Brick Mansions: The MenzGold tale

The whole of Ghana is buzzing with news of ‘MenzGold’, victims and non-victims alike have opinion on the issue and everyone seems to want their opinion heard. There is a certain level of curiousness attached to human nature and the need for information. This is a compilation of some facts and an objective overview on these issues and a clear prediction of the future for all parties concerned.

Menzgold is a Ghanaian registered company under the Ghana’s 1963 Company Act (Act179) and has been operating since October 2014, though their website states that they have been in operation for a year; This is their first lie. The company deals in the purchase, sale and export of stored gold, silver and other precious stones.

The company outlines a number of services ranging from gold investment to mining pre-financing on their website and other advertisement portfolios. The company is alleged to have operated in Kasoa between 2010-2014 under a different name ‘Menzbank’ and had duped a large number of market women in that area and gotten away with it.

The Bank of Ghana(BoG) herein referred to as BoG had intervened and made threats, however no records of an investigation or conclusive outcome was made, Also, it is alleged that the owner of Menzbank, Mr Nana Appiah popularly known as ‘Nam1’ was arrested but released later on. This SHAKEN grounds was the beginning of the lifeline of MenzBank and MenzGold-Ghana which was a rebranded and revitalized version of the previous Menzbank.

It made Menzbank its umbrella name and redirected its attention to gold dealership. All our national regulators watched unconcerned! Till today, the Menzgold websites purports to being affiliated to a ‘Switzerland Gold Bank’, this said bank has on a number occasions denied such an alliance through emails with investigative journalists and their signed statement hence forcing Menzgold officials to retract such claims on social media but they have not had the courtesy to do same for their official website.

This is their second lie. Menzgold has on numerous occasions stated that it is not a financial institution in response to allegation from the Bank of Ghana. A casual skim through the activities of any financial institution and that of MenzGold shows some precise similarities. If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.

This is their third lie. In an expensive campaign Menzgold communicated its separate character by insisting it does not accept deposits hence it is not a financial institution or accountable to the BoG. Sadly, before the BoG warning in 2017, Menzgold had accepted deposits from numerous customers whose names are withheld at the moment. In response to the call by BoG on their deposit collecting breach, Menzgold craftily set up a new subsidiary company called Brew Marketing consult ltd to accept deposits in the name of purchasing gold items. (I will discuss the brew marking consult in detail in another article).

This was yet another crafty lie and way around the law. The speed at which Brew consult ltd was licensed is a matter for discussion anther day. Almost every bureaucratic process takes weeks and months in Ghana yet Brew Marketing ltd got the express treatment probably with the pushing of funds at the time of the supposed first warning by the BoG, there was clear evidence to support collection of deposits and grounds for sanctions and legal action, however our ever promising regulators felt a warning was enough. Let's explore the role of the various regulators.

The Securities and Exchange Commission (SEC) and other regulators are described as the statutory body mandated by the Securities Industry Act 2016 (Act 929) to promote the orderly growth and development of an efficient, fair and transparent securities market in which investors and the integrity of the market are protected. Their broader mantle captured on their website involves check and licencing of operatives.

The SEC is mandated to create a system of fairness, regulate operations of companies, offer sanctions, probe all allegations of wrong doings. Lastly and most importantly protect the citizens. This is called paternalistic role to of state institutions and an offshoot of the social contract theory. In totality the SEC must ensure sustainability and growth of market. After MenzGold operations had gained roots and BoG was finally picking an interest, the SEC decided to intervene and its options on action against MenzGold was endless yet it choose to issue its warnings too.

This is a problematic stance and one would hope regulators with statutory powers will do more than issue warnings A year later in September 2018 the SEC issued a statement. It stated, For the avoidance of doubt the SEC directive stated as follows: “Accordingly, the SEC hereby directs Menzgold Company limited to shut down immediately the business of trading in gold collectibles with guaranteed returns to clients which constitutes, in essence, dealing in securities with neither the necessary licence nor disclosures authorized by the SEC. No new contracts should be created and all advertising of the investment business halted with immediate effect”.

The bone of contention raised by the SEC was fixed returns promised by the dealers. The SEC in its official communique reiterated; “The Rule on guaranteeing returns has existed in the Compliance Manual for Broker-Dealers, Investment Advisers and Representatives since January 2008. On the 14 day of April 2014 and the 31 day of march 2015 respectively Circulars with Numbers SEC/CIR/001/2014 and SEC/CIR/002/03/15 were issued by the SEC cautioning fund managers about the forbidden practice of guaranteeing returns and issuing fixed deposits to clients.

The recent Directive with number SEC/FM/DIRECTIVE/06-18 on the 18 June 2018 only provided a final transition period to completely fade out that illegal market practice. The SEC has not requested any fund manager to revise its provisions in Management Agreements executed with clients on redemption of funds over an extended period whatsoever.

Clients should insist on enforcing the terms and provisions on client redemption provisions according to the Management Agreement by the Fund Manager and the Client.” In the statement above, the SEC made it clear that there is a rule that prevents any company from promising fixed deposits, yet over the long years that MenzGold was operating, it had boldly promised a fixed lavish return on investments yet the SEC took no action.

To be clear, from the very first day MenzGold started its operation, it was in breach of a number of rules that warranted the revoking of its license yet our regulators took no action. As such the business grew in strength and number and when the regulators decided it was time to grow a conscience and protect the people, the people were in too deep hence the people began a campaign to defend MenzGold (their business partner) making the regulators seem abusive and checks targeted to destroy MenzGold. The regulators delay gave MenzGold the opportunity to build confidence through its consistency in paying returns and other obligations, as such when the regulators stepped in, it seemed impossible to shake that confidence off.

The SEC had the mandate to withdraw the license pending investigation amongst other alternatives stated in its mandate yet chose to sit idle for years. What is the public to do when the watchdogs to protect them sit idle and issue warnings? Experts in a field of study with no power can issue warning but a regulator takes action. A Regulator remembers its mandate to protect its people and its economy by weeding out any unscrupulous conduct.

Even on the face of issues without looking at the bank records and other privileged data, one can clearly see some uncouth conduct that would send warning signs to any well-meaning regulator to issue a halt and do a proper probe. Even in the communiques issued by these regulators none of them asserts its authority to take responsibility for the circumstance but rather are quick to transfer full culpability to the uninformed victims. Can one imagine such contemptible conduct from regulators in the west?

In one disheartening video we hear the finance minister of Ghana Ken Ofori Atta, making jokes about this issue and blaming victims to “have known better” and as such have full culpability in their ordeal.

His position can be interpreted as the position of government and the lack of sympathy in these circumstances is of serious concern even to the extent of describing the Ghanaians who elected him as greedy! Does he fully understand the far reaching implications of a bad economy? Does he know the number of businesses hanging by a thread called ‘MenzGold’, without which they would go under? Does this arrogant minister know that a lot of people go after these schemes not out of greed to build another skyscraper but because there are almost never enough resources to feed one’s children let alone pay school fees, bills and taxes? Does our so called minister know that at no point in official transcript before his inhumane comments, no one had mentioned that MenzGold did not have a license to operate in gold related products? Does he also appreciate that government is elected to represent and protect the people form injustice and as such if and when people have been exploited on a large scale government and all the regulators concerned must be questioned as to how this happened under their watch? Does he know that by law government must right those wrong and build the populace trust in the government? Does he also appreciate that it is the role of the government and courts to ensure a redress of all parties concerned? Such comments by this minister makes citizens lose faith in government and take the law into their own hands in pursuit of jungle justice through vandalism and mob actions. Our elected and appointed officials must review and watch their comments in public, they must recognize that they are the mouth piece of the country at every occasion. Their comments have global implications.

Over the past few months, the world looked on as Ghanaian regulative apparatus and the police looked on helplessly. There are three clear messages being sent to anybody willing to listen. Firstly, the laws in Ghana do not work, anybody can take advantage of people for a long period of time and the response of government will be “they should have known better!” It is important to mention that this is not the first second or even twentieth time this Ponzi scheme has ripped Ghanaians dry. MenzGold might not be a Ponzi scheme, I promised to maintain an objective streak however all logical indicators hold MenzGold guilty to the bone. As a lawless country which allows daily injustice, we have created a society that is truly conscious and aware the law does not work.

Secondly, we have gracefully showed a lack of character and promise in our economic reforms. Our investment capital is so volatile to abuse by repeated “one man show” pranks. Not all the clientele of MenzGold are Ghanaian as such our reputation is spreading. Our weak economy is increasingly looking unattractive to investors, soon Ghana will be a no go area for investors maybe then our government will grow balls to respond.

It is interesting how a company that had gained national prominence and had meetings with the President, the Chief Imam and the Asantehene would be described with ridicule by the finance minister while insulting the intelligence of Ghanaians, maybe the President and other dignitaries should not be meeting questionable characters with a possibility of duping Ghanaians? In lieu of context, the three most influential personalities in Ghana presently are the President, the Asantehene and the Chief Imam who all welcomed Nana Appiah, the owner of MenzGold into their respective offices where at one meeting Nana Appiah pledged one million dollars which was met with overwhelming applause. It is also purported that these dignified persons have invested in MenzGold as well. Most people did not give MenzGold a second look till they saw all the people they look up to engaged in these dealings. A broad spectrum of musicians/actors/actresses including Stonebwoy, Becca, Joselyn Dumas, Jackie Appiah and our own elected officials normalized and legitimized the business by endorsing its operations.

Once again, I am in no way blaming these officials or celebrities but I insist their role in making the gentleman’s business seem legitimate cannot be overlooked. Most vulnerable people believe they are role models and will understand their yoke and only advance licit ventures. Describing the circumstances as an obvious trap is misleading because these officials took a centre stage in Ghanaian politics and were up to task on paying all their returns.

I do agree with the finance minister when he says we must clean up the financial sector however I doubt a man who makes jokes of people’s predicament and vulnerability will give this issue the seriousness it deserves.

Thirdly, there is a continuous normalization of crime and corruption further. By blaming victims, we tell them anyone can do as they please and there will be no justice. Fundamentally our country is growing into an economically failed state where HIPC might be another option for government again. It is saddening that these things happened under the watch of a government that came into power by riding the average Ghanaian position thoroughly, the entire campaign of the NPP was sympathetic to the predicament the ordinary Ghanaian was facing yet they stand ignoring thousands of victims when they need action to be taken.

I understand government cannot jump every time something goes wrong, nor can they defend every victim in such circumstances. However, it becomes alarming when the disaster is so far reaching and it is eroding the image of the country. The government must respond in these circumstances to ensure it doesn’t perpetuate itself and continue the cycle of exploitation growing in the Ghanaian economy. It was heart-warming to read about a petition to the President by the lawyers of the victims, if the president was able to meet the said gentleman and offer his business legitimacy then the President owes it to the Ghanaians who looks up to him to step in and offer a calming voice and redirection. Failure to do so will make it certain that the view of the finance minister is reflective of his own sentiment on the issue.

Now to balance the scales, I do admit it’s possible that this is all a gross misunderstanding. With no official statement to explain the full detail of these occurrences, most Ghanaians must scrap the corners to get information or even make sense of their circumstances. A clarity from our regulator is imperative at the moment.

If indeed MenzGold is an honest business and has faulted, they should be rightly sanctioned and returned to their operations with a written apology from all state apparatus who maligned them and cast doubts in the minds of Ghanaians. If indeed MenzGold operated for years without a license and no regulator spoke up till a tally of millions of dollars were invested, then our regulators have failed us. The process of licensing is to protect consumers and ensure that people with the requisite training can vouch that the processes of a business and its outcome are within reasonable caveat and as such people are free to do business with them. Ghanaians are not greedy, they are simply trusting and vulnerable like people anywhere in the world. Government’s role in recovering the money from the persons involved is imperative.

The paternalistic role of the government gives a statutory mandate for them to give the victims justice.

To the commentators who still insist that victims are to blame for their loss, my response is that, if your default solution is to blame persons for a loss do remember that’s the same rhetoric used to blame victims of rape and abuse. The victim reserves the right to redress even if their conduct accelerated or aided their abuse.

Also MenzGold has a contractual obligation with these people, all they know is that they must get their money back, the law is very specific on these things. “They were warned” and their conduct through “We stand with MenzGold” looked unattractive but it in no way exonerates the unfortunate conduct of some actors. Most people needed help, most people don’t understand business and possibilities and the intricacies of profit margins and investment outcomes hence at all times as a state we should be able to rely on the paternalistic nature of government to protect its people. Some commentators have mentioned that the business operations of MenzGold is built around an individual and most assets are bought in his name using resources from the company.

The idea of a separate legal personality and the corporate legal personality can be suspended if there is proof of fraudulent behaviour, the concealment principle and the evasion principle when proven will be enough to sink this evasive ship. If indeed there is fraudulent behaviour, we as a nation must turn every stone necessary to ensure justice is served and a new order of deterrence from exploitation is built.

In conclusion, there must be a way to make people accountable. The laws of Ghana must work, numerous people are on record for being in this predicament and this shows a demand for urgency. One must admit, the regulators might be sorting out the issues behind closed doors and preparing a legal and financial redress, however justice delayed is justice denied. I believe a year of speculation and a four months of probing is enough time to make arrests, freeze accounts and issue official statements on the processes of their investigation. Keeping the public in suspense is making people stressed, belligerent and breeding pugnacious demeanour amongst victims. Blaming victims is unfortunate and incentive, I agree people make wrong decisions and choices and sometimes they get duped but under no circumstance should the law turn the other way and blame victims. The responsibility of the law is to bring balance and justice. This is an opportunity to revitalize the weakened faith of the populace in the judicial system. There are a lot of people in this situation and it is truly sad and unfortunate.

In as much as people were warned, these people should not have been allowed to operate in the first place. The government must ensure that it protects its people from all sorts of entrapment and extortion regardless of where it is coming from.

Keera Akosua Nyansapor

K.A.N.