Odahiekwu Ogunde, Yenagoa
Bayelsa State Government says its 2014 Cooperatives Law does not cover investment in foreign exchange trading.
It was learnt that some cooperative societies in the state usually cite the law as regulation to mobilise funds for investment in Forex trading.The government’s clarification on Monday came amid concerns about the fate and safety of investors’ funds trapped in Forex investment schemes and for which promoters had allegedly been laying claim to the 2014 Bayelsa Cooperatives Law as an enabling legislation.
Speaking in an interview, Commissioner for Trade, Industry and Investment, Mr Federal Otokito, said the alleged crash of Baraza Multipurpose Cooperative, the dominant cooperative society engaged in Forex trading, was of great concern.
He said that the government frowned on the development whereby the cooperatives got registered and approved to operate as cooperatives but would later modify its bye-laws to include Forex trading.
Otokitio, who stated that the bye-laws are not superior to the extant laws, however, said the state government remained committed to the development of cooperatives and the safety of investors’ funds.
He explained that the Bureau of Cooperatives Development, a parastatal under the Ministry of Trades and Investment, had received many petitions from members of cooperative societies engaged in foreign exchange trading and was monitoring the situation.
He said, “The Director of the Bureau of Cooperatives informed me that there are so many petitions from members of cooperative societies whose funds are trapped in Forex schemes.
“I have been getting text messages and it is worrisome to see people’s hard earned money go down the drains.
“Our Cooperatives Law of 2014 does not include foreign exchange as one of the areas that cooperatives can engage in but what they do is to apply and get registration to operate cooperatives and after getting approvals, they review their bye-laws to include Forex trading.”
Recall that the most popular of the cooperatives in Bayelsa using the cooperatives model to mobilise funds from its members, Baraza, failed to meet its 25 per cent monthly returns (payment) obligations to investors.
The development has led to the trapping of funds running into billions of naira of its over 40,000 investors.
Baraza had since March halted the monthly payment of 25 per cent returns to subscribers and announced a three-month suspension of payments to allow it recover from the crash.
Economic and Financial Crimes Commision had in April warned members of the public to be wary of investment schemes that offer mouth-watering returns for the safety of their money.
Chief Executive of Baraza Multi Purpose Society, Dr Miebi Briebina, in a reaction to reports of petitions by members whose returns were due since March 2021, confirmed that the society had ‘paused’ payment of returns to recover from challenges faced by the organisation.
On the directives by the Securities and Exchange Commision to all entities engaged in mobilising investors funds for investment in financial derivatives using digital platforms, Briebina insisted that cooperatives were not being regulated by SEC.
He said, “SEC does not regulate Cooperative Societies, so we will seek clarification on this directive.
“The Nigerian Cooperatives Act 2004 defines how Cooperatives should operate. We do not mobilise public funds but use only members’ funds. Baraza has paused payout till July 19, 2021 to focus on its road to recovery.”