As our front page story reports today, how big the Sakvithi scam is has still not been established. But it is clear that at least 4,000 people, enticed by the offer of very high interest rates, had placed their money in a risky enterprise and now stand to lose their capital. The well known quote that ``there’s a sucker born every minute’’ has been widely attributed to the great American showman, P.T. Barnum (1810-1891), as well as sundry others including a famous con-man, Joseph (Paper Collar Joe) Bessimer and others of that ilk. Even Mark Twain had been credited for the catchy truism. Be that as it may, it can be safely said that if a sucker is born every minute, a greedy human being enters this world every second. And that sums up the predicament of all those who went to Sakvithi for 48% interest and more on their deposits. They are reaping the seeds of their own sowing.

``Higher the yield, greater the risk’’ is a first principle in investment whether in the stock market, fixed income instruments or any other enterprise. There are people who lend money in the Pettah for returns sometimes as fat as 10% a day. These are short-term accommodations, made mainly on trust and the system has worked not just over the years but virtually over many decades. No doubt some people have got burnt, but often not necessarily because of deliberate cheating but rather on account of circumstances beyond the control of the borrower. But providers of such credit have usually made money even after discounting dues they could not recover. If not, this kind of money lending in the Pettah in the age old way could not have gone on for as long as it has. But depositing in outfits such as Sakvithi is a different matter as many thousand have found to their cost despite plenty of previous examples, not excluding the Pramuka Bank, staring them in the face. Pramuka depositors, after sweating a lot of blood, have won some government assistance for a bailout and this perhaps will encourage losers at Sakvithi to look for Government/Central Bank support.

We cannot believe that Sakvithi Ranasinghe Sir, a well known English teacher who appears on national television, has actually been conferred the title of Deshamanya. But his advertisements, apparently, described him as such. Given that we live in a country where all kinds of odd bods, including at least one who sits in Parliament on the national list of the government party and holds a non-cabinet ministry, calls himself Doctor, anything is possible in this so-called ``Democratic Socialist’’ Republic. Bookies have been conferred national honours alongside respected pillars of society deserving of recognition. The aforesaid doctor has come into Parliament under the colours of both the green and blue parties. The Central Bank spends millions of rupees of pubic money buying advertising space in the national media to keep people informed of registered and regulated deposit taking institutions. Yet the kind of scam now unfolding is possible because of human greed. A small ad placed by some shark attracts more attention than the bank’s big notices! There are enough vampires in this world to take advantage of this human failing. People looking for big interest on their deposits must understand that if they want to take the risk and enjoy the reward, they must be willing `donors’ if things go wrong.

The trouble is that while investors are happy with the sky-high interest rates, often paid for a short while with funds of other suckers drawn into the net, when the whole enterprise fails they want the Central Bank or the government to pick up the tab. This has happened in the past and will, no doubt, happen in the future. The Central Bank is considered the ``lender of last resort’’ and in the interest of preventing a run on deposit taking institutions, not excluding the banks, it has thrown good taxpayer money into rescue efforts. That has provoked questions like ``if you can bail out Mercantile Credit, why not us?’’ That argument has been used to good effect at least where the Pramuka Bank was concerned. Mr. Rohan Perera, widely blamed for the Pramuka debacle, went off abroad on leave from that bank never to return. If the authorities here have a case against him, they should have been able to get him back to face the music. But that has not happened till now. So no wonder if the public begins to think that the same will be the case with the Sakvithi man. He, by all accounts, had not fled the country as some reports had it. He had been abroad when Central Bank investigators simultaneously visited a half a dozen other suspicious deposit taking institutions in various parts of the country including the deep hinterland to look into their books. The word must have got out, as it always does in our open mouthed society, and the suspect naturally would have decided to stay away from the heat.

His operation was clearly slick. On payment of a salary of Rs. 100,000 a month, he had been able to employ a prominent media personality to give a veneer of respectability to his business. Those who know Mr. Edwin Ariyadasa will unquestioningly accept his assertion ``believe me, I’m not a thief.’’ He certainly is not that but he had proved himself to have been as gullible as depositors drawn in by the way above market interest carrot and now has to suffer the consequences. Those who have been stung will bay that the Central Bank has done nothing or not done enough about unauthorized deposit takers. But the bank has to collect evidence and go through the legally prescribed procedures before it can act in terms of the Finance Companies Act. Before the Director of Non-Bank Supervision can take an illegal finance business to court, he has to have the necessary information. He gathered this material before he went to the Monetary Board last week and the Central Bank named half a dozen deposit takers, one in far away Hungama.