DKM diverted GH¢77m to subsidiary companies

A special audit of embattled microfinance company DKM Diamond Microfinance Company Limited’s operations, carried out by chartered accountants Lobban, Hyde & Partners, revealed that the company diverted GH¢77.26million to subsidiary companies, the Finance Minister Seth Terkper told Parliament on Tuesday.

According to Terkper, DKM was granted licence to operate as a savings and loans company in 2013, but violated all rules regulating the sector.

An investigation by the Financial Intelligence Centre indicated that the company had a total deposit liability of GH¢115.2million from customers, but had only GH¢10.8million in its accounts at the time of investigation.

The monies are suspected to have been diverted into affiliate companies -- DKM Mining Ltd., DKM Transport Ltd., DKM Shea Butter Ltd., DKM Gas Filling Station and DKM Cement Depot Ltd.

The Finance Minister also stated that steps have been taken to retrieve properties belonging to DKM microfinance.

“DKM has made several promises to pay its customers but these have not materialised. The Bank of Ghana has initiated action to revoke the company’s licence, and the process of liquidating the assets of DKMDML and its subsidiaries to pay off depositors has commenced.”

The Bank of Ghana (BoG), Terkper claims, is however unable to account for other companies like Jaster Motors and God is Love since they were not properly registered with the central bank.

Mr. Terkper told reporters that it is time the central bank was empowered with stringent laws to help it to curb such incidents of scamming.

There have also been calls for compensation to be made available to victims affected, and Terkper hinted that government might consider this.

“These things involve huge financial costs. The first thing is to make sure those who were involved in the scam are prosecuted; and their assets, the depositors’ money, is traced as a first recourse to alleviate immediately the problems facing them. The other ones will lead to fiscal cost. When you have a large number of these institutions, it is also a cost on our central bank. It can weigh on the central bank and on the budget. But the issue has come up and it is under consideration. It is not being ruled out, but the first question to answer is: Where are the monies they have taken /hidden?” Terkper asked.

The Ghana Deposit Protection bill 2015, Mr. Terkper says, will provide protection for the small depositor from the loss incurred by depositors as a result of an insured event occurring; and will support the development of a safe, sound, efficient and stable market-based financial system in Ghana.

He said the bill is in the final stages of consideration at the Finance Committee of Parliament, and all issues outstanding relating to the Bank of Ghana have been addressed. Terkper explained.

Hitherto, Parliament in unison called for a ‘bail-out’ for affected victims of the DKM scam, and also pushed for officials of BoG to be summoned before the House to explain the issues.

Both majority and minority leaders of Parliament, described it as “a national emergency issue” that needed to be probed further.

“Mr. Speaker, this is in breach of article 183 of the constitution. Certainly, somebody was sleeping on his job; that is why the entire nation has been thrown into such turmoil. If we were a nation that had an eye on diligence this certainly would not have happened,” said Minority Leader, Osei Kyei Mensah Bonso.