DMG is a mysterious holding company with branches in several Colombian towns known principally for coca cultivation and armed-group activity. In Putumayo department, DMG has offices in Puerto AsÃs, VillagarzÃ³n, La Hormiga, Orito, Mocoa, and Sibundoy. A DMG branch exists in the coca boomtowns of Llorente, NariÃ±o; Granada, Meta; and MontelÃbano, CÃ³rdoba. (Click on the Colombian flag at the top of their website and look at the map of their locations.)
Their business model sounds miraculous: you give them your money, they offer incredible rates of return – you can double your investment in six months. How is that possible? Where is DMG’s money coming from?
As with too many things in Colombia, nobody seems to be asking. Here is an excerpt from an article that appeared in August in the Colombian newsweekly Semana, which raises at least as many questions as it answers.
For the last two years, a unique economic situation has calmed the income anxiety of those who live in this distant zone of the country [Putumayo], which since the 1990s has based its economy on coca cultivation and harvesting.
It is called DMG. … Long lines along Villacolombia or Calle Mocha, in Mocoa, the capital, show the level of impact that this financial phenomenon has in this region’s society.
Many arrive as much as two days before the payment day. Months ago they had left millions and millions of pesos in DMG’s coffers. Some, all of their savings. Others, what they got from selling their house, their car or their farm. There are even some who have taken out bank loans in order to invest the cash in this magical way of increasing their capital. When they arrive at the branch, the person receives the “benefit” of his investment, as agreed in each contract. Interest rates of 10, 15, 30, 50 percent, and during “special offer” periods even 100 percent.
Ten million pesos in DMG’s hands for six months can be turned into 20 million. Or if you prefer a monthly payment, they will give you 100,000 pesos every 30 days. That is, 10 percent. [The author must mean a million pesos every 30 days.] One can choose whichever way one prefers. Either way it is well above what any bank would pay to a savings account holder.
… David MurcÃa GuzmÃ¡n is the person behind this miraculous system. A young man of less than 30 years about whom little is known in the region. Only that one day he came to six of Putumayo’s 13 municipalities and set up his business.
The DMG offices, the local population says, have strong safes to hold the cash that arrives at the regional airports and is transported along the department’s awful roads by armored, escorted cars.
There is nothing clear about this business. There are no sanctions from the Superintendencia Financiera [Colombia's bank-oversight agency], there are no results from the preliminary investigations that the FiscalÃa [Prosecutor-General's office] began at the end of 2006. But the business is so prosperous, that in a zone where the narco-economy led the parade for years, it is easy to imagine that something strange is behind this surprising way of getting many out of poverty.
But this matters to very few. In the region, people are so content with DMG that any politician who wants to campaign and win elections in Putumayo would do well not to get involved. “A legislator asked in public about the origin of this money and called for an investigation, and the next day he had thousands of opponents in the department. The people will not allow this subsistence source to be taken from them,” commented a departmental government official.
Writing in El Espectador on September 15th, victim’s movement leader IvÃ¡n Cepeda saw no mystery about the origin of DMG’s funds.
There is a business [in Putumayo] devoted to money-laundering, DMG. Its owner, David Murcia GuzmÃ¡n, is an ally of paramilitaries, narcotraffickers and politicians. The business offers 50% monthly interest rates for any amount of cash.
Many families have sold their small properties in order to leave some capital in this business. However, extortions are being carried out against investors. In several cases children have been kidnapped to demand that their relatives give their earnings.
Official investigations of DMG appear to be stalled. Meanwhile DMG continues to sweep Putumayo – a department where thousands of small-holding coca-growers, their modest incomes eliminated by eradication programs, are desperate for any way to make money. And where nearly all wealth that exists is tied to organized crime.
Look at these excerpts from people who wrote in comments on the Semana article. With poverty generalized in Putumayo, and with the rule of law a distant aspiration, DMG has some passionate defenders. It is awful to think of what will happen to them and their savings when the DMG house of cards comes crashing down, as it inevitably will.
“Thanks to God DMG is a group that began in Putumayo, that is why I am standing up for it. David Murcia is thinking of his customers, som ething that no other human being has done. No doubt we all benefit from him. It is the blessing of God. And all of his customers are ready to fight so that this never ends. I ask all people who do not know poverty not to give their opininon about the Group. Because it is we who have lived it, and if it supports some politician that is not our problem. What is important is that our payments are made to us, regardless of where the money comes from. Thank you.”
“If we compare the aid that DMG gives us with the aid that the government offers, I’ll tell you that I prefer DMG. … If we see the interest that a bank or a financial corporation gives, it is enough to make us cry.”
“For the poor, DMG is just a refuge from poverty and a breath of air, we only want it to last just a bit longer … maybe we’re not as poor as they say … there is a lot of money and resources here, only that it remains in few hands … DMG has become a solution not only for poverty but for the illicit crops that afflict the department’s communities. ”
“The majority of us are poor, that is true, but we do not give up our conscience for a plate of beans. The miracle is a true miracle, it has given out more money than the department’s annual budget; how they do it is a well-kept secret supported by the government.”