Flashback to 1997: ‘Rival Gangs’ Fought in Albania After Pyramid Scheme Collapse Caused Chaos

Albania was ruled by a hardline communist regime, led by Enver Hoxha, between 1944 and 1991. The country was thrown into turmoil in 1997 by the collapse of a huge pyramid scheme.

Documents released by Britain’s National Archives have painted a picture of the disorder and anarchy on the streets of Albania after a pyramid investment scheme collapsed.

After the fall of communism in 1991 Albanians sought to improve their lives in a free-market economy but there were few private banks and many families chose to borrow money from private companies like Kamberi, VEFA and Gjallica.

​But in early 1996 three new companies, Xhafferi, Populli and Sude, began offering interest rates of 12-19 percent a month. 

Within a few months two million Albanians – out of a population of 3.5 million – had invested in one of the three companies but in November 1996 Sude collapsed, triggering a panic.

In January 1997 the government froze US$250 million in the bank accounts of Xhafferi and Populli but by March the country was in chaos.

​On 2 March 1997 the Albanian ambassador in London, Pauli Qeska, wrote to British prime minister John Major about what he described as an “uprising.”

The ambassador went on to protest at the BBC World Service and Reuters who he claimed “have played a negative role in fuelling hatred and animosities and false reports about the role of the Albanian Army in the student hunger strike” in the town of Vlora.

Mr Qeska also railed at a group of 11 Labour…

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