Rwandans who invested in the former TelexFree Rwanda Ltd company have appealed for government’s intervention to help them recover their lost finances from the US based company.
This comes a day after the company filed for bankruptcy in US Bankruptcy Court for the District of Nevada.
The international telecommunications and multi-level marketing company announced it had filed for relief under the US bankruptcy code to address certain operational challenges.
The Bankruptcy Code prohibits creditors from taking certain actions related to debts that may have owed prior to the commencement of the Bankruptcy Cases.
“If you believe that you might be a creditor of the Debtor based upon debts arising prior to April 13, 2014, and you are considering taking action based upon your status as a creditor, you may wish to seek legal advice,” a statement from the company said.
The company’s operations in Rwanda were banned last month after investigations revealed that it was performing a pyramid scheme that benefitted only the owners, leaving most clients counting losses.
“We want our government to engage the US (embassy) Commercial Attaché. It was a registered company in Rwanda and government should defend us,” James Gihana, one of the Rwandan investors said in an interview yesterday.
He said they had petitioned the Ministry of Trade and Industry, Rwanda Development Board and the Auditor General’s Office to intervene but they are yet to get feedback. Gihana declined to disclose the amount he had invested, saying it was personal matter.
But a source said individal Rwandans could lose as much as Rwf44 billion.
According to a report released last month, the company had channelled over $11.3 million (over Rwf7.6bn) to foreign countries, especially US and Germany without paying taxes.
The company was also supposed to have sent $6 million (Rwf4bn) to Rwanda in taxes.
Fred Murangira, who operated a TelexFree subsidiary company in Kigali, described the firm’s move to file for bankruptcy as disappointing.
When contacted, Emmanuel Hategeka, the Permanent Secretary in the Ministry of Trade and Industry, said it was difficult for government to intervene.
“If the company had assets in the country it would be easy for us to seize the assets and compensate the members but now I don’t think they had assets here. What we can do is only to look into the contractual framework between the company and members and advise accordingly,” he said.
He urged Rwandans to be cautious before venturing into suspicious businesses.
“It should serve as a lesson to Rwandans. They should invest with caution,” he said.
How the company worked
To join TelexFree, a member needed to invest $400, $1,525 or $16,225 a year.
The member was then obliged to post certain adverts daily obtained from the firm to a TelexFree website and the returns were ostensibly commensurate with one’s initial investment.
It is said that when a member invested $400 they got $20 weekly for 52 weeks, while the one who invested $1,525 earned $100 per week. A member who invested $16,225 was entitled to $1100 per week.
The company, that also operates in Uganda and Kenya, was suspended in Brazil, Peru and Tanzania over suspicion of involvement in money laundering.
Similar companies whose activities have been banned in Rwanda include Diamond Holiday Travels, Cooperative Abigize, Aguka development initiative, Twese development initiative, and Ingaru Company Ltd.