The claim is against the Security and Exchange Commission (SEC), the Economic and Organised Crime Office (EOCO), Bank of Ghana (BoG) and Attorney General’s Department in relation to the Menzgold saga.
Summary of Ms Clinton’s court filing:
· In summary, the filing appears to suggest 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 1st year of operation, they were shut down 5 years later.
· Given the fact that typical ponzi schemes attract more customers, who over time invest larger sums of money, government departments are trained to recognize that the longer a Ponzi scheme runs, the more credibility and reputation builds around a particular brand. The court filing, therefore, suggests that government department should have legally shut down the operation earlier so as to prevent customers from investing in the last 2 years of Menzgold’s operation since warnings were not enough. The filing also highlights the department’s mandate and control which attracts to it a duty of care.
· It will 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. A surprising conclusion by the Minister of Finance given his extensive financial training in the U.S with some academic knowledge gained in relation to white-collar crimes and their execution. White-collar crimes often use long-term strategies to attract and therefore agencies should have detected the ruses earlier so as to prevent more financial loss to the later investors who were plentiful and invested more.
· Vice-President of Ghana, Mahamudu Bawumia, 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.
Highlights of Ms Akuokor Clinton’s civil filing against government
(And earlier Notice to the AG’s department)
Claim for specific damages due to the fact that:-
(1) Although the Government of Ghana had shut down Nana Appiah Mensah, his sister Benedicta Appiah and wife Rose Tetteh’s similar type companies (Menzbank and Menzbanc) very quickly; they took the unusual and negligent step of leaving Menzgold Ghana Ltd and Brew Marketing open for 5 years
(2) Had government departments undertaken even the most basic Due Diligence assessment on the directors of both Menzgold and Brew Marketing (a family-owned enterprise) they would have realised the history and propensity of the directors to commit similar type financial offences and the habitual pattern the directors had in terms of setting up Ponzi type companies. Perhaps highlighted even more by the 20+ criminal charges each director is currently facing in court.
(3) Despite astronomical domestic and international bank transfers as well as large cash deposits into Menzgold Ghana Ltd and Brew Marketing (locally and internationally) by an unprecedented amount of customers (particularly in the 3rd 4th and 5th year of operation); no government institution shut down this obvious and blatant criminal Ponzi scheme for 5 years and warnings were not enough. This is despite the fact that Menzgold and Brew Marketing was taking in more money than the average bank in Ghana on a daily basis in the last 2 years of operation.
(4) Government departments didn’t follow their own internal policies when it comes to these type of schemes. Neither did they actively work together in a coherent and efficient fashion in order to shut down the criminal enterprise earlier. Current internal government policies include the listed guidelines stated below for what they should look out for when detecting Ponzi schemes:
A. Unreasonable and unrealistic high returns- if it is too good to be true, then be highly suspicious
B. Is it above the norm in traditional banking setting?
C. Overly constant returns
D. Is the product registered or approved by the regulatory agencies e.g. BoG, SEC, NIC, NPRA
E. Is the firm licensed by any of the financial regulatory agencies? – BoG, SEC, NIC, NPRA
F. Are the regulators aware of the firm or investment product?
G. Is it easy to understand the product?
H. They often use complex strategies to confuse victims
I. Complex and fairly new investment products e.g. Cryptocurrencies, Forex Trading, Initial Coin Offering (ICO), Multi-layered strategy
J. Inadequate information and documentation on the product.
K. Paperwork is not properly made.
L. -Conflicting investment statement of account
M. Poor administration, structures not properly set up
N. Difficulty in getting a proper statement of account on a periodic basis
O. Band-Wagon Signs
P. Crowd moving in the same direction (Don’t follow the crowd)
Q. Herd mentality and behaviour
(5) SEC, EOCO, Bank of Ghana and Attorney General’s department should have exercised more authority under statute, policy and recourse to specific agencies which would have aided them in shutting down Menzgold and Brew Marketing before the majority of customers invested larger sums of monies in the 4th and 5th year-more investors tend to invest more money at later stages of a Ponzi scheme.
(6) The Government of Ghana took the unusual step of waiting a clear 4 months (after S.E.C issued a notice for Menzgold to stop taking customers) before freezing the directors’ bank accounts and attempting to cull assets which by that time may well have been too late to retrieve anything-the likelihood of money being hidden offshore, in cryptocurrency, change of name for house deeds etc. is high the longer institutions don’t freeze assets. This was unusual for the government to wait so long to try instead of try to preserve as much assets as possible since with the Ghana Football Association case a few years ago, the government overnight applied for an ex parte injunction to freeze accounts, ear mark buildings and as much as possible preserve all assets ahead of the case being fully heard in court.
(7) Government departments allowed Menzgold and Brew Marketing to metamorphosis into a large, pervasive and dangerous financial entity that enticed and defrauded the general public for a prolonged period whilst gaining legitimacy and credibility over the years.
(8) Public interest far outweighs the State’s interest in not paying out to unregulated financial companies because the State’s inaction in not shutting down Menzgold and Brew Marketing much earlier (even within the first year) meant that more and more investors were able to deposit their monies with Menzgold and Brew Marketing which lead to unprecedented financial loss to the general public.
(9) These government departments were in part created to protect the general public in both the unregulated and regulated financial sector. The victims were a class that was readily identifiable, would be tempted by high returns and had sufficient proximate relationship to the agencies. The departments did not go far enough in protecting this class of investors since they waited too long to shut down a criminal enterprise and to freeze assets which caused more loss to the public.
(10) Misfeasance in public office-abuse of powers in bad faith by being reckless as to whether the action (or inaction) was wrongful and likely to damage the said investors