Across Nigeria, many individuals and organisations are affected by deceptive investment schemes. From digital platforms offering unrealistic returns to carefully disguised frauds dressed as legitimate businesses, these schemes have left painful financial and emotional scars. Amid these, Directors and professionals are expected to lead with integrity and caution, essential qualities when dealing with economic opportunities.

With the growing number of investment scams across the country, there is a greater need to be more vigilant in spotting fraudulent investment schemes. These types of schemes do not target only the inexperienced; many educated professionals have lost money. Research has shown that such schemes thrive when rules are ignored. Many people fall victim not just out of greed but often due to limited financial awareness, peer influence, and economic pressure.

In late 2024, the Economic and Financial Crimes Commission (EFCC) uncovered a large operation in Lagos. This group used online platforms to target investors abroad and locally, mimicking real investment services but had no real products behind it. The organisation behind it used messaging apps and fake social media profiles to appear trustworthy. What seemed like a small start-up fee grew into huge losses as victims were pressured to commit more funds. This approach follows a common trick: show a fake profit, demand more funds, and disappear when the victim can no longer pay.

To avoid losses, investors must take time to examine every opportunity properly. The following steps can help:

·         Check Authorisation - Confirm if the company or platform is registered with the Corporate Affairs Commission (CAC), Securities and Exchange Commission (SEC), Central Bank of Nigeria (CBN), or other recognised authorities. Companies that have nothing to hide usually provide this proof and clarity.

·         Request Financial Documents - Ask for official statements, reports, or other documents. These should offer a clear picture of how the business works and how it earns income.

·         Question the Promised Returns - Be careful with offers that seem too generous or risk-free. Unrealistic profits are usually the bait for a trap.

·         Look into Ownership and Management - Know who is running the business. A clear record of the individuals behind a scheme can reveal whether you deal with genuine managers or questionable operators.

·         Do Your Own Research - Don’t rely only on what promoters tell you. Check newspapers, online discussions, and reliable review platforms.

·         Speak to a Trusted Adviser - If unsure, talk to someone with professional financial experience who is not linked to the opportunity.

·         Understand How Business Makes Money - Ensure you clearly understand how returns will be generated. If the explanation sounds confusing or lacks detail, it may be best to walk away.

·         Don’t Let Anyone Rush You - Pressure to “act fast” or risk missing out is a red flag. Any serious investment offer should give you time to think and consult others.

The role of regulators is very important in ensuring a safe investment environment. Regulatory agencies like the SEC and the EFCC have tried to shut down illegal operations and educate the public. However, they cannot monitor every false promise via text messages or social media. The investor must still ask questions, demand answers, and walk away from unclear deals. Resources now exist to help verify companies and report suspicious activity. These tools should be used whenever there is doubt.

Also, directors have a duty to protect the interests of shareholders and other stakeholders. This includes ensuring company funds are not exposed to risky or unverified schemes. When individuals on the board or in senior management are approached with investment opportunities, these must be passed through the appropriate governance processes.

The governance process should include a standing policy on investment decisions, with clear procedures for review and approval. This prevents impulsive choices and maintains decisions open to review and accountability.

As the forebearers of sound corporate governance, Directors must lead through discipline, make the best decisions for stakeholders, and contribute to Nigeria's trustworthy and responsible investment environment.

Research & Advocacy Department,

Chartered Institute of Directors (CIoD)

28, Olawale Edun Road (Formerly Cameron Road), Ikoyi, Lagos.