At La Fayette, in the center of Tunis’ Galaxy commercial compound, stands the now infamous Yosr Development. Once believed to be a kind of hen that laid golden eggs, this investment company may possibly be a large-scale fraud dreamed up by owner Adel Dridi, who allegedly tried to flee the country with over 80 million dinars (US $51,000,000) on June 21 and was arrested one day later.

At La Fayette, in the center of Tunis’ Galaxy commercial compound, stands the now infamous Yosr Development. Once believed to be a kind of hen that laid golden eggs, this investment company may possibly be a large-scale fraud dreamed up by owner Adel Dridi, who allegedly tried to flee the country with over 80 million dinars (US $51,000,000) on June 21 and was arrested one day later.

Dridi spoke to Correspondents earlier in June, insisting that accusations made by the Central Bank of Tunisia about his company being fraudulent were untrue.

“He who intends to flee abroad or deceive customers would not invest in his own country,” said Dridi, adding that had any suspicion – money laundering or corrupt money – been proven, he would have closed the company a long time ago.

At the time Dridi made that statement, Adel Riahi, Senior Media Official at the Ministry of Justice, said the former Governor of the Central Bank of Tunisia Mustapha Kamel Nabl had already submitted the first legal memorandum to the Court of First Instance in Tunis in which two bank accounts amounting to TND 480,000 (US $292,000) registered under the name of ‘Yosr Development’ company were frozen.

Riahi alleged that Dridi had deliberately changed his company’s field of activity and claimed that the company’s business domain was concerned with sourcing, marketing and development. Dridi also declared that his activity was limited to collecting and marketing consumers’ needs and that he had a website visited by over 500,000 visitors every day.

Yet Riahi said the present central bank governor sent another memorandum to the vice-president on March 26, 2013 after the company’s owner was referred to the Judicial Inquiry Council for investigation.

When hundreds of investors heard the news that Dridi had allegedly fled the country with over 80 million dinars, they gathered in front of the company headquarters in Tunis on June 21, only to find that the doors were closed and the company had vanished.

The gullible ones

Middle-aged woman ‘Munjiya’ said she had sold all her possessions of gold and brought about 3000 Tunisian Dinars (equivalent to $2000) to Yosr in order to take part in one of the saving plans prepared and distributed by the company to the prospective depositors.

Munjiya did not hide her fears that her deposits were likely to ‘go up in smoke’ given the size of criticism leveled against such companies in general and this one in particular. She, however, added that the sight of some people cashing their profits put her relatively at ease. She said that she would cash ‘the profits’ on August 25 when she would get 7,000 dinars (US $4,200), an important amount, which would enable her repay her debts and prepare for her daughter’s approaching marriage.

‘Nizar’, an employee in a ministry and father of two, said getting a housing loan from the bank was possible by deducting a large portion of his salary not to mention the unfair bank interests. He believed that depositing money with Yosr offered huge profits in the shortest imaginable time, not exceeding few weeks.  He dreamed of buying a house.

As an option for the bank loan, he decided to sell his own car and deposit about TND 3,000 ($1,800) with this company. He said part of the money he would get would be spent on certain necessities while the remaining balance would be re-invested in the company. He added that the higher the invested amount, the larger the collected profits. Depositing, for example, TND 6,000 ($3,600) would be TND 15,000 (US $9,000) in profits, TND 15,000 (US $9,000) would be cashed TND 42,000 (US $25,600) and TND 22,000 (US $13,300) would bring over TND 62,000 (US $37,750).

‘Insaf’, a bank employee, intended to buy a car, but she already had a housing loan, which prevented her from getting an additional loan. She saved TND 5,000 (US $3,000) but still needed the remaining amount as the price of the car she intended to buy was estimated at TND 22,000 (US $13,400). Insaf thought Yosr Development would be the ‘magic wand’ that could help her solve her crisis.

She said no sooner had she heard in the local media about this new experience did she consider the idea of investing part of her savings estimated at TND 2,800 (US $1,700). She was promised to be paid the first installment of about TND 7,000 (US $4,260) in August. Insaf expressed her regrets at not having invested her money earlier, adding that she deposited other smaller amounts of TND 100 and 200 with the promise to receive twice the deposited amounts in July. She said there were several contested profits dedicated for the holy month of Ramadan, including the advertised  “Deposit 300 Dinars and get a cash amount of 750 Dinars!”

Too good to be true

Abdul Sattar Mabkhouti, an economist, said this type of company does not have a legal framework. Therefore, they operate without the supervision of the Central Bank, the Ministry of Finance or any other official agency. He added that any business activity must be monitored by the state and governed by specific laws and licenses. Mabkhouti also stressed that profits granted by these companies are inconceivable and reach up to 100 percent.

“What we observe in Tunisia today is a weak financial market coupled with declining revenues and bank interest rates, which perhaps explains the large demand for such enterprises,” Mabkhouti said, stressing “These companies appeal to gullible people who are lured by the large profit margins causing them to believe that these companies are capable of investing their money and offering them net profits of up to 100 and 200 per cent.”

Mabkhouti believes this type of transaction involves fraud as it involves taking money from one person and giving it to another and so on until one day the owner of the company becomes incapable of paying the promised profits and will consequently flee abroad or be imprisoned on fraud charges—possibly what has happened with Dridi and Yosr Development.

It is a dangerous game, as the money does not go through the banks, consequently affecting liquidity, harming the national economy and possibly even leading to financial inflation, said Mabkhouti.

There are many doubts at present as to the source of these funds, as it could be produced by money laundering, trading in contraband goods or corrupt money generated through forbidden practices; these types of companies may simply be a facade for re-recycling corrupt money.

Fraudulent precedents

Some experts believe that this phenomenon is similar to the famous story of ‘Rayan Company’ in Egypt, which succeeded in luring large numbers of investors and leaving the country after collecting huge amounts of money from its clients.

 Yosr Development company was established in 2010 and the number of depositors exceeded 50,000. Its owner, Adel Dridi said he intended to increase the number of clients to 150,000. Between February 25 and March 1, the company was able to disburse more than TND 20,000,000 million.

Adel Riahi added that the company distributes inconceivable profits to its  clients, which constitutes an obvious violation of the fourth and seventh Articles of Law No. 65 of 2001 concerned with company establishment.

An official source from the Central Bank of Tunisia stated that the company’s file has been referred to the judiciary, entrusted with the task of taking necessary legal action in this regard.