which interpretation of them we make, and prejudice is based on a negative and destructive system of beliefs and feelings with no factual support.


Unfortunately, in this case I'll against The Economist opinion and say that some govern supervision is necessary, since the people that got involved in this pyramid scheme doesn't have the necessary discernment to make proper investments.Otherwise, I agree, Fraud is widespread all over the financial segment.

Camilo Blanco

This episode is a reflection of the inhability of the financial system to attract deposits from the poor, the system have a less than perfect record on client management and this event is a reflection of that poor PR management. This is a result of greed, envy and the flow of easy money which is the real problem, the fact that people in Colombia is biased to work less get more (narcotics dealers, prostitution, etc) is getting the contry into deep trouble and the government (which has its own share of this behaviour) acts late and only when the events were just impossible to ignore. Mr Uribes government is to blame for not acting on time, yes, but also the people who invested in the schemes and the population should not pay for this, the investors should be let to lose all the money the put up in their bet.


Boy are these people just gullible, greedy or juss' plain stoopid? If a gambler bets his entire life savings on a card game or a crap shoot and he loses, is the casino at fault? The government should have put an end to this from the very beginning, before the "sickenss" took hold, but like everything else in this Ma�ana Nation, they let the rot set in deep before they acted. The real culprits fled the country with all the money. The only hope is to send out an internation order of capture or send an elite force to forcibly bring them back to COlombia for trial.

Elver Gomez

Mr. Vives, I might not know everything about Colombia, but since I live in Bogota and have lived here all my life I think I am entitled to an opinion on how this country is run.

German Vives

Everybody is entitled to her own opinion, but it is sad to see how people who know nothing about Colombia or our banking system venture uninformed, and sometimes poisonous, opinions. Of the opinions I just read, one person sees “smokes”, another one bluntly calls Colombians ignorant and Colombia a Banana Republic, and another one goes on to blame the Spanish people. I am a little disappointed because the comments of most of these people, besides being plainly wrong, do not reflect the profile of the typical The Economist reader. Someone who customarily reads The Economist is a well-informed and cultivated person, who for sure makes intelligent and informed comments. I also would like to recommend all these uninformed commentators to review their own history, and perhaps, they will remain quiet. Just to go over US history, we have Enron, Nabisco, a telephone company (name eludes me at the moment), and the recent financial mess, where thousands of people are losing their homes, jobs, and their dignity in the process. When you compare the Colombian pyramids case to what has happened, and is currently happening, in other countries around the world, you see as a little annoyance. To frame the pyramids problem properly, we must find the root cause in two factors. First, expensive banking services, and second and more importantly, culture. Some people want to make a lot of money quickly and without working for it, and are willing to take unreasonable risks no matter what. Later on when things, obviously, go wrong and they lose their money, they refuse to accept their loses and look for places or people or governments to blame for their own foolishness. Unfortunately, fools abound all over the world.


It is an interesting thing about the pyramids specially the "timing" the country is in a politica Turmoil, the indigenous coming to the city to ask for their rights.
But the curious situation is that the paramilitary leader Mancuso is in Washington declaring that many politicians and people linked with Mr URibe government we're part of a massacre, when Mr Uribe was governor of Antioquia (Masacre del Aro)
I believe this is all smokes and mirrors to distract the media and the people. However the current events should be a warning for the Government, and notice the social discomfort and tensions that are rising.


There is some truth to the fact that banks in Colombia are abusing their monopolistic position. After all, the owner of one group has become one of the world's richest men in some 20 years.
But that is not what causes pyramids. It is rather ignorance, people's hope that a messiah will come and save them from poverty and, as the President rightly said, "the mafiosi culture of easy money without work".

Elver Gomez

Well, I would venture to say that even the mightiest of banks are casinos these days. But thank you for repeating the official line of the government, I had already heard it through the governments press department (El Tiempo, RCN , etc)


Mr. Gomez, though the financial system in Colombia has many problems, that is not what created this mess. Everybody knew that there was no legal way of earning such profits (guaranteed also) in such a short period of time. People gambled its money and, as happens in every casino, they lost.

Elver Gomez

The problem is that Colombia's banks are managed by the same 3 economic groups that rule the country, they run a state supported and sponsored monopoly based on corruption and with the benevolence of one of their own as vice-president. Anybody that believes in the power of free markets realizes that people are forced to take such risks with their money in pyramids because banks offer terrible service, and due to lack of competition have the luxury of offering paltry interest rates.


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