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0253026113
ISBN-13:
9780253026118
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Fast Money Schemes: Hope and Deception in Papua New Guinea

Fast Money Schemes: Hope and Deception in Papua New Guinea

by John Cox

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Overview

In the late 1990s and early 2000s a wave of Ponzi schemes swept through Papua New Guinea, Australia, and the Solomon Islands. The most notorious scheme, U-Vistract, attracted many thousands of investors, enticing them with promises of 100 percent interest to be paid monthly. Its founder, Noah Musingku, was a charismatic leader who promoted the scheme as a form of Christian mission and as the basis for establishing an independent kingdom.

Fast Money Schemes uses in-depth interviews with investors, newspaper accounts, and participant observation to understand the scheme's appeal from the point of view of those who invested and lost, showing that organizers and investors alike understood the scheme as a way of accessing and participating in a global economy. John Cox delivers a "post-village" ethnography that gives insight into the lives of urban, middle-class Papua New Guineans, a group that is not familiar to US readers and that has seldom been a focus of anthropological interest. The book's concern with understanding the interweaving of morality, finance, and aspirations shared by a global cosmopolitan middle class has wide resonance beyond studies of Papua New Guinea and anthropology.



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Product Details

ISBN-13: 9780253026118
Publisher: Indiana University Press
Publication date: 10/02/2018
Series: Framing the Global
Edition description: New Edition
Pages: 260
Product dimensions: 5.90(w) x 8.90(h) x 0.50(d)
Age Range: 18 Years

About the Author

John Cox is a Research Fellow at the Institute for Human Security and Social Change at La Trobe University in Melbourne, Australia. He has more than twenty years of experience working in the Pacific region as a development practitioner and anthropologist.

Read an Excerpt

CHAPTER 1

Studying Scams

It was just like a dream at that time. Now it's so obvious that it was a con but at that time it was like all your birthdays had come at once! It was like Christmas every day!

Jack, doctor and Bougainvillean investor

PORT MORESBY, THE sprawling, dusty capital of Papua New Guinea (PNG), was the scene of a rush of Ponzi scams in 1999. Queues of people formed outside the offices of the "fast money schemes": some coming to make deposits, some to check their balances, others to roll over their earnings or even withdraw their rapidly growing balances. All had the hope of turning their deposits into huge sums of money with offers of 100 percent or even 200 percent interest per month. Rolling over K100 for a few months would produce returns in the thousands, or so they were told. Money Rain, Windfall, Bonanza '99, and Millennium: the very names of the schemes heightened expectations. The largest and longest lived is at the center of this drama and so of this book: U-Vistract Financial Systems, a Ponzi scam run by one Noah Musingku from the island of Bougainville. In a country with a population of some seven million people, as many as 300,000 people joined UVistract and the other fast money schemes, bringing with them their relatives, neighbors, and colleagues and losing millions of Kina, the national currency.

Introductions were mostly made by word of mouth, but, as passersby saw the growing queues or heard stories of payouts, they were also drawn into the world of fast money:

"I went in just to see what was happening and they said it was a fast money scheme"

"I looked out of the bus window and I saw all these people and I asked what are they doing and people told me that it was U-Vistract"

"My uncle came to me and asked, 'Have you heard of Noah Musingku?'"

"Our staff were sitting at their desks with calculators working out how many thousands they would be paid"

"This scheme was offering 100 percent return in one month, that scheme was paying 200 percent, I was crazy to leave my money in the bank."

The Port Moresby "coconut wireless" buzzed with stories of instant wealth, and, as the schemes spread through the town, almost no one was immune from the excitement. Similar queues started forming at money scheme offices in provincial centers around the country.

Like Ponzi scams elsewhere, early investors were often paid large amounts — and publicly. This generated credibility for the schemes and attracted still more investors. The visibility of payments to prominent people — and even simply rumors of such payments (cf. Stewart and Strathern 2004) — provided evidence that the schemes' financial patter was true. Jack describes the conspicuous consumption of his cousin at the height of the fast money rush:

There's a doctor who's from my area. He went off medical school for three months and was just investing. He got K10,000 from relatives and got a brand new K126,000 Toyota Prado. He used to drive us around and buy us drinks. For three months we never used to see him at school. He'd buy his classmates to take notes and make excuses for him. Every week, he'd go to invest. It must have been a lot of money because he was just playing around with money like it was nothing. Then he bought a brand new Toyota Celica. It was red. Probably worth K120,000, something like that. We used to call him a black tycoon. He had a lot of girlfriends, including an Australian lady who used to work for AusAID.

I was not there to see these queues of hopeful investors or the few successful "black tycoons" as I began research on this phenomenon with a visit to Port Moresby in 2005 and then conducted my main fieldwork during 2009. Nevertheless, many people, even those who ended up losing their money, have told me the same story in a similar tone recalling the heady excitement of the times. Indeed, the ability of fast money schemes to sustain the hopes of their investors long after the bubble had burst is remarkable. None were more successful in this regard than U-Vistract, the focus of this book. U-Vistract developed an elaborate cosmology of moral capitalism that it disseminated through well-produced newsletters, webpages, and its local organizers. More than fifteen years after the scheme was declared bankrupt by the PNG courts, U-Vistract continues to operate out of Bougainville and is even now drawing in small numbers of American and Australian investors through its internet presence as the International Bank of Meekamui (IBOM).

In this book I ask how this implausible scam has managed to persist over such a long period of time. Charles Ponzi's notorious scheme, after all, lasted less than a year before the authorities closed it down in August 1920. U-Vistract had a similar period of operations between its commencement in 1998 and the last payments to investors in 1999. However, it has managed to evade prosecution and, as its followers in PNG dwindle and lose hope of seeing their returns, is finding new dupes further afield. In the last few months of writing this book, I have given evidence to court cases in Sydney, Australia, and (via Skype) in Des Moines, Iowa. In both these cases, investors with no connections to PNG have been fooled into investing in U-Vistract. The scam is more global than I thought possible when conducting my initial fieldwork among middle-class Papua New Guineans, whose stories and experiences are the substance of this research.

In the following pages, I argue that U-Vistract's propaganda succeeded because it articulated far more than the material aspirations of middle-class Papua New Guineans. Through its financial patter, the scheme reengaged people in a moral vision of the nation and of themselves as catalysts of change. For both dupes and fraudsters the scheme was a locally staged performance of global ideas of financial investment, perhaps even ethical investment. As Foster (2008) has argued, global imaginings of share markets imply moral responsibilities and possibilities for individual investors, just as they resituate citizenship as a polity within market structures. As a type of "ethical investment" U-Vistract not only provided a means for people to deposit money into a financial scheme they believed to be good (and so make an ethical consumer choice), but it also represented an investment of individuals themselves in an ethical project of remaking themselves as prosperous global citizens. These good citizens prove their moral worth by exercising an appropriate mastery of financial disciplines, which now extend beyond saving and thrift within a household budget to calculation of risk and investment in a global market economy. This book shows how the "financial self" Zaloom (2006) is being created and reworked well beyond the financial centers of New York, Tokyo, Chicago, and London. Papua New Guinean financial selves are Christian moral actors who seek to harness the wealth of global stock markets for the purposes of fulfilling old hopes of egalitarian national development.

Scale-Making in "Economies of Appearances"

Stories of Ponzi schemes and mass pyramid scams are told everywhere, not least in the institutional centers of global finance, as New York's own Bernard Madoff demonstrated to the world. Indeed, Madoff's scam has become a metaphor for Wall Street's greed and deception. This book explores the fast money scheme experience of Papua New Guineans, but this is not a simple get rich quick story set in a quirky, out-of-the-way place. Nor is this a cautionary tale or a lament over the poor gullible victims of the scam, who in their out-of-the-way innocence could not have known any better. Rather, the fast money story reveals engagements with money and society that reconstitute middleclass Papua New Guineans as moral persons, citizens of a reformed Christian nation who have earned their right to join the cosmopolitan middle class in enjoying the prosperity of global share markets. Where other scholars (Hart and Ortiz 2008; Ho 2009, LiPuma and Lee 2004; Thrift 1998, 2001; Zaloom 2006; Miyazaki 2006) have studied finance as it is experienced and produced by the share traders and investment bankers working at the centers of powerful global networks, this book provides an ethnography of the reception of ideologies of investment by international consumers of financial products, albeit in the form of fraudulent mimicry. Local adaptations can provide new perspectives on global discourses, as Schuster (2015) has shown in her enthralling account of microfinance in Paraguay. This case comes from a country known as a primary producer of raw commodities such as gold, liquefied natural gas, tropical hardwoods, oil palm, coffee, and cocoa. PNG is rarely considered as a home to a growing middle class, and this places the aspirations of these distant investors into sharper relief than perhaps would be the case in a metropolitan example. Similarly, the fundamentalist Christianity that characterizes much of the public culture of PNG brings the moral dimensions of financial investment to the very fore.

Appadurai (1996) wrote of financescapes, referring to the flows of capital transforming the world on an unprecedented scale. PNG is very much part of such global financescapes. For the past decade, its economy has boomed with foreign investment in mining and associated services. The national capital, Port Moresby, has all the hallmarks of a boomtown, with new apartment towers going up quickly at prices few of the city's residents can afford. The spread of benefits from this economic development is highly uneven. Almost everywhere across the country, people complain of poverty, corruption, crime, ill health, and poor schooling. Yet, in this same moment, the middle classes are exposed to more possibilities of prosperity than ever before, even if these are simply experienced as images of distant and more modern people from elsewhere on television or the internet. For contemporary PNG, Appadurai's financescapes are "promissory notes of modernity" (Robbins 1998) that transform social relations through the power of anticipation. And this anticipation lies at the heart of any successful scam, or indeed of speculation more generally.

In her article "Inside: The Economy of Appearances" (Tsing 2000b; reprinted in Tsing 2005), Anna Tsing explores these themes of spectacle and promise, developing the idea of scale-making projects. Tsing analyses the case of Bre-X, a Canadian mining company that attracted millions of dollars of North American investment capital and high-level support from the Indonesian government, but on false pretenses.

Tsing's method of identifying scale-making projects translates well into the Papua New Guinean context. The scale-making done by PNG's fast money schemes draws on many of the same themes of investment, finance, and globalization. Yet what makes the Papua New Guinean fast money schemes so interesting is that they mark the emergence of a different kind of investor than the start-up capitalists who funded Bre-X. Bre-X was a fraud that mimicked mining ventures, but U-Vistract and its associated fast money schemes were frauds that mimicked financial investment itself. If Bre-X founded its deception on a well-known process of mineral exploration and production, U-Vistract's deceit was based on the idea that share markets produce wealth from their intrinsic processes that are abstracted from actual productive enterprises. Whether individual investors had a more elaborate rationale (and many did not), the scheme's appeal lay largely in repeating the financial patter of trading, options, investments, and so forth: a global language of money begetting money.

If this vision of global particle finance sounds intoxicating in its greed, one of the distinctive features of the Papua New Guinean fast money phenomenon was U-Vistract's efforts to create a moral foundation for the intersecting scale-making projects it fostered. This interplay of economic positioning and moral response lies at the heart of understanding fast money schemes because the shifting fields of money and morality provide opportunities for arbitrage (Guyer 2004; Miyazaki 2013). While global finance was understood as a money-making venture connecting Papua New Guineans to the wealth enjoyed by others, it was also joined to another global scale-making project: that of transnational Christianity, specifically in its neo-Pentecostal forms that emphasize the "prosperity gospel." As we shall see in the following chapters, Christian moral tropes were central to U-Vistract's conjunction of scale-making projects as it conjured images of the global, the national, and the personal. Christianity was fundamental to integrating these three scales and to girding them with a moral legitimacy that naked desire for money lacked.

U-Vistract's audacious claim to be a Christian reform of global financial systems was then true in a limited sense. The persons and their imagined communities that it fostered were not based on a morally and relationally hollow neoliberal homo economicus. Rather, they reflected a moral order that began with a disciplined Christian self. This self was "born again" into a more intimate relationship with God that presaged an affective self, finding fulfilment in its sentimental engagements with others and being moved by empathy for the sufferings of others into moral action. The later chapters of this book explain how these sentiments were merged into a distinctly Papua New Guinean modern social imaginary (Cox and Macintyre 2014; Taylor 2004) that included a critique of the national project of "development."

Fieldwork: Urban Papua New Guinea

Fast money scheme investors were clearly not the kind of discrete, geographically bounded community that has characterized the ethnographic traditions of studying Melanesia. While there were some apparent core constituencies of each scam (Bougainvilleans, Pentecostals), what was striking was how the scams spread out from these communities, cutting across the typical networks of church, family, affines, and kin to embrace friends, neighbors, and workmates as relationships that helped transmit the money schemes from individual to individual. These face-to-face transactions of information, forms, and account statements and the imaginings of wealth were also the flows of a global financescape, albeit heavily infused with Papua New Guinean national features.

To some extent this pattern of diffusion was characteristic of everyday life in the towns of PNG. However, the sharp distinction between town and village is proving hard to sustain in the face of increased mobility, the rise of peri-urban settlements, and now the advent of cheap mobile telecommunications that link urban wage earners to their rural subsistence kin in new ways (King 1998). Villagers have been seeking to be recognized as modern by their urban cousins for some time (Hirsch 1995, 2007; Knauft 2002). Moreover, the spread of schemes such as U-Vistract across various provinces has raised questions that are national in scale, suggesting that the study would need to be a multi-sited ethnography (Foster 1999a; Marcus 1995). In particular, I follow Foster (1995c; 2002a) in making considerable use of newspapers and other media through which fast money schemes were promoted and debated.

It became clear that middle-class investors were at the center of the dynamic flows of the scam across diverse networks of Papua New Guineans around the country. Indeed, Roeber (1999, 99) makes the claim that "fraud is a middle-class crime," intrinsically connected with city life and the uncertainties of living in the socially disembedded urban environment. He documents how fraudsters in Zambia played on middle-class competencies in negotiating city life. Fast money schemes were also a middle-class crime in PNG and certainly drew on middle-class ideas of "the desirable and the feasible" (Errington and Gewertz 2004).

The study is mainly urban based but does not seek to engage with a single geographically defined and locally bounded "community" of people within a particular urban locale. Rather the study begins with the phenomenon of fast money schemes and identifies relevant informants based on their involvement. Involvement is envisaged as occupying a very broad spectrum of activities and attitudes and so engages a variety of positionings. These may include direct promotion of money schemes; disillusioned investors, still hopeful investors, or past successful investors; authorities trying to close down the schemes; or microfinance operators trying to promote an alternative model of accessing money. These are the "chains, paths and threads" (Marcus 1995, 105) of fast money schemes.

(Continues…)


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Table of Contents

Acknowledgments


Abbreviations


Dramatis Personae


1. Studying Scams


2. The Story of U-Vistract


3. Money Schemes in Melanesia


4. Cargo Cult Mentality


5. Plausibility, Experimentation and Deception


6. U-Vistract and the Prosperity Gospel


7. Negative Nationalism and Christian Citizenship


8. Christian Patrons and Cosmopolitan Sentiments


9. "Some of us are fed up of banks!"


10. Nationals Investing in the Global


Conclusion: Disillusionment


Selected Glossary


Bibliography


Index

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