A company attempting to make money out of gold coins bearing the face of former president Nelson Mandela was ordered to cease operating by the Department of Trade and Industry on Friday.
In a notice published in the Government Gazette, Gold Charity Fund Investments was found to be conducting an unfair business practice.
An investigation into the company was launched by the Consumer Affairs Committee which suspected it to be a pyramid scheme. The company claimed it was in discussions with Mandela for the exclusive rights to mint a coin bearing his face, but the Nelson Mandela Foundation denied any involvement with Gold Charity.
Participants in the scheme were to pay R595, for which they would receive a 1/10 ounce gold coin, annual subscription to the fund, a monthly newsletter, and shares in the controlling company.
They were required to sell two gold coins to two other
participants, who would in turn each sell to two further participants, and so on, the committee’s gazetted report said.
Participants were to receive commission for their sales. The committee found that at least 87 54% of participants would receive no compensation. They would instead contribute towards the money made by the remaining 12,46%.
”The Peters of the scheme are robbed to pay the participating Pauls,” the report said.
It said participants were grossly misled, among others by being made to believe Mandela was in some way involved in the scheme.
”To use the name of an icon such as Mr Mandela to mislead consumers is not only an unfair business practice, which is certainly not in the public interest, but also borders on criminality.”
The name of the entity also misled consumers into believing their participation would greatly assist charity organisations.
”It appears that only 6,05% of Gold Charity’s turnover
was destined for charity.”
Trade and Industry Minister Alec Erwin adhered to a
recommendation by the committee that the scheme be declared an unfair business practice. – Sapa