The downturn’s new rules for marketers

The old recession playbook won’t work this time around.

Around the world, marketing and sales executives are being asked to do more with less. It’s a demand many have heard in previous hard times, and most managers muddled through then. But the nature of the current downturn—and of the changes the marketing and sales environment has undergone since the 2001–02 recession—suggests that those who follow the survival techniques of past slowdowns risk betting on the wrong markets, customers, advertising vehicles, or sales approaches.

In previous downturns, many marketers doubled down on large, historically profitable customers, geographies, and market segments. Today, this approach may prove ineffective because the world’s economic woes are affecting customers and markets in unexpected and extremely specific ways. Marketers should therefore toss out those historical expectations and focus on the emerging pockets of customer profitability.

Cash-strapped marketers have also typically emphasized traditional media, such as television and newspaper ads, while cutting back on new advertising vehicles. But marketing has evolved rapidly over the past decade, with traditional media declining in importance as the Internet and social networking achieved meaningful scale. Marketing executives trying to rationalize media spending must factor this new balance into their austerity programs.

Another common approach for marketers trying both to cut costs and safeguard revenue has been to slash back-office sales overhead while continuing to invest in frontline salespeople. The evolution of the sales force in recent years means that marketers should take a much more nuanced approach. Companies used to regard the “feet on the street” model as their primary lever for increasing sales. Now they rely on a mixed model—customer-centric frontline product specialists and industry-specific sales managers who play a coordinating role—to provide better service and target new revenue opportunities.¹If executives ignore these new practices when they rationalize sales programs, hard-won customer relationships, revenue streams, and margin gains may be at risk.

Of course, not everything from the past is outmoded: marketers must still reexamine the value propositions of their brands, fine-tune products and pricing, and manage the cost of media agencies and other vendors carefully. But these steps aren’t enough. To weather the storm, it will be necessary to identify anew who and where the profitable customers are and to prioritize the most effective marketing and sales vehicles for reaching them.

When marketing and sales executives do so, it’s critical to bear something in mind: the broader forces at work in the global economy mean that the underlying economics of strategies could continue shifting with unprecedented speed and scale. Such extreme uncertainty demands constant attention, frequent reprioritization, and strategies that anticipate and respond to a changing landscape.

Where to invest sales and marketing resources

The impact of recessions always varies across economies; for one thing, unemployment levels rise at different rates in different regions. This time around, however, global economic conditions are affecting different geographies and demographic groups in even more diverse and complex ways.

• A global credit crunch and the attendant volatility in commodities are whipsawing economies around the world in different ways at different times, which means the relative attractions and risks of customers and countries are shifting rapidly.
• The housing sector is contracting in markets around the world, but the level of mortgage default rates and the effect on consumer spending vary across and within regions. In the United States, for example, Arizona, California, Florida, Michigan, and Nevada have been hard hit, while other states less so.
• Historically attractive demographic groups have experienced major reversals of fortune. The nest eggs and retirement prospects of the baby boomers, for example, have been dramatically reduced by rapid declines in equity and housing values. This development raises the possibility of significant shifts in spending.

These disruptions suggest that the old tactic of focusing on historically profitable regions and customer groups will miss the mark. Instead, marketing and sales executives must reprioritize geographic markets and customer segments at every shift of economic fortune.

Reprioritizing geographies

Multinational companies will have to reassess their growth forecasts for the countries where they compete. Even assessments conducted as recently as 2008 should be reexamined, since the crisis has affected every country on Earth.

One global technology company, for example, recently began a major repositioning that shifted its marketing expenditures from developed countries to emerging ones offering higher projected growth rates and weaker competitive pressures. Recent economic events, though, have invalidated some of the territory-by-territory profit assumptions and significantly changed the time horizons of expected growth for others. The company recognized that its broad-based pre-crisis repositioning effort would generate disappointing results, so it is now working to identify markets with better prospects in this tough economic environment.

Companies can protect their revenues and profit margins by taking this granular approach a step further. Even within sectors or geographies that seem down across the board, the rates at which potential customers grow or decline vary substantially. While it is well known that the US manufacturing sector, for example, has weakened considerably over the past few years, manufacturing GDP has actually expanded in many counties across the country. In fact, from 2006 to 2007 the manufacturing revenues of companies in these counties rose by $97 billion,² roughly two-thirds of China’s manufacturing growth over the same period. In Michigan, one of the hardest-hit states in the US Midwest, growth rates vary by double-digit percentages, and manufacturing revenues in the top counties rose by nearly $2 billion in 2007. Of course, no marketing strategy could now rely on these outdated figures. But a similar analysis today, probably at an even more detailed level, would in all likelihood help a company that sells manufacturing supplies to focus its scarce sales resources on growth counties instead of deploying resources across the board in a declining market.

Consumer marketers with access to micromarket data have even more opportunities to enhance profitability. One beverage company recently conducted surveys that identified staggering differences in the potential profitability of customers within individual markets and micromarkets. The price sensitivity of the respondents varied by as much as a factor of 13 across regional markets, a factor of 5 across cities within them, and a factor of 3 across zip codes within individual cities (Exhibit 1). Armed with this level of detail, a company can maximize its profitability by focusing on micromarkets less sensitive to prices while also offering discounts or preferential pricing elsewhere to drive sales volumes.

Reprioritizing consumer segments

Much as the profitability of different regions and micromarkets has shifted, fluctuating unemployment rates, equity prices, and housing and fuel costs have changed the profitability of consumer groups that cut across geographies. In many cases, changes in consumer behavior will force companies to reallocate marketing resources from historically attractive segments. Some groups that until recently had been major contributors to spending growth will become less profitable. Affluent young professionals, many of whom work in the financial-services sector, probably won’t continue to fuel historic levels of growth in luxury goods, for example.

In other cases, the shock of the economic crisis could accelerate longer-term shifts in the spending and attractiveness of segments, such as the baby boom generation in the United States, as well as its counterparts in Japan and Western Europe. The high spending rates of the boomers made them a sought-after and profitable customer segment for many companies. The “wealth effect” of real-estate appreciation, along with the gains (or hopes of future gains) of the equities in the boomers’ retirement accounts, enabled much of this spending. Indeed, many boomers were borrowing against these assets to pay for their lifestyles.³ As a result, US boomers have saved less for retirement than previous generations did.

Today, the one-two punch of depressed housing values and big losses in equities means that many boomers face uncertain retirement prospects and can’t continue to spend as they once did. In fact, they will have to reprioritize their spending across categories en masse. In 2006, when we asked boomers how they would cut their overall expenditures by 20 percent, the respondents singled out clothing, personal care, home furnishings, and travel for cuts but said they were less likely to reduce spending on necessities like food, housing, and health. For companies in the sectors, such as home furnishings, that will probably bear the brunt of these spending shifts, the task ahead is to target demographic segments with better growth prospects.

Reprioritizing business-to-business opportunities

Business-to-business (B2B) companies must go a step further. A fresh look at segments isn’t enough; instead, such companies must reexamine their opportunities and risks on a customer-by-customer basis. Of course, they must start by assessing the basics: whether a customer has enough cash or liquidity and the likelihood that such funds will survive. Then they should think about how the crisis will affect all aspects of their profitability.

Many suppliers, for example, have long-standing agreements to offer volume-based rebates to their customers who are distributors. But the weak economy may cut the volumes of some distributors drastically, so that they no longer qualify. Similarly, some customers may find their economics undermined by volatility in the price of their key inputs, such as fuel and other commodities, and will therefore no longer be able to buy at the volumes and prices suppliers expect. Suppliers must stay alert to these possibilities and respond accordingly.

How to invest marketing and sales resources

In addition to putting resources into the geographies and customers with the greatest profit potential, executives must emphasize the media and sales efforts most likely to deliver such profit. In previous downturns, that meant investing in proven advertising vehicles while cutting back on newer ones with shorter track records, as well as focusing resources on sales reps while trimming central back-office functions.

Over the past several years, however, the challenges of marketing proliferation have created a more complex mix of marketing vehicles and sales models. Historical responses or across-the-board cuts may be exactly the wrong thing in this recession. A more nuanced approach is required.

Reprioritizing advertising vehicles

New communications vehicles such as the Internet, social networking, and mobile devices are gaining scale and delivering effective results. Meanwhile, classic media such as television have become, at a minimum, much more costly. Most marketing plans therefore try to meet their objectives cost-effectively by using a mix of traditional and new vehicles, with the latter typically accounting for 10 to 15 percent of spending.

A reprioritization of this kind requires a better understanding of the effectiveness of different forms of advertising than many marketers have today. These marketers, who assume the reach and cost of a vehicle serve as a proxy for its effectiveness, ignore the vehicle’s quality—that is, its ability to influence customers. Quality is easiest to measure in direct businesses, which can precisely determine the return on investments in outbound catalogs or e-mails. But there are ways to estimate the quality even of harder-to-measure vehicles—such as television, product placements, and sponsorships—and to prioritize them accordingly.

Companies can maximize the accuracy of their quality assessments by combining a variety of information sources, such as quantitative customer surveys, postevent focus groups (for sponsorships or other on-the-ground marketing efforts), and workshops where marketing managers and outside experts from advertising and media agencies piece together a collective point of view. Several major consumer companies that recently conducted such workshops found the consensus reached in them extremely consistent with more in-depth, quantitative studies.

No matter how a company arrives at its quality assessment, the real power comes from combining that analysis with data on the reach and cost of an advertising vehicle. This combination of reach, cost, and quality helps marketers compare the impact of different vehicles on an “apples to apples” basis—the key to effective prioritization. As the experience of one representative company demonstrates, it is not uncommon to find a hundredfold difference between the impact of two different vehicles. There is no consistent pattern indicating whether traditional or new vehicles have higher scores for reach, cost, or quality, so marketers must make their own objective comparisons to eliminate ineffective vehicles without hesitation and to support high-impact ones with confidence.

Reprioritizing sales functions

As we have seen, in tough times companies try to improve their profits by reducing sales overheads while concentrating resources on the frontline sales force. But today’s sales teams use newer kinds of support that are too important to cut indiscriminately: they play strategic roles in the sales process and are critical to serving the most profitable customers and to converting new prospects. An executive who slashes these support functions as part of a broad cost-cutting campaign risks severely damaging the sales force’s effectiveness.

Consider how recent changes have played out at a large industrial-services company. Ten years ago, 90 percent of its salespeople served either in account management or in the field. Only limited support was available, in the form of sales training, product information brochures, and a few product specialists. This company significantly increased the number of product specialists because its customers demanded greater expert assistance and its product range was expanding. It also added a pricing group for contract negotiations, industry-specific sales managers who provide additional expertise for customers, outbound telemarketing representatives who identify opportunities to gain small and midsize customers, and a customer and competitor analysis group to help decide how aggressively the company should support new opportunities.

In today’s downturn, this organization’s head of sales had to trim costs by 10 percent. Eliminating some product specialists, industry-oriented managers, and telemarketing support would probably cut the number of new leads and win rates so much that sales would fall more than they would if the company eliminated an equal number of salespeople or account managers. Similarly, thinning out the pricing or competitor analysis teams might lead to poor pricing decisions that would depress margins or to the wasting of time on unrewarding sales prospects. An analysis of win rates and profit margins on new contracts helped the head of sales to confirm that the retention of product specialists and pricing specialists was crucial to maintaining profitability.

Instead of making across-the-board overhead cuts, a company can rationalize its sales programs while maintaining performance in a variety of ways. Assessing the current sales-coverage model helps the company determine which selling and sales-support formulas are most effective for which types of customers and sales situations and then to rebalance resources as needed. In practice, this approach might mean handling reorders online, covering basic sales and account-management tasks through telesales representatives, and using larger response teams to address major requests for proposals. Another important step is to analyze win–loss ratios in difficult customer negotiations with an eye to determining which sales support groups are most effective and which contribute less and can therefore be trimmed. Streamlining the after-sales process and establishing the appropriate level of customer support can shrink costs as well. Critical to all these moves is an understanding of what customers expect and of the importance of after-sales support to their overall experience.

A nuanced approach like this can help sales and marketing executives to identify cost savings more confidently and to protect the people and programs making a direct contribution to profitability.

Companies that follow the playbook from past recessions will probably chase markets and segments made less attractive by the present downturn and focus too many resources on traditional marketing vehicles and frontline salespeople. To avoid these costly mistakes, marketing and sales executives must dynamically reassess their geographic, customer, advertising, and sales force priorities, with constant attention to the ever-shifting economics of this downturn.

About the Author

Dan Lovallo is a professor at the University of Sydney and an adviser to McKinsey

David Court is a director in McKinsey’s Dallas office.

THE OBAMA PHENOMENON: HOW IT ALL STARTED

It is no longer news that humanity is today basking in the Obama Phenomenon which from all indications is set to alter the socio-political equations both in the United States and the world over. Obamas’ emergence as the 44^th president of the world’s sole super power is a thing that was unthinkable just some years back, more so, when his race is famous for anything but standard behavior. Worst still is the fact that his ‘ancestral home’, Africa, is notorious for an assemblage of poor leaders and political waywardness.

This is why I am still baffled that Kenya, barely out of a political violence that engulfed it as a result of electoral fraud, shamelessly declared a public holiday to celebrate Obama’s emergence on the world stage. You can also see those lazy folks in our national legislative houses, briefly suspending their theatrics of daily assailing our ears with one revelation or the other on frauds and pilfering of public funds and other sordid revelations from the probe of one ministry or the other, conducted in the most unserious manner, even in announcing their findings. Of course, we do know that such probes are more for public show-offs than solving our problems- probes that will never be concluded; these legislators are now taking turns to commend something they never will allow to happen here. What a shame!

Painfully, it is becoming obvious that we are about to miss the opportunity of learning the lessons embedded in this great change the Lord is thrusting on mankind through this messiah of the 21^st century. Rather than sit down to study this phenomenon and see how and why it worked and probably, seek to know how we can best apply it to our own pitiable situation, we are busy clicking wine glasses to drink to a state of stupor.

As a matter of challenge, we need to remind ourselves that OBAMA became what he is today because he had a vision rooted in dreams dreamt by a fellow American, turned it to a mission with a solid plan, worked on it with all he has, focused and selfless, carrying every one around him along through persuasion and strong character base that assailed even the strongest of hearts, and he landed finally to our admiration and maybe, for some, consternation.

The dream referred to above was dreamt by the late highly respected Rev. Martins Luther King Junior quoted below in part, which was the seed sown back in 1968 hence this phenomenon called Obama. It also shows that with resilience, patience, focus and belief rooted in the strong faith that for a dream to be realized, you must have the vision and be exceptionally focused, carrying every one on the way along. This is what makes Obama. It is what makes nations great and that is the difference between us and the person we are celebrating. The dream as in the speech is as follows:

“I am happy to join with you today in what will go down in history as the greatest demonstration in the history of our nation.

Five score years ago, a great American, in whose symbolic shadow we stand today, signed the emancipation proclamation. This momentous decree came as great beacon of hope to millions of Negro slaves who had been seared in the flames of withering injustice. It came as a joyous day-break to end their midnight of captivity.

But one hundred years later, the Negro still is not free, one hundred years later; the life of the Negro is still sadly crippled by the manacles of segregation and chains of discrimination, one hundred years later, the Negro lives on a lonely island of poverty in the mist of the vast ocean of material prosperity. One hundred years later, the Negro is still languishing in the corners of American society and finds himself in exile in his own land.

So we have come here today to dramatize a shameful condition. In a sense we have to our nation’s capital to cash a cheque. When the architects of our republic wrote the magnificent words of the constitution and the declaration of independence, they were signing a promissory note for which every American fall heir. This note was the promise that all men, yes, black men as well as white men will be guaranteed inalienable right of life, liberty, and the pursuit of happiness.

It is obvious today that America has defaulted on this promissory note insofar as her citizens of color are concerned. Instead of honoring this sacred obligation, America has given the Negro people a bad cheque, a cheque which has come back marked insufficient-fund. But we refuse to believe that the bank of justice is bankrupt. We refuse to believe that there are insufficient funds in the great vault of opportunities of this nation. And so we have come to cash this cheque, a cheque that will give us upon demand the riches of freedom and the security of ***.

I say to you today my friends, even though we face the difficulties of today and tomorrow, I still have a dream. It is a dream deeply rooted in the American dream. I have a dream that one day this nation will rise up and live out the true meaning of its creed, we hold this truth to be self evident that all men are created-equal. I have a dream that one day on the red hills of Georgia sons of former slaves and the sons of former slave owners will be able to sit down together at the table of brotherhood. I have a dream that one day Mississippi, a state sweltering with the heat of injustice, sweltering with the heat of oppression; will be transformed into oasis of freedom and justice. I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character. I have a dream today.

I have a dream that one day in Alabama with its vicious racist with its government having its lips dripping with the words of interposition and nullification- that one day right there in Alabama little black boys and black girls will be able to join hands with little white boys and white girls as sisters and brothers…”

Well, every society it is said has its own gifts. We do have in Africa our own Rev. Martins Luther King in the mould of Nkruma, Awolowo, Nyerere, even the Madiba himself, Mandela. They may have, unlike the great Dreamer, participated in the governing processes in their various domains and times. They may also have made mistakes along the way. But what happened to their dreams? And where is our OBAMA? Instructively, as it is in politics and governance, so it is in business. Which is why we are still searching for a Bill Gate, neither are we able to light our homes 48 years in nationhood. Not to worry, the Germans are here maybe to ease out the Chinese? That is the typical rigmarole that characterizes our way of doing things.

NCAM: A DAY OUT WITH AUTO SALES LEGENDS OF OUR TIME IN NIGERIA

Even though there is no business existence without its challenges, there is one particular line of business in this country that takes lots of guts and down to finger pushing to get it off the ground. It is even more stringent due to the saturation of the market, even though some players belief otherwise.

The business of auto dealing is one of the most lucrative businesses that is gaining attention in the Nigeria corporate terrain. Although most auto dealers try engaging in popular brands to boost sales and recuperate the investments in the short run, it still needs the ability of a good marketing team to devise creative strategies in getting even an unwilling customer to order for the whole company!

To this end, a forum on the happenings in the auto world, tagged National Conference on Automobile Marketing, where the legends in auto sales and marketing in Nigeria would be gathered to bare out their minds, and share their success stories with budding and up coming auto marketers.

The one day event, holding at the Golden Gate Restaurant, Ikoyi, Lagos on the 26^th of November 2008, will feature a platform to chat with the big shots in the industry, interactive session and a paper lecture titled ‘the Magic of Volume Sales’.

The get together which commands the presence of the likes of Chief Michael Ade Ojo, Chairman, Toyota Nigeria Ltd; Chief Molade Okoya Thomas, Chairman, CFAO Group; Alhaji (Dr.) Sanni Dauda, Chairman, Peugeot Automobile Nig Limited; Chief Williams Anumudu, Chairman, Globe Motors, Dr.(Mrs) Diezani Allison-Madueke and Prof Bamidele Badejo to mention few, is primarily targeted at auto marketers, banks and insurance companies.

With full support from the federal and Lagos state governments, the event promises to be an epoch making one.

NISSAN MURANO: THE LOVE IN TOWN

A macho man will surely turn green with envy because there is something else in town that appeal and command the attention of the female gender. Nissan Murano, new darling in town, has gotten nothing that is left undone. With inspired sculpted curves, well crafted interior, and advanced technology, this is definitely something to chew!

After skipping a year, that is the 2008 model, Murano is Nissan’s midsize crossover that enjoys redesign since its first introduction in 2003. Named after an elegant sculpted glass art that comes from the islands near Venice, the two in one SUV combines the desirable attributes of a truck-based SUV, such as cargo capacity, ride height and available all-wheel drive, with the refinement, handling and comfort of a sedan.

The whole load is being pulled by a horse equated power of 265 version of Nissan’s VQ-Series 3.5litre V6 engine and receives the second-generation Xtronic CVT with Adaptive Shift Control. It consumes fuel at average approximately 18 and 23 miles per gallon in the city and highway respectively. Having the same template as D platform as the 2007 Altima, which provides a solid foundation and new lighter suspension components with increased stiffness. And with the availability of a dual-panel power sliding moonroof and second-row skylight, a new foldaway cargo organizer, heated front and rear seats, power liftgate, and power return rear seat. Nothing is forgotten in the production of the sport utility vehicle!

Accidents happen. Nissan put the safety of its occupants into consideration with the presence of driver, passenger and side airbags, although, the crash test and the total weight of the SUV are averagely impressive. If all driving codes are well obeyed, I think four stars is neither a bad grade for crash and rollover tests, nor five stars to get, in front and rear side tests!

Possible drawback in the functionality of the SUV could be the recommendation of premium fuel and its limited rear visibility, but not to worry, this is taken care of with the presence of RearView digital monitor feature.

Although the reliability data for this vehicle could not be gotten as at press time, Japan-based manufacturers are still tops in dependability and reliability while European models scored below average. And guess what the good news is, Nissan Murano has its parts assembled in the Asian country!

THE GLO ADVERT YOU NEVER SAW

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Sometime ago, a television commercial for Globacom was conceptualized, modified, adapted and approved. The lead model for advert was no other than, the masked musician, Lagbaja.

Knowing he doesn’t come cheap, Mike Adenuga, chairman of Globacom gave his nod, ready to pay his bill.

At the negotiation table, a fee of N35m was agreed upon by both parties. Subsequently, the recording of the TVC, partly at Lagos Bar Beach was done, with Lagbaja acting out the script. The director and the crew commended him for his professionalism and more.

The TVC was edited and presented to ‘the Guru’ as Adenuga is fondly called. He previewed and made some comments that prevented the TVC from hitting the airwaves as scheduled.

Eventually, the TVC was completely dropped but that did not affect the fees of the models, crews and others involved in the shooting of this TVC.

FINANCE MINISTER PETITIONED OVER CBN REVERSAL OF BANKS’ UNIFORM YEAR END

A corporate lawyer, Mr. Roy Bassey Ukoh and a forensic accountant, Mr. Ori Adeyemo, have, in a joint petition forwarded to the Minister of Finance, protested the reversal of the adoption of common year end by commercial banks as earlier directed by the Central Bank of Nigeria.

The two petitioners said they were compelled to write to the Minister in the overall interest of the banking public and asked for the reversal of the cancellation of the uniform accounting year end for banks in Nigeria which, according to them should have started in December 2008.

Describing the earlier directive contained in CBN Circular No. BSD/DIR/CIR/GEN/VOL2/008 issued on August 25, 2008, as laudable, the petitioners insisted the CBN Governor made an unpardonable somersault of his laudable policy of making December 31 of each year, the uniform accounting year end for each bank starting December 31, 2008.

Stating that such change of policy is not in the best interest of the general public but a compromised attempt to serve the parochial interest of the banking cabal, who are the Managing Directors of the 24 banks operating in Nigeria in other to cover their apparent lapses, the petitioners argued that CBN rationalizing the cancellation of the directive to the desperate mobilization of deposits and which led to the hiking of interest rates by banks, according to the two petitioners is not accepted and grossly untenable.

“We consider both excuses given by the CBN Governor as totally unacceptable and crassly untenable. It further goes to confirm our unassailable conviction that the Nigerian banking industry is not only weak, in dire state of distress but also desperately needing surgical operations to survive irrespective of the spurious splendid financial results that these fraudulent banks churn out from time to time (in active collaboration with the CBN) all in order to continually deceive the gullible unsuspecting Nigerians to invest their hard-earned money in the thrash shares of these sinking banks.” The petitioners reasoned.

Making further assertions on the impropriety of the cancellation of the common year end for banks, the petitioners asserted that: “It is a classic endorsement that the consolidation of the banking industry which the CBN carried out on December 31, 2005 has irredeemably failed if after telling Nigerians that it now has mega-banks; these same banks are still in hot pursuit of deposits at whatever costs not also minding the fact that these same banks had gone to the capital market times without number to mobilize funds. The question now is: what has happened to all the billion of Naira mopped up by Nigerians banks from the capital market from year 2004 to date? Nigerians need to know.”

“The CBN Governor has always been aware that Nigerian banks have been defrauding their customers through the passage of spurious and illegal bank charges into the accounts of innocent customers thereby leaving behind unpaid debts leading to the deceitful foreclosures of collaterised assets of the customers or the settlement of bogus debts at extremely high costs. For the unfortunate ones, it has always been a tale of woes leading to the collapse of businesses, ill-health and sometimes paying the ultimate price of untimely death. To worsen matters, whenever a report of the nefarious and illicit actions of the banks is brought to the attention of the CBN; an illegal referral is made by the CBN to the committee of Ethics & Professionalism which is a sub-committee of the Bankers’ Committee made up wholly and exclusively of bankers with nobody protecting the interest of bank customers thereby making banks judges in their own case.” The petitioner further asserted.

Making further allegations, the petitioned observed that: “Another very important point to deliver is the fact that the CBN Governor is in the knowledge that banks have surreptitiously been stealing Federal and State Governments funds through non-remittance of 10% Withholding Tax on declared dividend as well as interest on deposits, 5% Value-Added-Tax (VAT) as well Personal Income Tax yet have blatantly refused to call them to order knowing fully well that by virtue of Section 3.2.5 of the CBN Monetary, Credit, Foreign Trade & Exchange Policy Circular No. 37 of January 02, 2004, it is the responsibility of the CBN to collect these deductions from the banks for and on behalf of the Federal Government of Nigeria within seven days of collection. The various excess and spurious bank charges clandestinely laid into the accounts of both arms of government all in a bid to defraud in billions of Naira cannot also be wished away.”

“As investigative accounting consultants, we are in the knowledge that the books of these Nigerian banks have all along been cooked and spiced accordingly in order to present fake excellent performances. A veritable way of doing this is to aggressively mobilize deposits at the adopted scattered year ends and also to temporarily put a stop to lending when the accounting year end of banks is near.

“The banking cabal has also made it a point to be shifting deposits among themselves in order to help out each other and they are aware that a uniform accounting year-end will put a final stop to this unwholesome malpractice.

Alluding to one of the reasons the common year end would have done the banking industry some good the petitioners observed that: “Nigerians will recall that prior to the announcement of the uniform accounting year end for banks; every bank in Nigeria was always celebrating any achievement that they can think of from the mundane to the unimaginable. At that time, it was commonplace to find banks celebrating best bank with highest deposit base, the first bank to deploy certain banking software in Nigeria, the first bank to hit the trillion Naira asset base, the bank with the highest turnover and all what not. However, we note that with the announcement of the common accounting year-end, all this rubbish has stopped.

“We must not forget the so-called compromised ratings given to banks by the foreign rating agencies based on the falsified financials published, which these banks would then celebrate as if they have won the football world cup. It was either the banks were awarded A+++++ or AAAAA or some stupid figures by their collaborating foreign rating agencies without looking at facts behind the figures published.

“We wholly support this uniform accounting year-end for banks since it will enable Nigerians and the whole world to be able to separate the chaff from the grains but this laudable and well-thought-out policy by the CBN is being killed before it is born and therefore every attempt must be made to stop the unwarranted and self-serving shift or cancellation of the uniform account year-end.”

“It cannot be disputed that the capital market in Nigeria has lost over N3.5 trillion due to depression with the Nigerian banks accounting for over N2 trillion thereof. You will also admit that this was what led the CBN to issue a guideline allowing the banks to reschedule margin accounts by at least one year. We sadly note that even with this understanding, the CBN is yet to fully inform Nigerians as to the extent of the loss incurred by the banks as a result of their participation vide gambling with depositors and investors monies in the capital market.

“Our submission is that with the full implementation of this uniform accounting year-end policy by the CBN; Nigerians will be able to know the healthy banks from unhealthy or dead-woods because as things currently stand, the adopted scattered year-ends gives latitude for fraudulent and creative accounting manipulations, which undoubtedly amounts to corrupt malpractices which the CBN is now advocating and encouraging through the back door.

“It is an understatement to say that if you are allowed to have your way by shifting or out-rightly canceling the uniform accounting year-end of these banks, you would have succeeded in postponing the doomsday, which would eventually come considering the whole lots of unwholesome and unprofessional malpractices being daily perpetuated by these banks unrestrained.

“We cannot but state once again that the financial state of these banks is in sordid state and the earlier that the CBN and the banks come clean to tell Nigerians the truth the better.” The petitioners concluded.

REVEALED! NIGERIAN INVESTORS LOSE NBILLIONS TO ONLINE INVESTMENT SCAMS …DIAMOND CASH CLUB, GETAWAY, CLUB FREEDOM, OTHERS CRASH

Long before internet high yield investment programmes became household names in Nigeria, knowledgeable cyberspace investigators had cautioned internet users of the prevalence of scams operating in the name of internet investment schemes.

Unfortunately, it would seem that for reasons of greed and ignorance, most Nigerians fell headlong into the vortex of fraud enabled by the internet. Now, experts say billions of naira might have been lost to the many schemes Nigerian participants in these schemes subscribed to.

FORTUNE & CLASS Weekly independent investigations also revealed a connection between the internet investment scams and the mushrooming of wonder banks in Nigeria and their ultimate demise. Most of these wonder banks had collected deposits from the public and had in turn invested in these internet schemes in the hope of earning so much to be able to pay off their depositors. At the end, however, no payment was made and that, ultimately led to the wonder banks crisis.

Some other operators structured a different model for deposits mobilization to be part of the internet schemes. These go around urban centres, organizing lectures and seminars to educate and persuade more people to join their team so as to enhance their movement on the board of the investment scheme. By early 2008, a thriving sub industry had emerged around this multi level marketing based investment schemes.

One such operator is at present in serious distress, she had been able to persuade quite a number of people to invest through her in these schemes, and had, in turn invested online in the hope of the huge returns promised by the online schemes operators, but months after she made financial commitment, nothing was heard of the scheme again.

“It became a rat race.” She told FORTUNE & CLASS “I will invest in a scheme after someone I knew would have told me that they got paid by the scheme only to realize that the site had packed up some weeks after I did my registration. I soon got to know that the schemes only paid those who were first in line, so with other people like me we started looking out for new schemes, yet we were not so lucky because as soon as we registered we wouldn’t be able to access the site again. It was later that we realized that most of the schemes were operated by the same set of people. They will create new schemes as soon as they have collected money from subscribers and go ahead to set up another site, sometimes, multiple sites for the same purpose, only to announce soon after why they are encountering problem of non payment after on the site. I realized after I lost my personal money and those of other investors that all these schemes are big time 419. I am miserable now and can’t even accuse anybody for what is happening to me because it’s all online you don’t even know who you are dealing with.” The operator said of her frustration.

There are thousands of these schemes on the internet; the most popular in Nigeria are Getaway Club, Club Freedom and Diamond Cash Club. Ironically, top professionals in the country were persuaded to invest in these schemes. The schemes marketing pitches are persuasive enough, the argument for participation is hinged on earning residual income by marketing a certain product to a minimum two people who will form the down line of the initiating participant when they are registered online, by some sophisticated mathematical formula, participants are promised huge returns for merely marketing to these two people. But the trap is that these two recruits must also bring in two other participants on their line and it goes on like that. It turned out that it was a waiting excuse to wait endlessly on line for reward when a down line has not brought in people to join them. Some other schemes are not even bothered about the niceties of these multi level marketing some experts have described as intelligent fraud. These other schemes merely want the money of the participants and as soon as they have enough people registered, they vamoose from their sites.

The operations of these schemes were based on e-currencies; participants paid certain sums to be registered in a scheme with these currencies and are promised to be paid in the returns in e-currencies. The most popular initially was e-gold, for reasons that would be revealed later, e-gold gave way to Liberty Reserve, Paypal, e-bullion and some others.

It turned out that operators of the schemes and the administrators of e-currencies were different legs of the same model targeted at defrauding people that were intent at getting rich quick. When administrators of e-gold announced at any time that they had confronted problems on their sites, it was a good excuse for investment schemes operators to provide an excuse of known payment such that soon afterwards their websites are erased from cyber space.

In this review, FORTUNE & CLASS Weekly reveals how the online investment schemes operate for the purpose of scamming participants.

GETAWAY CLUB AND DIAMOND CASH CLUB

The Getaway Club and the Diamond Cash Club operate on different propositions. Getaway Club markets travels while Diamond Cash Club markets diamond. A participant is registered in the Getaway Club scheme by purchasing the Getawayclub Platinum Pass for $230 that also qualifies participants as Marketing Consultants.

You are issued with a password protected “travel site.” You are also automatically placed into our rewards system as a Getawayclub Marketing Consultant. Participants are promised a return of $20,400 for being part of the scheme.

Participants join the Diamond Cash Club by buying $300-value Gemstone voucher for $200. The participant is told he or she only needed to sell two Gemstone vouchers (such adds two people to his/her downline) to start moving his or her position in the system (the targets).

First you start with the Sapphire target, after cycling out of the sapphire target you enter the diamond target and you get your $200 back.

The Diamond Cash Club explains in detail the typical multi level marketing formula for standing in line to earn as much as $8000 over and over again.

“Targets are split in 4 levels with 1 member on level 1, 2 on level 2, 4 on level 3 and 8 on level 4. New members will enter on level 4 and each time level 4 is filled by the efforts of all members on the target. Yep, all of them will be working on filling those 8 positions. Thus when level 4 is full, the target will split and positions will move one level up until someone reaches level 1. Then the next move, he or she will enter the next target. If they were in the Sapphire target, they will move to the diamond. If they were in the diamond target, they will move into another diamond target. This is called cycling a target.

You only cycle the Sapphire target once, and you get your $200 back . The first time you cycle out of the diamond target, you will get $8000 cash and a $6000-value Diamond. However, new members signing after the 29th of August 2007, will have the choice of replacing their $6000-value diamond with $6000 cash, that is a total of $14000 in cash for cycling the Diamond Target for the first time. Then next time you cycle out of the diamond target, you will get $8000 cash. Thus you can win $8000 over and over without having to pay any extra fees.”

However, way back in December 2007, an online investment scheme investigator, writing under the brokerjone tag, had revealed the deception in the operations of Getaway and Diamond Cash Club in a report he posted on the site of autosurfing.com

The report revealed that both Getaway and Diamond Cash Club were operated by the same organization on the same server that had hundreds of “gay porn” sites on it. The hosting internet service was based in Newzealand. The investigator also noticed that the contact information for The Getaway Club…and Diamond Cash Club….were exactly the same: This was shown through the domain details as provided by WHO IS (an online store of domain names detail of registers). Diamond Cash Club was registered by Lee Consulting Limited of 603 Ruttonjee Centre, 11 Duddel Street, Central Hong Kong, Hong Kong
The investigator also asserted that all of the initial posters that were hyping up The Getaway Club, Diamond Cash Club, and 6 Star Travel Club were all from the same source in Australia.

It is the character of these schemes to float common community of participants under different teams, all wishing to recruit as many people as possible into their teams with the promise that the more recruits are made the earlier individual circles out to receive their rewards.

These teams get on internet forums to popularize the scheme through creating threads that discuss the benefits of the schemes, and as investigators found out, there will always be a monitor or group of monitors that constantly update the particular forum of activities of the scheme especially that of payments which are made to him/her or to a certain individual that no other members of the forum may be able to identify.

In the Getaway and Diamond Club under review, the investigator revealed that all original hype posters on (internet) forums originated from the same area, AND all in the same teams like Megablast, Phoenix Rising, Team Xler8ters.

“One “team” that I’ve seen posting the most is this Phoenix Rising team. They started in Diamond Cash Club…hyped it up, jumped into 6 Star Travel club within a month, and now Paullette one of their “leaders” is starting some Ammteam.build.” The investigator observed.

These “leaders” are nothing but corrupt and greedy cheerleaders trying to suck you into a giant Ponzi Network all run by the same anonymous Admin Team, that are obviously so morally challenged that they are hosting their service on a server with hundreds of Gay Porn Sites.” The investigator concluded

The revelations of this investigation have recently been appreciated by some Nigerian participants in the scheme who had been waiting to no end to circle out of the boards of these schemes.

CLUBFREEDOM A participant is registered in the Clubfreedom scheme at a cost of $200 and gets a $6000 reward when such circles out of the board. A participant that circles out monthly gets $72,000 per year while one that circles out weekly gets $312,000. Like both the Diamond Cash Club and Getaway, participants have realized the follies of their involvement in the scheme.

E-GOLD When in April 2008, MMG, an online advertising forum for High Yield Investment Schemes announced that it was no longer going to accept e-gold as payment for advertising or membership upgrades, not a few avid online investment schemes participants feared that the worst might be in the offing.

MMG had explained in the notice that “it has been a very long and difficult journey with e-gold since April of last year. We had our original accounts blocked for no reason. And even though we have fully complied with all of their requests, they remained blocked indefinitely. Every account we have opened since April 2007 has been blocked within a month’s time. Needless to say, we are extremely frustrated, and we know many thousands of our members are as well… e-gold simply isn’t a reliable currency any longer.”

The MMG announcement in fact, heralded the crisis that would soon consume the world of cyberspace investment schemes. By July, 2008, the issue was in the open; the US Justice Department had located the contact of e-gold and had slammed a case of money laundering on it. Soon, after, it was announced that e-gold, the e-currency that had at one point in time enjoyed the status of international platform of exchange and trade in cyberspace, was bankrupt.

Of course, when a company is declared bankrupt, its assets are sold to offset creditors liabilities and other commitments, but in the case of the owning company of e-gold, the registered capital of the company was a mere $20,000 with assets that can be easily added up by a kindergarten pupil; computers and office furniture. What this translated into was that those using e-gold as their store of value had lost. It was also a waiting excuse for investment schemes operators that had not been paying rewards to their participants.

LIBERTY RESERVE In the same advertisement rejecting e-gold, MMG had advertised that in an attempt to make its transition from e-gold to other online currencies payment as painless as possible, “ANY advertising purchases at MMG made with ebullion, Liberty Reserve, or wire transfer will be discounted an extra 10%, except those purchased through the MMG Auctions.”

In short, the demise of e-gold led to the rise of Liberty Reserve as the popular form of e-currency. But again, Liberty Reserve has its own limitations, online investment operators and participants protested constantly that it was always under attack by computer hackers which makes its site goes down constantly with consequences on the operations of scheme operators.

E-commerce Journal, an online journal that reports the activities of High Yield Investment Programmes noted that …”investors in HYIP-industry complain that they are facing big problems with money transfers to hyips (through Liberty Reserve)”

Besides, e-commerce journal also reported that investors were complaining that money has been written off from their account without reaching the addressee’s account while account history contains records of the last three days only. The implication for High Yield Investment Scheme, in the consideration of e-commerce is that most HYIP operators took advantage of the Liberty Reserve problem not to pay:

“We received complaints that hyips like ROInv Ltd, sus909, and suresurfpro are still not paying, and even  hot hyips like Brics Fund and The Stoic are also having pending withdrawals issue. We are not sure what the problem is and what other excuses the admin will create to delay the payment.” E-commerce journal noted

NIGERIA MILLIONAIRE CLUB Not wanting to be left out in the internet investment fraud schemes, some Nigerians also floated the Nigeria Millionaire Club under the operating name of Family Freeodm Club. An online proponent of the scheme sold the concept on the fact that: “It is an entirely new program which has revolutionized the way home business is been run online today. At Family Freedom Club, things are easier and the pay is exceptionally higher. The advantage of earning $16,788,732.80 every year makes Family Freedom Club a must for all who desire success.

“The Club is also out to help people around the globe achieve their dreams.  In this Millionaire Club you will earn “$16,788,732.80 + USD!” bonus for every direct referrals and indirect referrals. You don’t need to sponsor before you get paid but if you can introduce at least 2 people to the club it will only speed up your chance of getting the $16,788,732.80.

“Family Freedom Club is also the only 3 in 1 program in Nigeria today, that is, as a club member you have the opportunity of becoming a millionaire in the next 6 to 12 months, the chance of making friends from different part of the world and the chance of advertising your product free on the net through 54 major search engine include Yahoo, Google and MSN. If you are ready to join the Millionaire group, check out the site at http://www.familyfreedomclub.com.”

Some participants in the Family Freedom Club have submitted on other online forums that they had been short changed by operators of the family freedom club.

E-PLATINUM CLUB Another internet Investment Scheme that caught the attention of Nigerian participants is the e-platinum. In fact, the e-platinum declared that it has an administrator in Nigeria, this is an allusion to the influence of Nigerians on cyberspace investment schemes.

The site of the scheme tells the marketing pitch of the scheme.

“Combining the power of mass purchasing and discounts, and a team of highly dedicated administrators, IT and marketing personnel, ePlatinumClub is the business opportunity that will set standards in value and compensation that are yet to be achieved.

Our plan gives all members the opportunity to earn a recurring income and enjoy savings across various products and services globally.

With a registration fee of $175, participant is promised a reward of $4,175 over and over again. The operators of this scheme canvassed its difference from other schemes.

“Our program is based around the traditional 2×2 matrix; however, we have many key differences:

1. There are only 11 members in every board.

2. The bottom line of each board only has 6 people (unlike the traditional 8 many programs adopt).

3. We have just TWO boards!

4. You can join a Next In Line (NIL) team (whereby each member receives two qualifiers as the team grows).

Due to the speed at which our members can cycle, we are confident that members will cycle through our boards quicker than any other program available!

When you signup for ePlatinumClub, you will be placed in the first board at the bottom level. As your downline grows, you will move up in the board to the top.

Upon cycling the first board, you will receive YOUR MONEY BACK from your initial signup – almost a guarantee you won’t lose! You will then be placed in the top board which receives a massive $4000 upon cycling!”

For all it avowal to being different, however, e-platinum has not been paying to participants has promised.

OTHER INVESTMENT SCHEMES THAT HAD PACKED UP

Business-is was launched April 29^th. It only operated for about three days to May 2^nd. It offers three types of plans which are 12%, 14%, and 15% daily. It stopped paying since May 2nd. It claimed that its e-gold account had been blocked.

Bs-investment… Just scam Bs-investment announced its cyber presence on February 7th and claimed to offer a few different types of low rate of returns which are 0.17% – 0.34% daily, 0.02 – 0.08% daily, 25% monthly, 17.5% monthly, and 10% monthly.

But about a month after it commenced operations, in March, precisely, it claimed that its e-gold account had been blocked and announced on its site that it stopped paying to participants because of the blockage.

Teriosinvestment Terios investment was floated online on May 18th and offered two types of plans which are 25% daily for 6 days and 150% after 1 day. Only after four days of running, Terios investment suddenly stopped payment, according to online participants that had deposited funds to participate in the six days plan, on May 22^nd. Those that registered for the 150% one day plan said they did not receive payment for their investment.

Skyeclub Skyeclub commenced collecting deposits from participants on March 14^th, 2008, it offered a single 15% daily returns on investment for 10 days plan. Participants said they have not received payment since May 20.

Forex Money Maker Forex Money Maker offered three types of plans; a 130% on investment after one day, 170% after two days and 10% daily for 180 days. Some few days after it was floated, participants complained that their deposits were not even crdited to their account. Despite this, operators of the scheme were said to play smart by hiring people to make deceptive posts on major public forums talking about how good Forex Money Maker are.

ROIclub ROIclub was loaded on April 1^st and offered three types of plans; a 22% daily earning for participants for five days, 120% after five days and 150% after 10 days. Two months after commencing operations, however, it stopped payment.

The administrator of the site initially excused its inability to pay to the down Liberty Reserve site, when Liberty Reserve started running, however, it still could not pay.

Unique-Forex This HYIP announced it online presence on July 8^th, 2007, offering multiple plans which consisted of minutely, hourly and up to 260% returns on investment after three days. The administrators of the scheme made it popular by paying to its selected representatives only. It is said that the administrator also hires a bunch of paid posters to make fake paid posts on public forums. But when it was time for paying reruns, the site switched off its automatic withdrawal feature of its site. The instant withdrawal feature was disabled on January 2nd and payments went pending ever since then till now.

Fast-fx Fast-fx is undoubtedly a class act in scamming. It started on January 1st and offered 2.4-% to 3.1% hourly returns for 48 hours, and 110% to 120% after one day. Interestingly, it closed shop after one day of collecting funds from participants.

Sectiontraders Sectiontraders commenced operations in September 2007, with what is described as low returns on investment plans of 1.5% daily for 60 days, 2% daily for 90 days and 2.5% daily 90 days. Online investors were attracted to it by its seeming realistic ROI but by December of the same year, it had stopped payment just as many participants said deposits were not even credited.

E-Lifepro E-lifepro came online last year’s October, offering hourly plans as well as daily high rate of return and short time frame type of plans of 5% , 7%, 9%, and 11% every 3 hours for 75 hours and 110% – 350% after 1 day to 7 days respectively.

Though e-lifepro’s threads on public forums were full of paid posts, participants on different forums insisted that they had not been paid over a long time. Besides, other cross checks showed that the site administrator also sends spam emails offering new plans of high rate of return of between 400% to 740%. The administrators also offered 5% – 20% bonuses to lure players to deposit money into the obvious scam.

Blue-share Blue-share was introduced online 29^th September, 2007, though considered a high yield investment programme that offered unrealistically high returns, it operated for about four months before participants started getting signals of the true intentions of the operator.

Blue-share promised returns on participants investment of 11% to 14% daily compounded for 11 days, by February this year, Blue-share was reported to be paying returns due only to selected monitors (canvassers that represent its interest on public forums). It had since folded up, however.

FOREXCO.us Perhaps because Forexco.us offered low returns on investment of 1.5%daily compounded over 250 days it was able to sustain the scam over a longer period. Forexco.us was able to sustain its presence in cyberspace because it was able to pay its monitors over a longer period of time. This helped the Forexco.us thread to be active on public forum with posts claiming to have been paid. This no doubt, lured some more unsuspecting participants to the scheme.

But at the moment, the scheme is dead to cyberspace.

Financial-network-investment Financial-network commenced operations in September last year offering low return on investment plans of between 1% and 3% daily. It however stopped by paying before the end of 2007, this was o the excuse that its site had been attacked by hackers; the operators of the scheme had posted on their site the need for them to wind-up temporarily to rework the site from the activities of hackers which according to them did not allow them to pay participants.

The next news old participants of the scheme heard of the scheme were through a monitor that inundated different public forums of his being paid. This apparently lured some new participants to the scheme. They were unlucky, because by January this year, the operators had disappeared.

Cap350 This is another ambitious investment high return promising scheme. Floated June 6^th, it offered 350% payment on initial deposit within 24 hours. Participants rushed into it but non according to investigation were paid.

The operators were very smart and dubious. They displayed fake paid out statistics on their site and updated this daily with details of payments to participants which later were found to be lies. The participants could not find of any such payments in their accounts. After a while, the operators blocked access to the website by some of the participants and then, all together just disappeared.

Invest4moremoney Invest4moremoney was an obvious scam but not many participants gave serious thought to this when the programme came online on September 12^th 2008. It offered, perhaps, the highest rate of return on investment, it promised to pay a 700% on a minimum registration deposit of $5 and 1,500% after two days. For instance if a participant’s deposit the minimum amount of $5 for the 700% plan such must be getting $35 after 24 hours while a deposit of $20 for the 1500% plan should get the participant $3000 after 48 hours.

It turned out that none of the participants in this scheme got paid though the operator kept paying to monitors that posted news of payment on public forum to lure more participants to the scheme.

Bermouda This scheme which started May 22^nd this year offered participants a vacation on the Bermouda Island and huge promised returns within short investment period. Bermouda promised a 350% payment on deposit after one day, 1500% after three days and 10% hourly for 24 hours. Trackers rported that the operators did not pay any of the participants even as their deposit paid was not recorded in their membership account.

A participant reported that the operator sent him an email requesting for more deposit if he wanted to receive his outstanding payment while some other participants complained that the operators deleted their accounts without any reason and that they could no longer log into the site of the scheme

Promohaven Promohaven operators stopped paying promised returns to members since the beginning of June this year. The investment scheme ran for about five months and offered a mix of medium and small return on investment. It offered to pay 9% daily for 13 days, 5% daily for 25 days and 1.5% daily for 90 days.

E-commerce journal reports that as of end of May, the website was down for a few days and the admin said that it was caused by hackers attack. When the website was up again, the pay out problem started. “The admin started to make pay outs selectively to small amount withdrawal requests and to the monitors only.” The online journal noted.

The operators also run other programmes at the same time and all of them have turned to scam now. They are surfwithdoves.com and mysurfads.com.

Pathway-2-prosperity (P-2-P) Pathway-2-properity started inviting people to invest on February 1^st 2007. It offered low Return On Investment plans of 1.5% daily for 7 days, 1.75% daily for 15 days, 2% daily for 30 days and 2.5% for 60 days.

However, by October 2007, there were issues of non payment of returns. Some participants’ accounts were blocked without explanation while deposits were missing and not updated into their accounts.

Despite various complaints on October 31^st, the operators announced they were increasing the minimum deposit to $100.

Capital Investment Group.us The operators of capitalinvestmentgroup.us stopped paying in the early days of November 2007. Capitalinvestmentgroup.us which started on October 22^nd, offered hourly ROI type of plans.

According to participants, the operators stopped paying after they received partial payment. Most participants have experienced missing payment and their deposits didn’t complete the cycle.

Burst Profit Burstprofit started on November 29^th 2007 and offered190% returns after one day, and 240% after two days. Participants explained that initially, the operators made selective payment to the first depositors only. But when they reinvested, they lost all their money. By December, 2007, the operators had disappeared.

State Invest Stateinvest’s e-gold account was placed on limit on September 10^th, 2007. The scheme crashed within its first month of operation. Stateinvest offered 120% to 156% after one day, 165% to 214% after three days, 210% to 273% after five days and 260% to 338% after seven days.

Prior to disappearance, members have had to face several problems with this programme. Some members had experienced missing deposits and accounts were not updated with daily profit.

Monitors also had bad experiences with this hyip when they didn’t receive their referral commission other than pending payments.

Frost Gold Fund Frostgoldfunds was streamed online in July 2007 and offered three types of plans of 9%-10% daily for 14 days, 4%-5% daily for 45 days and 0.8%-1.2% daily for unlimited days.

Participants, however, said they started encountering payment problem by August 2007. The problems also included missing deposits. Soon after, the site simply disappeared.

NIGERIAN FOREIGN BASED PROFESSIONALS RUSH BACK HOME FOR JOBS

At about this time last year, the average American based Nigerian professional would not give much thought to a proposition for him to come back to Nigeria and pick up a job. The scenario has, however, changed over the last six months. With massive jobs losses arising from an inclement economic storm that suddenly came upon countries in the highest hierarchy of development, foreign based Nigerian professionals are now becoming more receptive to overtures made to them by Nigerian companies to come back home to work.

The option to come back home has actually been embraced by these foreign based Nigerian that have become victims of massive layoffs in the United States of America especially or are being threatened to be laid off.

The job loss statistics don’t seem to favour Nigerians, the Labour Department had announced that this past October was the tenth straight month of job losses with another 240,000 lost in the preceding month.

Companies that once were the stars of the business firmament were losing their shines and declaring losses. Citigroup announced last month it cut 11,000 jobs in the third quarter, bringing the total number of job cuts in 2008 to 23,000. According to Bloomberg, Citigroup aims to shrink its workforce to about 290,000 employees by next year from 352,000 as of Sept. 30.

Fidelity and Mattel have also announced 1,300 and 1,000 job cuts, respectively just as Ford had said it would cut its North American salaried workforce by an additional 10 percent. General Motors Corp., has also reported big losses and figured to be announcing even more job cuts before long.

Regulators, meanwhile, shut down Houston-based Franklin Bank and Security Pacific Bank in Los Angeles, bringing the number of failures of federally insured banks this year to 19. DHL has also said it would significantly reduce its air and ground operations in the United States and cut 9,500 jobs within the country

Still, the Labor Department’s unemployment report provided stark evidence that the economy’s health was deteriorating at an alarmingly rapid pace. The jobless rate was 4.8 percent just one year ago.

About 10.1 million people were unemployed in October, the most since the fall of 1983. With employers slashing jobs every month so far this year, some 1.2 million positions have disappeared, over half in the past three months alone. Factories, including auto makers, construction companies, especially home builders, retailers, mortgage bankers, securities firms, hotels and motels and educational services, all cut jobs. Private companies cut 263,000 jobs, the most since the country was beginning to emerge from the 2001 recession. It marked the 11th straight month of such reductions.

All the economy’s woes — a housing collapse, mounting foreclosures, hard-to-get credit and financial market may have set a new tone for Nigeria’s gain as some banks and other corporate organizations feverishly woo the foreign based Nigerian professionals.

Just last week, one of the many foreign based that are taking positions in Nigerian banks and other companies resumed at a new generation bank head office in Lagos. He had opted out of Arthur Anderson’s Illinois office for the new job in Nigeria. His reasoning is that business was shrinking for the audit practice of the company because most of the companies on the audit list of Arthur Anderson were more or less folding up.

Another returnee told FORTUNE&CLASS that there is a resurgence of hope in the economic development of Nigeria in the rank and file of Nigerian communities abroad. For this returnee, like another one that spoke with FORTUNE&CLASS the remuneration offered foreign based Nigerian professional to move back to the country are quite better than what their total package in the USA for instance.

Another attraction for Nigerian based foreign professional to start heading back home is the contemplation of his freedom to interact with his or her kith and kinsmen back home in Nigeria.

USING EARNINGS PER SHARE EFFECTIVELY IN A RECUPERATING MARKET

A lot has been said about Earnings Per Share (EPS) but there is still more to be discussed. I have met a number of investors with total misconception of what E.P.S is and what it is not. This write-up is aimed at correcting the “absolute confidence” placed in it by some investors. No doubt, the use of EPS is one of the most reliable methods of picking good stocks but it is definitely not all-self-sufficient as misconstructed by some.

What is EPS?

Earnings Per Share is the net profit declared by a company per unit of its shares. This is calculated by dividing the total net profit by the number of shares in issue. If for instance the net profit of a company is N100, 000,000 and the number of shares in issue is 500,000,000 units, then the EPS is arrived at by saying N100m/500m units of shares which is equal to 0.2 or 20k.

How it is used

How is EPS applied in making investment decisions? As earlier said, EPS is the profit per unit of shares of a company. It shows how much a company has to share as dividend or plough back into the business to yield future returns. Therefore, given two identical stocks {selling at the same market price} whether in the same industry or in different industries, the simplest yardstick to use in checking which one is better is by subjecting them to the litmus test of EPS. A good example: stock “A” is priced at N10 in the stock market and stock “B” is also priced at the same N10 per unit. The EPS of stock “A” is 20k and that of “B” is 45k. Looking at it on the surface, a naïve investor will quickly jump to the conclusion that stock “B” is better. Why? Because it records a higher EPS compared to “A” and by implication it means stock “B” will have more money to pay as dividend and also have money to plough back into the business.

Its limitation

But the question is: Does it always work like that? Have you ever wondered why a stock with a lower EPS commands a higher price compared to the one with higher EPS? Has it ever occurred to you why investors will prefer to pay at premium for a stock which EPS is little or nothing to be compared with a counterpart stock? If your mind has been working as mine, you will realize that EPS in itself is not an all-sufficient factor that should influence your investment decision; hence its limitation.

Additional factors to consider

The following are additional factors an investor must consider to complement his buy decision having spotted a stock with strong EPS:

Investors Confidence

We have seen so many stocks whose EPS are high and yet are selling below those with lower EPS. Yes, some may argue that the market is yet to discover such a stock or such a stock definitely has potential for future growth. These are all possibilities, but more often than not, the fortune of such a stock is determined by the level of confidence placed on it by investors. We have myriads of examples at present in the stock market especially at this recovery juncture. If the market does not have confidence in the stock, definitely it cannot do well in the market.

Easy Entry and Exit

The attractiveness of any stock lies in the fact that there is easy entry and exit in and out of such a stock. Irrespective of how robust the EPS of a company is, if the market perception is that it may be difficult to exit as at when desired, such stock may not do well as expected.

Quality of Management/Ownership structure

The integrity, aptitude and industry knowledge of the management paraded by a company is a very important factor to consider. The ownership structure of a company is also very essential. A friend once called me and said he had just spotted an insurance stock with a very strong EPS. Upon a closer look and some findings, I discovered that it will not be a good buy because the company was being run like a “one-man-show”. Of course, he bought the stock but not able to get the desired result because the market did not respond to it.

Consistency/Future prospect

How consistent a company can replicate its past performance is also a very serious issue to consider. A stock could record an exceptional brilliant performance for a season, but that may be short-lived for several reasons. Also, the future prospect of such a company is of great importance.

Source of profit declared

It is not enough to buy a stock based on high EPS which is as a result of huge profit declared. The profit recorded could be from a source outside the regular business of the company e.g. sale of assets like building, machinery e.t.c. when such items are disposed, some organizations capture it as part of income for the accounting year, thereby impacting positively on the profit and by extension the EPS.

The above factors are of course not exhaustive as there are other factors like: Industry regulation, cash Liquidity e.t.c. EPS is a dependable way of identifying and picking a good stock, but it must be supported by other factors to make an informed buy decision.

HOW YOU CAN INVEST NOWAS THE YEAR WINDS DOWN

On the strength of what market performance is now with the influx of third quarter results to the market and stocks are beginning to make significant gains as investors pick up stocks at rock bottom prices which demonstrate that a bullish run appears to be in sight. Therefore the best time to buy is now as the year winds down. Also as a result of the prolonged bearish period in 2008, we have single digit P/E’s and price to book ratios below 1. I recommend the following strategy.

– Invest with the medium term in view. This is predicated on market volatility which makes geometric increase in the prices of stocks slim at this period. On few stocks, 20% gain could be achieved but substantially, you get less before a downward movement in the short term. Investing for medium term towards the first quarter of 2009 is recommended.

– Invest in fundamentally strong stocks that had experienced sharp decline in price in recent time. Consider those with strong last quarter earnings, bright/impressive earnings projection, good product mix and good management among others. Using earnings per share as a sure guide on these stocks.

– Invest in stocks with closer dates of release of the next result. Some results that were expected in December that may not come would be released in January. Target these stocks particularly, when the earning per share outlook is bright.

– Consider some stocks whose calendar year ends in December, their full results will hit the market between first and second quarter 2009.

– Investing profitably for the medium term requires good industries. Attractive industries to consider first include Banking, insurance, Petroleum, Healthcare and few stocks in Conglomerate, Chemical and Paints etc.

You may need specific guide and further investment tutelage against the unforeseen volatility, you can me reach for advisory services.

CHARLES UGWU BLOCKADES PROSHARE NIGERIA WEBSITE

Charles Ugwuh, son of the immediate past Minister of Commerce and Industry, Eng. Charles Ugwuh, is at the centre of a controversy over the illegal blockade of Proshare Nigeria website, a popular investment focused website. According to owners of the website, Ugwuh shut down the site so as to blackmail Proshare.

In a release made available to FORTUNE&CLASS, Proshareng explains that on Friday, November 7^th 2008, Charles Ugwuh of ContentOmni made good his threat to shut down the website of the company in an attempt to blackmail it to pay for spurious bills.

Ugwuh manages the Information Technology arm of Proshare through his ContentOmni IT company. He had informed the management of Proshareng that the site would be hosted on a dedicated server for which payment was made to January 2009. This, according to Proshareng management, was backed up with a full year maintenance agreement, equally paid for.

The revelation that Ugwuh had, in fact, breached the specific order to host the site on a dedicated server was made when, according to the Proshareng statement, it discovered, sometime in the first quarter of 2008 that Google had flagged the blog website as ‘possibly harmful’ to users.

“This was brought to his attention with nothing done. We realized the need to take better care and full control of issues related to the site as we were responsible for the site and requested that a 3^rd party investigate the cause. We discovered that the problem resides on ContentOmni server for which we had no control over. This led to the discovery that we were indeed not operating on a dedicated server as contracted; and was sharing the platform with his other clients.” Proshareng explains.

Highlighting the reason for the need to have a dedicated server, Proshareng said:

“The agreement states that we shall be able to deliver 50,000 newsletters per 60 minutes amongst other service qualities desired by us. This unfortunately was never the case because of the deceit and non-conformity with the contractual obligation as agreed with us. To deliver this service, the company has had to operate shifts in a 24 hour cycle to meet newsletter demands.

Commenting on the challenging relationship Prosahreng had had to contend with Ugwuh because he held the sensitive information and access to its site, Proshare observed:

“The ContentOmni office in Ikeja was shut down early this year, barely two months after we had commissioned the firm and we have had serious challenges locating him or reaching him on phone when we had service issues which was a daily affair, for which our maintenance agreement covered.

“Most importantly, we needed ContentOmni to complete outstanding work from Proshare 2.0 which remained outstanding till date. A culture of service failures, non-observance of delivery timelines; desperation for money and disregard for client preferences, all well documented in formal correspondences showed no sign of abating.

“As the market entered the bearish state in May/June we feared for our ability to respond to the anticipated need for ‘another type’ of market information during the increasingly obvious market downturn, and requested that the website be handed over for us to take full responsibility for.

“Several entreaties from him for understanding of pressing challenges were made. On one of such visits, we made available additional funds to assist.

“Again, nothing happened and when ten (10) months after, sometime in September 2008 we asked again that he simply hands over the site and refund our money when able, he pleaded with us that we would have the site ready in October 2008.

“During the period of waiting, we requested for but did not receive information on the look and feel, functionality changes, logic for uploading and information on what customers should do and know about the new site. We still do not have that information.

“He rather sprung on us the need to move us to a ‘better’ dedicated server on a day when we were due to load a clients advert and while the website was acting up. It was literally a ‘gun to the head’ moment. We then realized that given the ‘catch 22’ situation we found ourselves, the only reasonable thing to do was to go ahead with it but insist that payment will be made by us directly to the web host, especially given our most recent experiences with him on matters relating to integrity.

“We recall that we have a subsisting contract till January 2009 and reckon that we could validate all works completed by the firm to achieve a smooth handover.

“ContentOmni migrated the platform to a test version of Proshare 3.0 in October 2008. The transition was anything but smooth or professional. Clients, advertisers, subscribers and staff members found it challenging to buy into the site and we thus demanded for a meeting/presentation from the firm. This he said he could not create time to do as ‘anyone should be able to apply themselves to the information there if serious’.

“Ugwuh’s disparaging remarks about users’ level of IT literacy would be considered by some as unusual but his formal response to our request to provide FULL DISCLOSURE of all third parties to which he had allegedly contracted on our behalf was anything, but sincere or professional.

“ContentOmni, he said, cannot and considers it unprofessional to disclose the identity of the third parties with whom he had contracted on our behalf nor can they disclose the source codes relating to our site (though initiated and paid for by us) if we want to take over the site and move it from them.

“We responded by demanding for a meeting as we became convinced of ContentOmni’s resolves to use any means available to them to keep us from being independent of them. When we insisted that we wanted a complete control of third party obligations and direct relationship with service providers supporting our operations as part of the transition, he threatened to shut us down unless full payment was received in a matter of days for spurious bills which included previous work done and paid for, and cost of transferring the website from one server to another.

Knowing our desire and passion to always serve the people, especially at this critical time of financial turbulence; Charles Ugwuh went ahead to block the website by placing a suspended service notice with the view to embarrassing the company and bring the brand into disrepute for no just cause. The notice was placed by ContentOmni and not the web host as anyone with knowledge of such services would know that no credible business will behave in such a reckless manner over disputed bills.

He had hoped that our zeal for service would compel us to succumb to such lawless act of intimidation and blackmail. WE REFUSE! If he is not responsible for the shut down, can he allow us pay direct to those who are, so we can hold them to a higher standard of decorum and service regard.

“This singular action of Ugwuh was subsequent to a commissioned project to deliver on the ideas put forward by us on the anticipated market requirements for investors in the Nigerian Capital Market; known as Proshare 3.0 – a customer centric platform which would remain free for all users. The completed site was due for launch in January 2008, having paid for same in November 2007.” Proshare recounts

“Charles Ugwuh, a son of a former minister, touts and believes that he is privileged enough to ignore the consequences of the shutdown by taking the law into his own hands. Sadly, this will be another chapter in the list of incidents we have had to grapple with this year in what many believe is a deliberate attempt by certain faceless persons/institutions to stifle the service and muzzle our voice in the market. It is not lost on us that the last incident we had to issue a disclaimer on related to the possible hijacking of our mails to which we used the website to immediately quell. More tragic is the fact that ContentOmni, referred to in the said broadcast as looking into the remote causes of such has allowed itself to be a willing tool to shut down our capabilities to defend ourselves.”

“This makes it such a compelling reason, not to allow such a blackmail to stand.” Proshareng affirms.