Avoiding the con men of the Middle East

And some even to the extent that the whole investment can disappear to support someone else's unscrupulous lifestyle. Here in the Middle East we seem to be particularly targeted by the more determined con men.

An example I recently received arrived as an email from a Florida, USA, based adviser, offering guaranteed capital security plus interest rates from 12% pa on investments up to $1,000,000 rising to 24% pa for sums of over 12 million. All secured apparently through his 'IBC' and a highly involved and somewhat incomprehensible maze of financial terminology.

Deeper investigation revealed that only the most stupid or greedy would consider the venture. I never discovered quite what an 'IBC' was, but a bit of digging revealed that the so-called guarantee was being provided by a Puerto Rican company with a track record in such deals of a whole 90 days! Not an investment for anyone with any sense.

But is the other end of the scale much fairer? I have also received an email from a friend who sent me the following answer from the local branch of a reputed, worldwide banking institution to her query about why her $15,000 deposit account had not been credited with any interest for the past 6 months.

'I feel you are primarily concerned with the 0% variable interest rate currently being applied to your US Dollar International Access account... ...Although we always endeavour to pay the finest rates possible to our depositors, we have no alternative but to reflect current market conditions in the prices we pass on.'

Her capital may be safe, but I don't think you could describe it as the 'finest' rate. Is a 0% interest rate fair, and is it really reasonable? Are the bank lending her money at 0% or even just at cost, I bet if you went to that bank and asked to borrow $15,000 they'd want more than 0% a year.

So between these two extremes is it possible to deposit cash with out risking loosing all to some offshore shark? Or giving up all hope of any return to a bank who will only give a market rate to those with large sums or who can commit for long periods?

One suitable alternative are offshore money market funds, offered by the larger offshore fund management groups. They tend by definition, to offer competitive market rates, and they are as institutions they are now just as secure as most banks, in fact many of them are owned by banks.

For example The Bank of Luxembourg's Short Term Dollar 'B' Fund gave a return of 3.26% in the year up to 5th April 2002. The drawbacks are that the funds are usually domiciled in areas where only postal transaction can be completed, and therefore access to the funds is only as quick as mail service will allow. But if you're looking for a no risk, short term, reasonably accessible, home for your cash, take a look at Money Market Funds. They make a viable alternative, without the surprises!