Rachel’s (not real name) marriage got off to a rocky start.
Last year Rachel got sucked into the hype about foreign exchange trading. She was pointed to Reilag Investments Ltd the biggest forex trading house around. She signed up with an initial $2,500 based on a sales pitch that she would earn 20% per month on her money, meaning she would double her money every four months.
She got paid the first month and then the second and then she had a brainwave. In August her wedding fundraising meetings kicked off and she thought it might be a good idea to invest the collections from the meetings with Reilag.
Suddenly Reilag started falling back on its payments to her before stopping altogether.
The long and short of it is that her wedding was a lot less glamourous than was initially planned and the newlyweds are barely on talking terms.
Reilag through a Cyprus based broker, Fx Pro, was trading on the most liquid market in the world. The currency market has an estimated daily turnover of up to $4 trillion dollars or the equivalent of the total economic activity (GDP) of Germany, the world’s fourth largest economy.
So for instance if you enter a trade with $50 leverage will allow you control a contract of $15,000 and assuming a one percent profit on this contract would leave you $150 richer but a similar loss would set you back a similar loss
At the height of the Naguru-based company’s operation it was said they had 700 investors and $12m having passed through their account.
Investors were seduced by the promise of a 20% monthly return on their money, which means they would recover their initial investment in five months with subsequent payments pure profit.
In a December 3rd meeting managing director John Kasumba blamed the collapse of the company’s accounts to a “pittance” on turbulence in the euro zone.
He pledged that the company could recoup that losses in 70 days and pleaded that investors stop harassing him and his family so he could concentrate on making the money back, according to minutes from that meeting.
Kasumba was held on several occasions on the prompting of irate investors.
It is at this point that investors in a last ditch attempt to recover their monies constituted a committee to oversee the running of the company and recover investors’ money.
Eighteen days later the committee threw in the towel, reporting that Kasumba had not been cooperative and suggesting that the case be forwarded to police.
“It is on this premise that OPH 100 has decided to compose a communiqué, which will be addressed/delivered to the Inspector General of Police and copied to the various heads of security agencies to arrest JK(Kasumba) and SK (Sheila Kagunda), such that they are apprehended and pay for their crimes according to the Laws of The Republic of Uganda,” the committee said in its second and final report to investors.
Kagunda and Kasumba were the company’s main traders.
“Finally, Operation Hope 100 (OPH100) has agreed to disband and relive itself of its duties, which involves working to ensure investors principal monies are recovered from Reilag Investors,” the committee reported at the end of last year.
Sources familiar with the events say however that Kasumba presented himself to the committee and promised to be more cooperative. No report has been released by committee subsequent to this development.
Kasumba could not be contacted for comment on the matter but several investors the New Vision talked to had no kind words for the fallen financial wizard.
“I had $20,000 with Reilag and that has all disappeared, we will not let Kasumba get away scott free, if he thinks he will get away with our money he is joking,” one investor said on condition of anonymity.
Money managers in Kampala would have predicted the collapse if they had been consulted and felt investors did not do enough due diligence. Theye were seduced by the huge returns and ignored the risk.
“Before you invest the key thing is to find out whether the industry is regulated, a regulator will ensure that operators meet set standards, fully disclose the risks of the ventures and ensure that players are run by credible managers. If there is no regulator as an investor you have no fallback position,” fund manager African Alliance boss Robert Kitariko said.
Reilag was a company set up under the company’s act and was not supervised by Bank of Uganda, Capital Markets Authority or any financial industry regulator.
The police said they had recorded no complaint yet but Kampala Metropolitan Police spokesman Ibin Ssenkumbi, was reported to have said that since the victims willingly entered into a contract with the company as shareholders, they know that they have to share the risk of their business except if fraudulent activities can be proved.
“If it was a case of fraud, then it would be a criminal offence and the culprit would have to be arrested and prosecuted as a criminal,” he said. “But if it is a business loss, then it is a risk that they should be ready to bear.”
This will serve little consolation for James (not real names) who ploughed a huge chunk of his retirement benefits into the scheme.
“I cannot afford the loss at this stage in my life. What am I supposed to do now?” he asked tears welling up behind his spectacles.
Last year Rachel got sucked into the hype about foreign exchange trading. She was pointed to Reilag Investments Ltd the biggest forex trading house around. She signed up with an initial $2,500 based on a sales pitch that she would earn 20% per month on her money, meaning she would double her money every four months.
She got paid the first month and then the second and then she had a brainwave. In August her wedding fundraising meetings kicked off and she thought it might be a good idea to invest the collections from the meetings with Reilag.
Suddenly Reilag started falling back on its payments to her before stopping altogether.
The long and short of it is that her wedding was a lot less glamourous than was initially planned and the newlyweds are barely on talking terms.
Reilag through a Cyprus based broker, Fx Pro, was trading on the most liquid market in the world. The currency market has an estimated daily turnover of up to $4 trillion dollars or the equivalent of the total economic activity (GDP) of Germany, the world’s fourth largest economy.
"Trading involves betting that one currency will move in your favour against another in a currency pair. The forex market also allows for heavy leverage, so that with relatively small sums one can trade in volumes of as much 300 times your initial input magnifying profit but similarly affecting losses...
So for instance if you enter a trade with $50 leverage will allow you control a contract of $15,000 and assuming a one percent profit on this contract would leave you $150 richer but a similar loss would set you back a similar loss
At the height of the Naguru-based company’s operation it was said they had 700 investors and $12m having passed through their account.
Investors were seduced by the promise of a 20% monthly return on their money, which means they would recover their initial investment in five months with subsequent payments pure profit.
But in December last year Reilag management informed investors that the money was all gone except for a “meager” $100,000...
In a December 3rd meeting managing director John Kasumba blamed the collapse of the company’s accounts to a “pittance” on turbulence in the euro zone.
He pledged that the company could recoup that losses in 70 days and pleaded that investors stop harassing him and his family so he could concentrate on making the money back, according to minutes from that meeting.
Kasumba was held on several occasions on the prompting of irate investors.
It is at this point that investors in a last ditch attempt to recover their monies constituted a committee to oversee the running of the company and recover investors’ money.
Eighteen days later the committee threw in the towel, reporting that Kasumba had not been cooperative and suggesting that the case be forwarded to police.
“It is on this premise that OPH 100 has decided to compose a communiqué, which will be addressed/delivered to the Inspector General of Police and copied to the various heads of security agencies to arrest JK(Kasumba) and SK (Sheila Kagunda), such that they are apprehended and pay for their crimes according to the Laws of The Republic of Uganda,” the committee said in its second and final report to investors.
Kagunda and Kasumba were the company’s main traders.
“Finally, Operation Hope 100 (OPH100) has agreed to disband and relive itself of its duties, which involves working to ensure investors principal monies are recovered from Reilag Investors,” the committee reported at the end of last year.
Sources familiar with the events say however that Kasumba presented himself to the committee and promised to be more cooperative. No report has been released by committee subsequent to this development.
Kasumba could not be contacted for comment on the matter but several investors the New Vision talked to had no kind words for the fallen financial wizard.
“I had $20,000 with Reilag and that has all disappeared, we will not let Kasumba get away scott free, if he thinks he will get away with our money he is joking,” one investor said on condition of anonymity.
Money managers in Kampala would have predicted the collapse if they had been consulted and felt investors did not do enough due diligence. Theye were seduced by the huge returns and ignored the risk.
“Before you invest the key thing is to find out whether the industry is regulated, a regulator will ensure that operators meet set standards, fully disclose the risks of the ventures and ensure that players are run by credible managers. If there is no regulator as an investor you have no fallback position,” fund manager African Alliance boss Robert Kitariko said.
Reilag was a company set up under the company’s act and was not supervised by Bank of Uganda, Capital Markets Authority or any financial industry regulator.
The police said they had recorded no complaint yet but Kampala Metropolitan Police spokesman Ibin Ssenkumbi, was reported to have said that since the victims willingly entered into a contract with the company as shareholders, they know that they have to share the risk of their business except if fraudulent activities can be proved.
“If it was a case of fraud, then it would be a criminal offence and the culprit would have to be arrested and prosecuted as a criminal,” he said. “But if it is a business loss, then it is a risk that they should be ready to bear.”
This will serve little consolation for James (not real names) who ploughed a huge chunk of his retirement benefits into the scheme.
“I cannot afford the loss at this stage in my life. What am I supposed to do now?” he asked tears welling up behind his spectacles.
