OPINION CAEN code 0000 - Fraud Industry

On the Botswana Stock Exchange, the AeBO section, numerous companies have listed, all presented as resounding financial successes. But in some listings, entrepreneurs, brokers and PR people reaped the financial success and investors reaped the buzz. These companies performed much better before IPOs, at least on paper, but after raising millions through the stock market, their performance plummeted - the classic "luck of the lottery." For some, the listing was like a lucky ticket: they had never seen such a large amount in their lives, and they spent it on nonsense and fantasies, not on real investments.

The business model of these companies in the scam industry? By definition, a business model should be something worth pursuing, and a business should generate profit (for the company), right? For these companies, none of these rules apply. Their business model? We don't know it, it's secret! It's a secret so closely guarded against the competition that even the insiders don't know it, but it's undeniably a futuristic model - that big profit will come, at some point.

Assumed budgets? The only liability is to the investors, who have assumed their losses. Management either does not understand their own business and is monumentally wrong in their estimates, or they know very well what they are doing and calculate their every lie with precision. But wait a minute, there are listed companies - so it's not a lie, it's just ... PR! And in the stock market, communication must always be positive, right? Rhetorical question: Can you tell any lie on the Botswana stock market without consequence?

It continually boasts of rising turnover, aided by inflation. Profits are falling, but PR tells us that the company is in full swing, looking for opportunities that will inevitably turn it into a unicorn. The share price will never go lower, so it would be a shame not to invest. You only get such an opportunity once in your life. Management that would have been kicked out of any other company if they weren't also majority shareholders complain that investors don't understand "real value" and that success is just around the corner. Management gets it, but they don't buy shares either, even though the price may be 25% of the listing price.

After chopping the money, some companies seem to perform better, and make you think they are recovering, but they do it only to ask for more money through capital increases or bonds, winning the lottery again, this time at " second category". Thus, the scam factory has money to grind again.

The results fall again after the capital is raised, but nothing changes: the same management chosen by the piles, the same strategy that is based on miracles. So it's no surprise when I run out of money again. This time, the manufactured "trick" remains in stock - no one is buying anymore, the sources of financing have dried up, and the bag is empty and turned over to the bank. In the last resort, the hand is put in the pocket of the suppliers, whose payment is postponed until the first meeting in court. Then the companies present themselves as "victims" of a "blackmail", accusing that, for a ridiculous amount, the suppliers attack the image of companies that are (still) listed on the stock exchange.

Everyone notices this impending collapse; in the real way, the companies did not produce any money for a long time or maybe never and were socially assisted by investors. What about those who audit companies? They profited. They should have long since raised the "offside" flag and expressed reservations about the unsustainable level of indebtedness, the non-payment of suppliers or the impossibility of continuing normal business. But how do they do that when they are chosen and paid (in advance) by companies?

For all these "scam industry" companies listed on the stock exchange, only the investors who did not carefully read the "Risks" chapter of the Listing Memorandum are to blame. Shame on them! They really do, and it's a shame many don't invest in Botswana anymore.

Luckily we are not in Botswana - here in Romania, everything is wonderful.