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May 3, 2010 - 7:19:31 AM

Protests over fraudulent investment operations in Darfur turn violent.

At least three people were killed in Sudan's troubled Darfur region on Sunday during violent clashes between Sudanese security forces and protesters defrauded of millions in a Ponzi scheme.

Witnesses and international aid workers reported that around 1,000 people descended on the North Darfur governor's home in the capital Al-Fashir to protest the new provincial government's failure to investigate a local pyramid scheme which left hundreds of Darfurians penniless.

Witnesses reported between three and 10 people killed and dozens wounded after automatic gunfire broke up the protest and led to intense fighting. It is not clear whether the shooting was between police, Arab militias or civilians, many of whom are members of militant groups fighting the government.

The clashes followed a demonstration earlier this week in which hundreds of defrauded investors were tear gassed by police as they tried to protest in front of the regional prosecutor's office.

A Ponzi scheme is a fraudulent investment operation in which investors are paid high returns using money from separate, new investors, rather than profit earned through actual investment.

In the first such operation known to have taken place in Darfur, residents told Reuters that ten months ago, two unknown men began promising thousands of small-scale local cash investors returns of more than 50 percent after just a month of investment. The men gave patrons certificates to authenticate their investments and investors were paid the promised profits for a few months.

The get-rich-quick scheme became so popular that the Al-Fashir market began being dubbed the Al-Mawasir market, a reference to the local colloquial Arabic for a scam.

The operations suddenly shut down, however, ahead of Sudan's national elections last month, leaving thousands of Darfurians financially ruined. Estimates as to the total money lost have ranged between 240 to 350 million Sudanese pounds ($120-$175 million).

Osman Kibir, then a candidate for governor of North Darfur, promised that if elected he would find the perpetrators of the scheme and return investors' losses. Since his election last month, Kibir has backtracked, claiming that investors involved in schemes based on interest could not be compensated, as interest is Haram, or forbidden, by Islamic law.

"This plot that came into the spotlight during the demonstration is a political plan, around which the political dead-enders who have lost the last election convened to make up [their] losses," the governor said in a statement, accusing local politicians who lost in the elections of being behind the protests. "The state government has nothing to do with the so-called Al-Mawasir market, as it is a market of citizens that make profit and loss without interference from the government"

Officials from the Northern Darfur administration could not be reached for this article.

Last week Kibir's administration claimed to have arrested a number of men in connection with the Ponzi scheme, and the governor promised ahead of the protests that he would expedite the investigation.

Stephen Van Neel, who served as a U.N. area commander in Darfur and is now a senior researcher at the Institute for Security Studies, said the protests were just beginning.

"We certainly have not seen the end of this," he told The Media Line. "The governor said that if he got elected he would turn this thing around and the people would have a better chance of getting their money back, so now they are demanding that he step down."

Once a small city serving as an agricultural market for the surrounding area, Al-Fashir has become somewhat of an economic boomtown since the start of Darfur's humanitarian crises in 2003. As thousands of international aid workers set up base in the city, various new businesses opened.

"These schemes are something very new to Darfur," Van Neel said. "The environment is more conducive to this kind of thing than it has been before, so I think we are going to see more and more of these kinds of things as people go in there to make some money."

"The larger question is why it became so violent," he added. "The answer to that is much easier: the only group that really has access to these kinds of weapons is the SLA [Sudan Liberation Army]."

Dr. Richard Rossin, special advisor to Abdul Wahid Mohamed al Nur, chairman of the Darfurian Sudan Liberation Army (SLA), said that while the rebel movements had supported the protesters, they were not involved in the shootings.

"The SLA has been demonstrating," he told The Media Line. "That's all I know."

Meanwhile, on Monday the Justice and Equality Movement (JEM), Darfur's most powerful rebel group, formally announced the suspension of peace talks with the Sudanese government, accusing government-backed forces of attacking Darfurian villages in breach of a February ceasefire.

For well over a year, Doha has sponsored Darfur peace negotiations between the Sudanese government and the two principal rebel groups: the Justice and Equality Movement (JEM) and the Sudan Liberation Army (SLA), which has said it will not negotiate with the government until there is an end to all violence in Darfur.

Sudan's western Darfur region has witnessed over seven years of ethnic conflict between dozens of African tribes and Arab tribes backed by the Arab-dominated Sudanese government. According to U.N. estimates over 300,000 Darfurians have been killed and 2.7 million made refugees since the rebel groups launched a revolt in 2003, accusing the government of marginalizing the region.

A number of international bodies have described the Sudanese government's response to the revolt as a genocide and the International Criminal Court has charged Sudanese President Al-Bashir with seven counts of war crimes and crimes against humanity. The court issued a warrant for his arrest last year but despite Al-Bashir visiting a number of African and Middle Eastern nations ever since, he has not been arrested.

Darfur is named after the local Fur tribe, the largest ethnic group in the region, the name simply meaning "land of the Fur."

Formerly an independent sultanate, Darfur was incorporated into Sudan by the British in 1917.

Today Darfur's six million inhabitants, principally subsistence farmers and pastoralists, make up one seventh of Sudanís population.

Darfur's 80 tribes are often categorized into Arabs, non-Arab "Africans" and various tribes who have lost their native languages to Arabic.

Some see "Africans" in Darfur as those whose mother tongue is not Arabic, although in reality the lines between those considered Arab and "African" are not that clear.

Darfur's "African" tribes, such as the Fur, Zaghawa and Massaleit tribes, tend to be settled subsistence farmers and traditional cultivators who grow millet, sorghum and market vegetables. Darfur's Arab tribes, on the other hand, are principally nomadic cattle and camel pastoralists.

Low-intensity tribal conflict between these sedentary and nomadic communities is nothing new in Darfur, but the war of the past seven years centers around a conflict over natural resources as the region faces an increasingly acute desertification crises. With Saharan desertification spreading south through Darfur, pastoralist tribes have migrated south in search of grazing lands and water. Lack of employment opportunities or central government investment in the region has made matters worse.

By Benjamin Joffe-Walt on Monday, May 03, 2010

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