In November 2017, the Bank of Ghana (BOG) via notice cautioned the public against transacting business with Menzgold Ghana Company
The BOG on August 6, 2018, followed up with another notice canvassing the same arguments in its earlier statement and added that it is in discussion with other “relevant regulatory authorities towards taking appropriate action against the company”.
Menzgold has continuously insisted that it has not violated banking laws of Ghana. In a statement issued by the company on August 7, 2018, it stated that it does not “accept deposits from customers or carry on deposit-taking business in Ghana”. Menzgold continued that its activities are “restricted to allowing customers to purchase gold or deal in gold as an alternative investment” and that these activities fall outside the scope of the Act 930.
The essential elements in Menzgold’s arrangement which fall within the scope of Act 930 are:
There is a sum of money involved backed by gold;
Menzgold holds the money/gold for a specified period of time; and
It pays premium on the money/gold invested when its clients demand so at the expiration of the investment period.
In addition, the definition of “money” includes assets that can be easily converted to cash or capital that is invested or traded as a commodity. Hence, although Menzgold may be holding gold in trust for its customers, essentially, it is holding money.
Act 930 envisages a situation where money/assets cannot be classified as a deposit. Thus, where the BOG is uncertain in a particular case whether a particular liability of a specialised deposit-taking institution is to be regarded as a deposit, Section 6(3) of Act 930 grants the
Consequently, it is not out of place for the BOG to classify Menzgold’s activities as a deposit-taking business and consequently notify the public. What is rather worrying is that the BOG as a regulator is whining and failing to exercise its powers under Act 930. If the BOG believes that Menzgold is violating Act 930 (which indeed it believes per its notices), what is preventing the BOG from enforcing Act
In addition, the BOG has the power to impose fines between GH¢15,000 to GH¢60,000 on a company and its directors who operate a deposit-taking business without a license. There is also a term of imprisonment of not less than two years and not more than four years for directors and individuals found liable to have violated section 6(1) of Act 930. It must be noted that all criminal prosecutions fall within the mandate of the Attorney-General under Ghanaian law.
In an interview on Accra based radio Joyfm, the Communications Director for Menzgold stated that Menzgold is not regulated by the Securities and Exchange Commission (SEC) but it has obtained the requisite license from the Minerals Commission.
SEC in a notice[vii]to the public stated that it has not licensed Menzgold to carry out business in accordance with the Securities Industry Act, 2016 (Act 929). In an interview, the Director-General for
There must be some clarity by SEC on this matter particularly because Section 109 of Act 929 prohibits a person from carrying on business as securities exchange, broker-dealer or primary dealer without the requisite license. Act 929 defines the key terms which could form the basis of classifying Menzgold as an entity that should be regulated by SEC.
For instance, securities exchange is defined to include an exchange or approved trading facility such as commodity exchange, metal exchange, and other derivatives exchanges that use instruments for trading. Commodity exchange means an exchange or a facility where various commodities and derivative products are traded while derivative means a financial instrument whose characteristics and value are dependent on or derived from one or more underlying assets, such as a commodity, bond, equity or currency.
I believe it is time for the BOG and SEC to act forthrightly without any equivocation. As regulators, they have been given all the powers under Ghanaian law to act. Whining should be left those of us in the public.