In a shocking turn of events, Ugandans have fallen victim to yet another swindle, this time involving a poultry rearing investment scheme that never even existed.
Dubbed “Capital Chicken,” this so-called investment opportunity primarily targeted corporate individuals seeking to profit from the chicken business without the hassle of direct involvement.
The company’s website proclaimed, “We are an agribusiness contract farming partnership enterprise who rear poultry on behalf of individuals who wish to earn an income out of poultry farming but are limited by a number of factors including but not limited to limited skills, no access to land, insufficient capital, lack of a stable market, and time.”
With its headquarters located at Plot 74, Kanjokya Street in Kamwokya and another branch on Ben Kiwanuka Street in Kampala, Capital Chicken further tried to deceive investors by displaying photos of a fictitious chicken farm in Mukono.
The scheme enticed investors with promises of returns ranging from a minimum of one million shillings to an unlimited amount, either individually or as part of a group. Supposedly, investors could pocket 15% of their total investment every month.
To build trust, the scam operated with binding contracts and assured investors of its registration and insurance coverage.
Capital Chicken even announced plans to open chicken selling shops across the country, urging investors to prepare to own these establishments.
Many victims spoke highly of their initial experiences, believing the company was legitimate and profitable. One anonymous victim said they invested three million shillings and received 1.8 million in returns twice, leading them to expect similar profits for a third time.
Operating since around 2022, Capital Chicken managed to instill confidence in its members, who trusted the company enough to reinvest and expand their capital.
However, a red alert was raised last month when the Capital Markets Authority disclosed that the company was not under its regulation.
In response, Capital Chicken issued a statement defending its legitimacy, emphasizing its partnership status and insurance coverage.
Yet, trouble began brewing in August when investors reported not receiving their interest payments upon contract expiration. Investors were told there were challenges with chicken suppliers, but payments never arrived.
As investors sought answers at the company’s Kamwokya offices, they found locked doors and empty premises, with a notice claiming staff were on retreat and would return on October 2, 2023. However, when they returned on the designated date, the offices remained closed, and the police officers guarding the entrance were nowhere to be found.
The shocking revelation unfolded as employees discovered that the CEO had absconded with investors’ funds and fled the country. Several deputies also vanished, while employees hid for fear of investor reprisals. At least two Capital Chicken employees have been arrested, and the hunt for other managers continues.
In a WhatsApp status, the company’s administrator, seemingly on behalf of the staff, admitted they were also duped by the company’s deceit.
This scam is reminiscent of past frauds in Uganda, such as the BLQ sports betting scam, World Global Mobile Network, Telex Free, and others that left countless victims without justice and significant financial losses.
The Capital Chicken scandal serves as yet another cautionary tale, highlighting the need for investors to exercise extreme caution and skepticism in the face of seemingly lucrative opportunities, especially when dealing with unregulated ventures.
Capital Markets Authority Fails Miserably in Combatting Rampant Fraud
CMA advises potential investors in Uganda to conduct thorough research before committing to any product or service and to invest with licensed and regulated firms. Dickson Ssembuya, the CMA Director of Research and Market Development, also cautions investors to be cautious of unsolicited investment offers, diversify their investment portfolios to reduce risk, and regularly monitor their investments.
Despite these warnings, Ssembuya highlights that Collective Investment Schemes remain a viable investment option due to their numerous benefits, including lower risk through pooled savings, the ability to invest in larger ventures with minimal savings, and the advantage of favorable tax policies exempting returns.
The CMA has already taken action against several complaints, urging the public to be cautious about seeking investment advice or dealing with unlicensed individuals or entities. Recently, the CMA issued a warning about three companies in Kampala – Capital Chicken Ltd, The Mall Fund Ltd, and Veta Plan Chicken – accused of conducting business resembling capital markets without the necessary licenses. These companies argued that they were registered with the Uganda Registration Services Bureau (URSB) as farming ventures, not financial companies dealing in stocks. However, suspicions arose from their business model, where investors deposit money with the firms and receive returns after five months, depending on their initial investment.
It is alleged that the returns to investors are funded by new investors joining the scheme, not from the revenue generated by the chicken farming operations. Regulators consider this a Ponzi operation. Ssembuya mentions that they have organized online public lectures to educate Ugandans on protecting themselves against scams.
Capital Chicken Suspends Operations
Capital Chicken Limited announced a temporary closure of its operations following actions taken by regulatory authorities. The Financial Intelligence Authority (FIA) froze the company’s accounts after the Capital Markets Authority (CMA) discredited its operations.
In a statement issued on Tuesday, October 3, 2023, Capital Chicken explained that they had been forced to close temporarily due to the CMA’s negative assessment and subsequent freezing of their accounts by the FIA. They also expressed a desire for regulatory agencies to engage with them to resolve any issues.
Concerns arose on social media about Capital Chicken’s closure and the safety of investors’ money. However, Capital Chicken assured its clients that their investments were protected and encouraged them to remain patient.
The CMA had clarified earlier that Capital Chicken Limited, along with two other entities, had not sought approval to offer investment contracts to the public. Capital Chicken’s investment scheme targeted corporate investors looking to invest in the chicken business indirectly. Investors were allowed to contribute individually or as a group, with promised monthly profits.
The CMA warned that unregulated investment activities carried risks for investors, and it recommended seeking advice from licensed professionals for sound investment decisions.
