The Bayelsa government on Monday said its 2014 Cooperatives Law on which some cooperatives societies cite as regulation to mobilise funds for investment in Forex trading does not cover foreign exchange trading.
The disclosure brings to question the fate and safety of funds of investors whose funds are trapped in forex investment schemes whose promoters tout the 2014 Bayelsa Cooperatives Law as enabling legislation.
Mr Federal Otokito, Commissioner for Trade, Industry and Investment said in a telephone interview that crash of the dominant cooperative society engaged in Forex trading, Baraza Multipurpose Cooperative was of great concern.
He said that the government frowned at a development where the cooperatives got registration and approvals to operate as cooperatives and later modified its bye-laws to include Forex trading adding that the bye-laws cannot be superior to the extant laws.
Otokitio said the state government remains 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, was in receipt of several petitions from members of cooperative societies engaged in foreign exchange trading and was monitoring the situation.
“The Director of the Bureau of Cooperatives told 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 peoples 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 the review their bye-laws to include Forex trading,” He said.
It would be recalled that the most popular of the cooperatives in Bayelsa using the cooperative model to mobilise funds from its members, Baraza failed to meet its 25 per cent monthly returns payment obligations and trapping of funds running into billions for its over 40,000 investors.
Baraza had since March halted the monthly payment of 25 per cent returns to subscribers to the scheme and announced a three month suspension of payment of returns to allow it recover from the “CRASHED”.
The Economic and Financial Crimes Commision had in April cautioned members of the public to be wary of investment schemes that offer mouth watering returns for the safety of their hard earned money.
Meanwhile Dr Miebi Briebina, Chief Executive of Baraza Multi Purpose Society 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 society.
On the directives by the Securities and Exchange Commision (SEC) 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.
“SEC does not regulate Cooperative Societies so we will seek clarification on this directive.
“The Nigerian Cooperative Act 2004 defines how Cooperatives should operate. We do not mobilize public funds but use only members funds.
Meanwhile Baraza has paused payout till July 19th to focus on the Road to Recovery,” Briebina said.
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