Accra, Ghana, December 27, 2018//-A renowned economist and Professor at the University of Cape Coast (UCC), John Gatsi, has asked the current managers of the Ghanaian economy to make a bold statement on the Menzgold crisis.
According to him, the government could not be mute over the alarming and full grown social problem following the collapse of the gold-trading firm.
The government had ordered the firm to stop operating which resulted in the locking out of Menzgold customers’ investments.
“As to how this should be handled is part of how our governance responds to emerging social problems”, Prof Gatsi, told African Eye Report.
He continued: “The fact we should embrace is that the Menzgold problem has now moved to what our friends in sociology and development studies will call a Social Problem.
This is not about whether or not government should sell the assets to pay investors. When you look at the investment volumes by individual Ghanaians and their frustration, you should know the effect on their families, the unthinkable decisions that some may be taking”.
This is where sociology, governance and financial market regulations come together to deal with social problems, Prof Gatsi recommended.
“It is a fact that citizens have the duty to invest in reasonable investment products. So many discussions and notices issued by Bank of Ghana (BoG) should be enough to trigger disinvestment by those who invested”. But these notices were ignored.
What caused the problem?
Lack of regulatory clarity from SEC and BoG
Serious breaches that may lead to erosion of investments normally go with arrest and in the absence of such arrest, it is not clear if indeed the regulator (Securities and Exchange Commission (SEC) sees Menzgold as operating deceptive scheme, according to Prof Gatsi.
He added: “Just as respected people who invested in the gold scheme encouraged others, it is equally important to note that many investors who believe that the owners of the investment scheme were close to political leaders both past and present would not take any warning by BoG seriously”.
Prof Gatsi maintained that investors in Menzgold did not receive proper education, saying: “Some described them as being greedy”.
However he noted: “The truth is proper financial literacy reduces the number of people who invest based on greed. The fact that workers from the security institutions, BoG and Ministry of Finance also invested in the scheme is clear evidence that the project ahead of us is more of concrete financial literacy”.
Liquidation of assets
Commenting on the saga, a financial consultant Charles Mensah called for the liquidation of the assets of Menzgold to pay aggrieved customers.
According to him, that is the surest way to get funds to settle customers who have been demonstrating for their lock out investments.
But gov’t says no help for customers
Not a pesewa of government funds would be used in paying any clients of tottering gold-trading firm Menzgold Company Limited, Finance Minister Ken Ofori-Atta has said.
Speaking at the 20th-anniversary ceremony of the Securities and Exchange Commission (SEC) on Wednesday, 21 November 2018, Mr Ofori-Atta said all those who invested in Menzgold were greedy and did so at their own peril.
“As we try to clean up the financial services sector, I know the SEC has come down hard, strong and justifiably on Menzgold.
“But the issue with a company of Menzgold … it’s become an issue of greed as a people and our own behaviour when we are so clear as educated as we might be, that when we went there, there was no licence.
“I think it is not in the place of government to fund or get your money back for you.
“It was an obvious trap that you went into.
“Maybe we, as an industry, should also push the whole issue of education and empowerment so that people do not fall prey to that”, he added and wondered how enlightened people could fall into such a trap.
“… As I look at the Ministry of Finance and I see some people who are at the Ministry of Finance who have invested there, I look at the Bank of Ghana and I see some people who have invested there, and of course the military etc., [who have invested there].”
For months now, thousands of Menzgold customers are unable to access their investments after the SEC ordered its closure, due to its unregulated business model.
Earlier, this month, Menzgold had asked its staff to proceed on leave following increasing threats to its properties as well as staff of the company.
Menzgold has been unable to pay its clients their dividends due to an ongoing battle with SEC and the BoG over its operations. While the state institutions say the company has not been licensed to take deposits, Menzgold insists it does not take deposits and does not answer to the two institutions.
African Eye Report
