The demand for payment of locked-up funds of customers of Menzgold Limited has taken another turn as lawyers for the customers sue the government and some regulators over the funds.
Head of Chambers at Clinton Consultancy, Ms Amanda Akuokor Clinton, who is representing customers of Menzgold, has filed at the High Court on December 22, seeking GHC 11,402.000.00 for 28 of the Menzgold clients.
The claim of negligence is against the Securities and Exchange Commission (SEC), the Economic and Organised Crime Office (EOCO), the Bank of
Ghana (BoG) and the Attorney General’s Department in relation to the Menzgold saga.
According to the statement of claim, the defendants “had the power and control by virtue of statute giving it powers to protect the plaintiffs and had control over the plaintiffs in determining whether to shut down the fraudulent activities of Menzgold Ghana Ltd and Brew Marketing Consult at the first signs of illegality, before all the plaintiffs invested in an unregulated financial institution towards the end of the operation.”
The suit suggests that by the government departments’ conduct, they created a danger to the general public since Menzgold Ghana Ltd and Brew
Marketing were not crucially shut down within the first year of operation, but
five years later.
The case may set a precedent in Ghana about the extent to which these key departments can be held liable for failure to act and/or failure to exercise their authority sufficiently enough during the commission of a large scale, white-collar, criminal, Ponzi scheme enterprise.
Already, the CEO of the defunct gold dealership firm, Nana Appiah Mensah (NAM 1) has been charged with abetment of crime, defrauding by false pretences, carrying on a deposit-taking business without a licence, sale of minerals without a licence, unlawful deposit-taking, and money laundering.
It is alleged that the accused had taken various sums of money, totalling GH¢1.6 billion from customers.
The latest civil suit is seeking compensation for some of the victims given the fact that typical Ponzi schemes attract more customers, who over time invest larger
sums of money.
With government departments training its personnel to recognize that the longer a
Ponzi scheme runs, the more credibility and reputation builds around a particular
brand, the suit suggests that the government should have legally shut down the operation earlier so as to prevent customers from investing in the last two years of Menzgold’s operation since warnings were not enough.
Ms Clinton said it would be interesting to see what the court determines in this case especially in view of the fact that the Minister of Finance, Ken Ofori Atta “highlighted last year that the customers were ‘greedy’ customers who fell outside a category the government can compensate since the customers invested in an unregulated company”.
She described the comments as “surprising” given the Finance Minister’s extensive financial training in the U.S with some academic knowledge gained in relation to white-collar crimes and their execution.
She added that Vice President Dr Mahamudu Bawumia also “recently acknowledged that the customers were warned as to the nature of Menzgold being ‘419.’ If government officials knew Menzgold was ‘419’ whilst in operation, they had a duty to quickly shut down what was so obviously ‘419’ in the public interest and to prevent more customers and losses; mere government warnings were not enough.”
While the civil action is yet to be called, in court, the criminal case is in court with the prosecution saying it wants to amend the charge sheets.
The facts of the case, as presented by ASP Slyvester Asare, the prosecutor of the criminal case is that in October 2018, the police received a complaint from about 16,000 people that Menzgold had convinced them to invest GH¢1.68 billion in a gold purchase scheme that yielded 10% monthly interest.
According to the prosecution, the complainants said their money were locked up and that they could not find Nana Appiah Mensah and the other principal officers of the company.
The prosecutor said investigations revealed that Menzgold and Brew Marketing Consult were incorporated as limited liability companies in 2013 and 2016, respectively.
Menzgold, he said, obtained a license from the Minerals Commission in August 2016 to purchase and export gold from small-scale miners, and that in order to successfully engage in the business, Nana Mensah founded Brew Marketing Consult to be a gold buying agent.
ASP Asare said although Menzgold was licensed to purchase gold, it was not licensed by the Minerals Commission to trade in gold.
Notwithstanding the lack of such a licence, he said, Menzgold went public after its incorporation and invited the public to deposit money for a fixed period with interest, on the pretext of gold purchasing.
The prosecutor said further investigations revealed that the three accused persons were the directors and principal officers of Menzgold and Brew Marketing Consult.
Nana Appiah Mensah was released from police custody after arrest on August 17, 2019, after meeting his revised bail conditions.
Earlier, the court had varied the bail conditions to allow for five sureties to guarantee his bail without showing evidence of having properties worth the GH¢1 billion bail sum.
The court, however, refused a request by counsel for Nana Appiah for a reduction in the bail sum from GH¢1 billion to GH¢20 million.
The court had ordered, on July 26, 2019, that three of the five sureties should show justification, meaning they must show proof that they had properties or interests worth the GH¢1 billion bail sum.
As part of the bail conditions, he is also to report to the Ghana Police Service every Wednesday.
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