South African authorities busted a pyramid investment scheme on Tuesday involving a company offering HIV/AIDS treatments in a country with one of the world’s highest infection rates.
Finance Minister Pravin Gordhan announced the police action in a budget vote speech to parliament, and Revenue Service spokesman Adrian Lackay said executives at an unnamed firm misappropriated 100 million rand ($13.5 million) invested in an “immune booster pack for HIV/AIDS sufferers”.
South Africa has the world’s largest AIDS treatment programme, and plans to double that with a $960 million scheme to increase access to anti-AIDS drugs to 80 percent of sufferers by 2013.
Authorities did not disclose the name of the company but said it was listed on Johannesburg’s alternative investment market.
In a pyramid scheme, new clients are recruited to pay money and to recruit ever more clients to sustain itself.
Police and tax inspectors raided premises in Durban and Pretoria and arrests were expected to be made, Lackay said, adding that the company and individuals would not be identified until they were formally charged.
“We will not disclose the name of the company until formal charges are brought before a court of law,” said Lackay.
Imuniti, whose website describes itself as a pharmaceutical and natural medicines maker, said South African Revenue Service (SARS) inspectors had searched its Durban offices on Tuesday morning but denied police had been present.
“The subject of the investigation is not Imuniti or any of its subsidiaries or any of its directors,” acting Chief Executive Neil Lamble told Reuters. “It’s certain other parties that the investigation is in respect of and we are cooperating with SARS fully in their investigation.”
“A team from SARS did arrive at the offices this morning to conduct an investigation,” Lamble said. “I can confirm it was not the police.”
South Africa has one of the world’s highest HIV infection rates, with at least 5.7 million of a population of 50 million believed to be infected. As many as 1,000 people die every day of AIDS-related illnesses.