A call for independent investigation into Menzgold operations

General News of Wednesday, 9 January 2019

Source: Kojo Mbeah

2019-01-09

Menzgold

Without doubt, the rise and collapse of Menzgold, a high-profile public interest case more serious than the GFA and the Judge-bribe scandals combined.

Insider sources hint in anonymity that Menzgold was more of an underground international financial institution that laundered billions of dollars. If this is true then it couldn’t have been possible without the tacit involvement of the Bank of Ghana and commercial banks.

An independent investigation into the operations of Menzgold could expose serious corruption at very high places, discover serious instances of money laundering in the process inadvertently expose and destroy the reputation of many in positions of trust, delineate the influence of crime by state institutions and public officials, expose the involvement and or association of some public officials with organised crime, unmask the use of state resources and influence in committing crime, set the stage to reform state institutions and plug loopholes in laws and administrative procedures and practices that it is not possible that investors may never recover their investments. .

According to the Bank of Ghana it came to its attention that Menzbank was operating microfinance at Kasoa under the guise of gold trading and illegally using the title “Bank” on October 28, 2014. The Bank of Ghana has the power to stop Menzbank from operating but did not. The Bank of Ghana only published on March 11, 2015 (Notice No. BG/GOV/SEC/2015/04) a list of unlicensed entities operating illegally, that included Menzbank and went to sleep.

The Banking Act, 2004., ACT 673, Section 16 states: “A person who carries on banking business without a license or in breach of the conditions of its license or contravenes Section 17 commits an offence and is liable to summary conviction”. Section 17 (1) further states that: “Except as otherwise provided in this Act, no person, other than a bank, shall hold itself out as a bank or use the word ‘bank’ or any of its derivatives in any language in the description or title under which that person is on business in Ghana, or make representation to this effect in any billhead, letter, paper, notice, advertisement, or any other manner whatsoever”.

To circumvent the law, Menzbank changed its name to Menzbanc Ghana Company Limited and kept on operating. The Bank of Ghana took no action but instead issued a notice on April 13, 2016 to warn the public against the deposit-taking operations of Menzbanc.

Three (3) months later on the 22 of July 2016, the Bank of Ghana wrote to Menzbanc cautioning it against unlicensed deposit-taking activity. On August 2, 2016 the Bank of Ghana invited management of Menzbanc to discuss its unlicensed deposit-taking activity. Menzbanc responded to the Bank of Ghana’s invitation in a letter dated August 3, 2016 claiming that they were not engaged in deposit-taking.

The Bank of Ghana contacted Minerals Commission and Precious Minerals Marketing Company (PMMC) on licensing status of Menzbanc. The Minerals Commission indicated Menzbanc had license to purchase gold locally and to export. Precious Minerals Marketing Company indicated license issued Menzbanc had expired.

At this point even if officials of the Bank of Ghana were doltish, it should have been very clear to them that Menzbanc was an illegal operation. Yet the Bank of Ghana again invited management of Menzbanc for a meeting to discuss its operations on February 13, 2017. Five months later on July 19, 2017, the Bank of Ghana cautioned Menzbanc to desist from taking deposits without taking any action against Menzbanc.

Emboldened, Menzbanc changed its name to Menzgold. It further had the audersity to informed the Bank of Ghana that it had a subsidiary by name Brew Marketing Limited from which it’s clients/ customers will purchase gold and deposit with Menzgold for dividend. The Bank of Ghana took no action against Menzgold. That is INCONCEIVABLE!!!

Clearly something was very wrong at the Bank of Ghana. The immediate questions that should have occupied the attention of officials of the Bank of Ghana were: (a) Under what license was Brew Marketing Limited operating? (b) Under what license was Menzgold operating? (c) Which authority issued the licenses (d) and under what law were they be operating?

These unanswered questions notwithstanding, the Bank of Ghana treated Menzgold and its subsidiaries as if they had legitimate licensing and conducted three (3) “mystery shopping” transactions clearly intended to legitimatize Menzgold operations. There was no need for the Bank of Ghana to spend tax payer’s money to conduct these “mystery shopping” because Menzgold was not licensed. By engaging and paying another company to conduct “mystery shopping” and declaring that no gold was seen throughout the investigation etc, the Bank of Ghana gave sublime legitimacy to Menzgold’s illegal operations. The “mystery shopping findings also gave the general public subliminal encouragement to invest with Menzgold.

The owner of Menzgold, Nana Appiah Mensah’s (aka NAM1) next move was to associate and connect with important, influential, powerful and the respectable personalities in society to give him and in extension Menzgold operations clout and respectability. Further more, he established the necessary connections to influence, control and pull strings.

The invigorated Menzgold now became a conduit for people with illicitly acquired cash to push their money into the banking system without inhibition. One cannot just walk into a bank and deposit say fifty thousand Ghana cedis (GHÇ50,000.00) cash in an account just like that. The law require banks to find out what a customer does for a living and to report suspicious transactions.

News of Menzgold’s operations spread quick and fast even outside Ghana. People with dirty money saw the opportunity to clean their money. With the ordinary Ghanaian investor as a cover, the procedure was simple. Anybody could invest any amount in Menzgold without question. After some time the investment is redeemed. Menzgold issues the investor a cheque to cover the investment and interest due; the investor then pays the cheque into a bank account. Simple! According to insider sources the cut for assisting to launder money is between 25% to 40% depending on the amount, the circumstances and conditions. It would be naïve for any right thinking person to think that this conduit created by Menzgold escaped the notice and attention of security agencies, Bank of Ghana officials and banks in general.

On the 19th September 2017, the Minerals Commission wrote to Menzgold to the effect that Menzgold was in breach of the law and that Brew Marketing Limited had not been registered as a licensed buying agent. The Minerals Commission has the power to shut down the operations of Brew Marketing Limited but did not.

Nine (9) months later in June 2018, the Bank of Ghana and Minerals Commission in a joint visit to Menzgold establish that Menzgold was engaged in the solicitation of deposits from the general public and that it paid interest of between 7%-10% per month to customers based on the quantity of gold purchased.

It was only when European and American anti-narcotic and money laundering agencies mounted pressure on Ghanaian authorities that regulators in Ghana begun to pretend to do their job. Money launderers constantly look out for loopholes and weaknesses in the financial sector, which they exploit to enhance their operations by acquiring control of large sectors of the economy. They bribes public officials and even governments. Their influence in an economy and political space weaken society, ethical standards and democratic institutions.

Money laundering has three stages: the (i) placement stage, (ii) layering stage and (iii) integration stage. Placement is when domestic or foreign smuggled-in laundered cash is circulated through small businesses, financial institutions, shops, petty traders etc., to misrepresent and disguised the source of money. Buying assets is another classic way used to transform conspicuous laundered cash into less conspicuous valuable form. Securities brokers can also facilitate money laundering by structuring cash deposits to disguises the source. As well, corrupt banks officials can connive with drug dealers and organised crime to launder. It is easier when the financial sector is liberalized without adequate checks. Another method is to use laundered money to set up front companies to enable the illegal funds to be obscured in legal transactions. Money launderers also take advantage of currency movements in liberalized foreign exchange markets.

As soon as placement is successful within the financial system, proceeds are converted into instruments like money orders and banker’s drafts etc. Assets bought with laundered cash are sold locally or abroad to make it difficult to traced. Then comes the layering stage where launderers take steps to ensure that laundered money is made difficult to uncover or detect and ensure that law enforcement agencies are not able to trail proceeds from investments.

The final stage is the integration of proceeds into the economy through the banking system to make it look normal. The only difference between the layering stage and the integration stage is that, with the integration stage only an insider or informant can tell that the money is dirty, for it is virtually cleaned.

Questions that need to be asked are:

(1) Why have state institutions whose mandate it is to delve into the matter lost their pro-activeness?

(2) Why are politicians constantly working hard to invent excuse(s) so as to stay away and to avoid questions regarding Menzgold?

(3) Why have Menzgold and its associate businesses received police protection?

(4) Why have the Bank of Ghana and SEC been lackadaisical in applying regulations.

(5) Why have Nana Appiah Mensah and others not been arrested or prevented from travelling?

(6) Why have no serious investigations commenced into the operations of Menzgold and the conduct of the Bank of Ghana in this matter among others?

(7) Who are the real power behind Menzgold?

(8) Why is the Bank of Ghana running away from issues that relates to Menzgold?

Current crises in the banking sector should not be allowed to distract independent investigation into Menzgold.

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