Gamblers push MMM's share price up again

SCORES of tense Muscovites were standing in the sweltering heat yesterday outside the Rileyeva Street branch of MMM, the shady investment company the government has warned citizens to avoid because it is operating a giant pyramid scheme whose collapse could be imminent.

I assumed these people were queueing up in the hope of offloading their MMM shares before they became worthless, but I received a sharp lesson in how journalists should never assume anything, especially in this Wonderland called Russia. The crowd was actually trying to buy more MMM shares.

'The papers are saying MMM are charlatans, but I trust them over (President Boris) Yeltsin and his government any day,' declared Maria Vasilievna, a pensioner who said the few shares she had in the company represented a large part of her personal finances. 'What has the government ever done for us, except trick us with their money reforms?'

The old lady was referring to two occasions, once under the former Soviet prime minister, Valentin Pavlov, and once under Russian economic reformists, when the government without warning withdrew certain rouble banknotes from circulation.

Entrepreneurs with connections managed to change their money in time, but pensioners and other poor people found their savings wiped out overnight. Thus the discredited government now faces an uphill task in persuading ordinary citizens to take its financial advice.

MMM, run by a secretive character called Sergei Mavrodi, who in a list published earlier this month came out as Russia'z fifth- richest man, has drawn some 5 million investors through a slick campaign of television advertising. The commercials feature Lyonya Golubkov, a fictional truck-driver, who is able to buy his wife a fur coat and go to America for the World Cup because he has bought MMM shares.

What MMM fails to mention is that the company apparently does nothing whatsoever and is only able to pay dividends to shareholders on the basis of money coming in from new share purchases: in other words, it has built a pyramid without foundations, something which would be illegal in the West.

Investors have indeed made money in the early stages of the game, but their luck cannot last forever.

MMM bosses were 'a group of skilled swindlers who take advantage of Russia's imperfect legislation to bamboozle people and fill their own pockets,' said Sergei Almazov, the head of the tax police, which has been pursuing the company for non-payment of taxes. But an arrogant Mr Mavrodi has defied the authorities to touch him, saying his investors are 'a political force' which could rock the government if it moves against MMM.

Ministers met yesterday to consider ways of regulating the securities market in future and set up a working group under the acting Finance Minister, Sergei Dubinin, to protect the interests of MMM shareholders.

But judging from a new surge in demand for the company's shares, it seems Russians are still mesmerised by the dream of quick and easy wealth offered by Mr Mavrodi. MMM share prices were yesterday edging up to 90,000 roubles ( pounds 28) after plunging to 55,000 roubles on Wednesday.