Businesses concerned of hidden ‘pyramid schemes’

TIRANA, March 30 – A business association called Konfindustria has expressed concern for an increased presence of the so-called “chain company pyramid hidden” in the Albanian economy.
Konfindustria has submitted a formal application to the general director of tax in order to undertake fast legal actions necessary to combat the phenomenon of “a chain of hidden pyramid companies, resulting in actual losses of the companies with financial liquidity disabilities” that use cash “to cover their obligations.”
Konfindustria urged the tax authorities to set specific structures within the system of taxes for the start of bankruptcy procedures for those companies having financial losses in two consequent years but which use the transfer of their losses from one year to the other.
Konfindustria said that many such companies pass the debts from one year to the other using subsequent loans from banks, which they also said could participate in an illegal activity they called a “time bomb” to the banking system and also the country’s economy.
The collapse of such investment schemes in post-Communist Albania sparked widespread and deadly rioting in 1997. An estimated 1.68 million investors lost 1.26 billion USD.
The schemes were fueled by new cash pumped in by gullible investors, and crashed when enough investors pulled out to claim their profits.
Crowds looted army depots, the government ceased to function and a few thousand people died in the violence.
A temporary administration was set up with the help of the international community after a NATO-led force was sent to Albania to help restore order.
Several other managers of failed pyramid schemes have been imprisoned and many others fled Albania.
Few of the missing funds have been paid back to private investors.