BoN declares Karatbars International a pyramid scheme

05 May 2019 14:50pm
WINDHOEK, 05 MAY (NAMPA) - The Bank of Namibia (BoN) has declared Karatbars International, an e-commerce company that specialises in the sale of small gold bars, a pyramid scheme.
A statement issued by BoN Deputy Director of Corporate Communications, Kazembire Zemburuka on Friday said Karatbars International which specialises in the sale of small gold bars and gift items in gold bullion, is in contravention of Section 55A of the Banking Institutions Act of 1998.
The Act states that it is the mandate of the bank to investigate persons or businesses whose business activities and operations are suspected of contravening the legislation.
Following an investigation, BoN established that the business practice did not have tangible products for sale to prospective members or affiliates, except for small gold embedded cards.
The cards are purchased based on the successful recruitment of new participants, for which money is accepted as a regular feature of joining the business.
Zemburuka said the fees paid for the cards is used to render legitimacy to the business practice, thus its business practice was not suitable without the continuous recruitment of new participants.
“However, the real attraction of new participants to Karatbars is not the purchase of the gold card, but the desire to earn money through the introduction of new members to the business practice,” he stated.
The bank thus cautioned promoters and participants of Karatbars to stop conducting its business activities and to refrain from recruiting new members on the promise of earning a commission for recruiting them.
Zemburuka added that should promoters choose to continue selling the gold embedded cards and gold related products, then such products should be sold directly to customers.
“The products should also be the primary source of income, that is, the commission should be earned based on the products sold, and not on the recruitment of new members as is currently the case,” he said.