Central Bank warns against Internet scams

The Central Bank last week warned the public against Internet-based scams and its investment after hundreds of Sri Lankans burnt their money in such a scheme but victims defended themselves against accusations that they were ‘suckers.’

The scandal widely reported in newspapers last Sunday also drew criticism and snide remarks from sections of the public that victims should have known better than investing in unregulated schemes particularly after the GoldQuest controversial multi-level marketing scheme. “In Sri Lanka it appears a sucker is born every second,” said one company accountant.

Harren Tennakoon, leader of the Seagull Members Association, told The Sunday Times FT that the participants in the Seagull Softwares scandal should not be dismissed as suckers or gullible victims. "We are educated people who did a lot of research before participating in something like this," he said. "BPO's (Business Process Outsourcing) are real jobs and there are lots of them around the world. This is not a GoldQuest scam. These people are educated and didn't fall for a GoldQuest scam."

Hundreds of people, including students and undergraduates, fell victim to Seagull Softwares, an Internet-based BPO run by two Indians from an office at Mount Lavinia. The victims invested in so-called slots – which ultimately totalled millions of rupees – in return for work which was supposed to pay off handsomely. Police are on the look out for the two Indians who decamped with the money.

The Bank in a warning notice urged the public against investing in schemes under the pretext of Internet based BPOs, pyramid schemes, multi-level marketing schemes and network marketing schemes.

It cautioned the public "not to get swindled by unscrupulus persons who attempt to induce the public to join such schemes to gain monetary benefits easily." Ashoka Handagama, Deputy Director of the Bank’s Information Department said the case is a bit different from the GoldQuest type pyramid scheme. “So we have to tackle the problem differently."

Since the Seagull scandal broke out last week, its unfortunate victims have been in a tizzy to find out exactly how it all went so wrong. Tennakoon, leader of the Seagull Members Association representing victims, said a meeting held by the association last Monday was attended by around 3000 participants.

He said it is estimated that there are close to 20,000 participants in the Seagull Softwares scam but only 3000 were able to attend as they are spread our across the country. The association has created a website, www.seagullmembers.com, where information on the latest developments is updated. The meeting was intended to help members in collaborating the information they have and submitting it to the CID (Criminal Investigation Division).

"We are also in the process of making a proposal and trying to send a letter to the President," Tennakoon said. "We want to hold some media conferences soon. We don't know where the two Indians are but we think they have definitely left the country. The Sri Lankans who were listed as Directors of the company don't exist because their identity cards were a fake. They were using real NIC numbers but they had made fake ID cards." He added that they are now trying to ascertain more information on the two Indians who were running Seagull Softwares in terms of why they came to Sri Lanka and who supported them.

Tennakoon is also urging the police and the government to take more interest in the case. "When some members have spoken to the police, they are being dismissed because they think these people did a stupid thing by falling for this scam. This is not right. What these men have done requires more attention from the government." Tennakoon added that the absence of laws regulating the Internet and use of the Internet for these types of businesses are urgently needed. "There are drug laws, traffic laws, but nothing for Internet fraud. The country needs to take an interest in developing laws governing the Internet. Any rogue can come here and swindle people because there are no laws in the books."

BPO's are increasing becoming ever more popular with the Indian BPO industry growing rapidly. It mostly involves companies in the west who seek to outsource certain work in an attempt to slash costs and increase productivity. Most of the outsourcing goes to countries such as India, China, Malaysia and Russia.