Another preservation order against the alleged pyramid scheme disguised as grocery stokvel

The Gauteng High Court has issued another preservation order in favour of the National Prosecuting Authority (NPA) against the alleged ‘grocery stokvel’ pyramid scheme, Women Against Poverty and Hunger, after already issuing an order for R1 535 040 a few weeks ago.

The preservation order against Women Against Poverty and Hunger (WAPH), its founder Kelebogile Precious Phumo (also known as Mme Lebo) and eight other associated persons is the second order, this time for R3 791 829. The money is held in 14 different bank accounts.

According to the National Consumer Commission (NCC), participants in the scheme, who are mostly women, are encouraged to deposit money into two bank accounts belonging to WAPH, four bank accounts belonging to Phumo, and promoters Itumeleng Thai, Thulisiwe Midrand Mbambo, Busisiwe Primrose Horacio, Nomsa Mbalati, Nomakhosi Zwane, Gugu Cele, Mpho Patsa Mokoena and Agnes Mofokeng.

This preservation order comes a few weeks after the high court granted the NPA the first order for the amount held in three bank accounts belonging to WAPH and one bank account belonging to Phumo. The NCC says the total preserved to date is R5 326 865.

The NCC investigated WAPH’s conduct and found that it conducted multiplication and pyramid schemes disguised as grocery stokvel, contravening sections 43(2)(a) and 43(4) of the Consumer Protection Act (CPA).

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Recruiting participants for R1 000

WAPH encouraged participants to recruit more participants for a reward of R1 000. The NCC referred the matter to the NPA’s Asset Forfeiture Unit.

Hardin Ratshisusu, acting commissioner of the NCC, says by encouraging participants to recruit more participants for a reward of R1 000 and promising unrealistic returns to participants, WAPH allegedly operated a pyramid scheme.

“In this regard, section 43(4) of the CPA describes a pyramid scheme as an arrangement, agreement, practice or scheme where participants receive compensation derived primarily from their respective recruitment of other people as participants, rather than from the sale of any goods or services.”

The CPA prohibits anyone from directly or indirectly promoting, joining, entering, or participating in pyramids, multiplication and related schemes.

Furthermore, Ratshisusu says, members of the public made a once-off payment of R300 for grocery items to the value of R5 310 for 12 months. “The scheme offered, promised, or guaranteed unrealistic returns, contravening section 43(2)(a) of the CPA.

“We welcome the second preservation order but are concerned that the promoters appear to be continuing with the scheme. Consumers are reminded that promoting, joining, entering, or participating in these schemes is in contravention of the CPA.”