ALBANIA: PYRAMIDS, A YEAR LATER

AIM Tirana, 26 January, 1998

Not even a year after tumbling down of the first Pyramid, the last stones of the systems which had brought about destruction of the Albanian state, have not been removed. And while majority of the pyramidal systems were destroyed and along with them the building of the Albanian state, some of them continue to exist, paralyzed by double fear: their closing down would cause new disturbances, and their persistence will just prolong the agony of a destroyed economy.

History of the informal market in Albania is one of the most painful proofs of the initial capitalism in the countries of eastern Europe. For the first time in Albanian press an article was published against the informal market in the beginning of September 1996. An economist took upon himself to explain the mechanism of this type of the market, presenting it in the form of a pyramid which is predermined to tumble down. The author of that article, with a precise calculation came to the conclusion that each type of a pyramidal system is predestined to be destroyed within 19 days after its creation. His logic caused laughter among all the Albanians who had invested their money in these systems and who collected fantastic interest every month, like in fairy-tales. This is how it all began: in 1992, manager of lotto and electronic games of chance, at the ministry of finance, managed to block an account in a western country, where money made in the so-called quarterly game was collected. A client was charged with a task to provide four other accounts, investing first a sum of 10 dollars, while he provided another 40 dollars from clients who also had to provide four clients each in order to join the game. The first of them collected an enviable sum of money, perhaps 120 dollars after a year's time, and so on, according to the order on the list, which also determined the moment when a certain client would win in this lotto. This game mostly took place in the capital, but as learnt later on, the centre of the game was actually in a small town about 45 kilometres from Tirana. Immediately after this game was banned by the Albanian officials, the manager was hit with a hard object and knocked out in one of the alleys in Tirana, several metres from his home. Perpetrators of this crime have not been found to this day, and he himself suffered only minor injuries and is still employed at the ministry of finance.

It was wrong to believe that an end has come to this game. It was just transformed into another form, the pyramidal systems. Bosses of the pyramids were stars shining on the Albanian sky. The president of National Democracy or Xhaferi Foundation always had his picture taken for Albanian newspapers while talking on two of his mobile phones and declared that his best friends were in Washington. He declared that he inherited his wealth from a grandfather who was allegedly a Pasha. He also said that he owned a fortune in the USA, consisting mostly of a few hotels, but the journalists who talked with him said that he was confused about the states where his hotels were located, because once he said they were in California, and another time that they were in Virginia.

The journal of Xhaferi Foundation, Bamirsija (Benefaction) was sold in 20 thousand copies and with this circulation it belonged among the best selling newspapers in Albania, better than many political and daily newspapers in Tirana. This journal had nothing to do with journalism, nor did it have a team of journalists, but just published articles about everyday life of the president of the Foundation, interest rates, crossword puzzles and letters of gratitude written by those who were cured or who had received aid from the Foundation.

According to the currently available data, the number of people who had deposited their money at interest rate in pyramidal systems, in December 1996, amounted to presumably 1.2 million, while the deposit of all these foundations and companies reached the sum of 1.2 billion dollars. In the meantime, people started a new life. Small businessmen shut down their firms and invested the money they got for them into pyramids. The interest they received for the invested money was much higher than the money they had ever made by hard work. Cafes in Tirana and other cities sprang up like mushrooms after rain, but so did the number of their guests. In the past three years, the type of commodities that the Albanians were buying changed. According to a poll done by INSTAT, it turned out that 75 per cent of the Albanians wore clothes from the west and that products coming from the east, mostly from Turkey, were disregarded. An English journalist wrote among his impressions about Albania that half of the Albanians drank coffee and that the other half served them that coffee.

Pyramidal systems sprang up and grew more powerfully than elsewhere in the city of Valona, which later became the centre of revolt. On 6 February 1997, when one of the pyramids seated in Valona, Gjalica, went bankrupt, the number of investors had reached 60 thousand in the city of 80 thousand, and the sum of money the company was obliged to pay reached the figure of 320 million dollars. Gjalica is nowadays just a bitter memory. After doors of jails were opened in March, during the days of anarchy, its boss left the country.

And while Djalica can be considered to be a closed chapter, or dead hope, dilemmas still accompany the greatest Albanian company VEFA, which is refusing to be called a pyramid, but which has not paid a single cent to any of its creditors for a whole year, although they have not lost all hope. In 1996, this company applied to be the organizer of Formula 1 Grand Prix, the greatest automobile competition, and then bought a chain of supermarkets in southern Italy and numerous factories and other facilities in the country. In the end of 1996 it had 80 thousand creditors who invested between 500 and 600 thousand dollars, The boss of VEFE still owns a helicopter and a large number of luxury cars of the latest type. And while in a sharp conflict with the government which had sent a commission to verify his wealth and in order to make the operation of the company public, the boss of VEFE, Alimucha, former non-commissioned officer of the army, speaks every evening on his private tv channel and promises to return the money.

A year after, all the bosses of pyramidal companies are at large. A certain number of them are abroad, and the others have remained in Albania. The only exception is the first cornerstone of the pyramids - Sudja, a woman of about 30, a Romany with absolutely no knowledge about finances. Sudja is the only one who is behind bars, which left about 20 thousand people without any hope, who have lost about 80 million dollars. On the day of her bankruptcy, she accused the press for her fall. She appeared on tv for the first time and said that she was saving money for construction of Lines factory for women and children. She did not cooperate with any Albanian or foreign bank, and very little money was found in her house, in a few boxes for transportation of bananas. It turb+ned out that about a thousand people had sold their homes and deposited their money in these empty banana boxes!

Remains of the fallen pyramids and the shadow of the still existent make the road of the Albanians towards stability very hard and uncertain. The Gordian knot has not been resolved yet. Perhaps it is not because the sword for cutting it is missing, but because nobody dares take it into his hands. The glorious pyramids were nothing but empty banana boxes.

AIM Tirana

Sami NEZA