COTONOU, Benin – More than a hundred thousand people in the tiny West African nation of Benin have lost their savings in a Ponzi scheme run by a now-defunct company that appeared to be publicly endorsed by the country's president.
The government said in a statement last month that more than 130,000 people gave their savings to Investment Consultancy and Computering Services. Together they lost more than $130 million, the statement said.
The corporation was registered as a nonprofit computer service company and was operating illegally as a banking institution. ICC was forced to close July 1, and more than a dozen of its employees were jailed.
But the reverberations have echoed to the top of Benin's power pyramid and now threaten President Boni Yayi, who appeared on television with ICC managers.
Television news shows showed Yayi and other top government officials posing alongside the managers of the investment firm. The images were reproduced on T-shirts. While investors interpreted Yayi's presence as an endorsement, the president did not officially speak in favor of ICC during the appearances.
In this country of 8.7 million people, the average yearly income hovers at $750. Many lost months to years of savings in the scam.
Electrician Lambert Saizonou, 40, planned to use his investment earnings to buy his first house. Now he has lost all of his savings. Jobs are scarce, and Saizonou worries it will take years to save to buy a home for his family.
"They promised me an interest rate of 200 percent," he said. "Now I must start saving again, little by little."
Herman Menton, a 32-year-old company manager, lost nearly $1,500 after investing in ICC for a year. Like many of ICC's investors, Menton was referred to the company by friends who had already invested and lured him with the promise of high interest rates.
Perhaps the greatest swindle, some say, is the government's role in the investment company. Many victims say the sight of government officials in the ads reassured them their money would be safe.
"We saw them on television," said Pierre Dossa, a mechanic who lost his savings. "How could we not believe in it?"
Since the announcement that ICC's activities were fraudulent, Yayi has swept his administration of those associated with the company. In July, he fired Armand Zinzindohoue, the minister of the interior, and Chief Prosecutor Georges Constant Amoussou.
More than a dozen individuals connected to ICC have been jailed, including the president's cousin and two of the company's top managers.
But some members of Benin's National Assembly say these measures do not go far enough. They accuse Yayi of being complicit in ICC's corrupt activities, and they have called for his impeachment.
Adrien Houngbedji, Yayi's opponent in the 2006 presidential election and a vocal critic of the administration, says Yayi failed to exercise moral caution.
"He met with ICC managers in public, on television, and on the radio. This could only reassure investors," he said.
Houngbedji claims Yayi has failed in his official responsibilities.
"We have elected a chief of state to protect the people," he said. "He has betrayed the confidence placed in him by the people, and he should be prosecuted before the high court of justice."
But the government of Benin denies any wrongdoing. "This is a private affair between a business and its clients," said spokesman Candide Azanai. "Because the people have been robbed, the government is intervening for the security of its citizens."
An investigative commission has been established, and the government is seeking to retrieve funds from ICC, even seizing personal items such as cars and villas from the company's managers. Victims will be reimbursed according to how much money is recovered, according to Azanai.
ICC managers could not be reached for comment, as the company no longer exists and many executives are in jail.
The handling of the ICC scandal will be an important bellwether for the West African nation, says Africa expert J. Peter Pham.
Since the adoption of democratic elections in 1991, Benin has enjoyed a stable political environment. It's unclear if the scam could lead to civil unrest — or if voters will instead wait until 2011 to express their discontent at the polls.
"This will be a test of the maturity of the constitutional system and the democracy that has taken root in the last 20 years," says Pham, senior vice president of the National Committee on American Foreign Policy who has written extensively on emerging democracies in Africa. "Do you vote the rogues out of office or engage in mob mentality?"
Associated Press Writer Artis Henderson reported from Dakar, Senegal.