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There has been a lot of media coverage regarding the investigation into the United African Stokvel (UAS) by the Financial Sector Conduct Authority (FSCA). Thousands of investors claim to have lost money and estimates are that members could have lost up to R100 million.
Many of those who invested say they believed the UAS was legitimate because they had heard about it through the media. The founder of UAS had even been featured at a tax conference. To what extent was the UAS legitimised by the media and even organisations such as the SA Institute of Chartered Accountants (Saica)?
I first came across the UAS in 2021 when City Press readers contacted me asking whether it was legit. One look at the offering set off alarm bells. It was unclear how they made their money and the returns offered were well above what would be considered normal investment returns.
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They were promising to triple your money in six months by investing in “telecoms and property”. One financial adviser told me that, when he had contacted them for further information about their investments, they avoided answering the questions.
While recommending to people who contacted me not to invest, a reader sent me a link to an interview with Darren Langbein, the mastermind behind UAS. He was speaking at Saica’s TaxCon in 2021. This is an annual event hosted by Saica.
Langbein spoke at the conference as an “expert” on stokvels and the business opportunities around digitising them.
Speaking at this conference gave him a great amount of legitimacy and he posted the interview with an SABC journalist on the UAS Facebook page. Saica had inadvertently given him the credibility he needed.
Responding to a City Press query this week, Saica said that, although Langbein had appeared as a speaker at its conference in 2021, he had had various media interviews prior to that event. The institute confirmed that “as soon as the allegations against Mr Langbein came to light, Saica removed his video and content from all our platforms”.
There were articles in publications such as Stokvel Talk and Disrupt Africa about how amazing Langbein and the UAS were. Ironically, in the Stokvel Talk interview, Langbein was quoted as saying that he was “entirely unaware of the amount of scamming that happens in the industry, and did not realise that his business’ success depended on gaining the trust of the stokvel community”.
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When people read or hear about companies or investments in the media, they believe they have some legitimacy. They are seen as being “endorsed” by the media houses. From the outset, it is important to understand that companies often pay for coverage – they pay for the interviews.
A good, ethical media outlet would ensure that the write-up is marked as an advertorial, but that is not always done. And even if it is marked as an advertorial, the readers do not always understand the implications of this. However, there are genuine articles about new businesses or investment platforms.
This is a very difficult path for the journalists to walk. As a journalist, one tries to cover new and upcoming investment options to provide these new entrants with some coverage in an industry dominated by large established players.
A good example would be investing in cattle. We have provided coverage of this interesting investment category, but these investments do not fall under the current financial regulations, which take time to adapt to new forms of investment. Until recently, crypto exchanges such as Luno were not regulated. Yet people are investing through those platforms.
Journalists should do their research, and the investment being offered needs to make sense. But, as an investor, you always need to do your own homework before you invest. You cannot believe something to be legitimate because you heard about it in the media.
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The other challenge journalists face is defamation. As much as one has a bad feeling about an investment such as UAS, publicly calling them out without any evidence will very quickly land you at the press ombud. The founders of pyramid investments are quick to take legal action because their entire investment model relies on new investors, so any negative media can bring down the whole business.
The best you can do is to explain that the numbers do not add up. You cannot use words such as “scam” or “pyramid scheme” until it is proven.
The UAS is not the first and certainly will not be the last investment scam to gain popularity and receive positive media exposure.
My advice to potential investors is to always do their own homework. If it sounds too good to be true – then it is – even if you are reading about it in the media. And just because there are no negative articles or reviews does not mean it is aboveboard.
It is only once the scheme fails that the investors step forward to complain.
