General News of Friday, 28 September 2018
Menzgold Ghana Limited says it will, today, September 28, begin the payment of dividends accrued on the gold trade business to its customers.
Making the announcement at a press briefing held in Accra yesterday, the Corporate Affairs Manager of the company, Nana Yaw Offei, said the payment schedule would be based on the maturity period of the investments made by customers, explaining that it would be on first-mature, first-served basis.
He, however, added that customers who invested in the gold trade business on or after September 12, this year, when the business was forcibly shut down by the Securities and Exchange Commission (SEC), would not get any form of returns.
“As a result of the shutdown of the gold trade business, the firm cannot process any kind of termination on the gold vault market until a healthy restoration is determined by the courts, since we have filed a suit already,” he added.
The announcement came against the backdrop of a suit filed by the company challenging the actions of the Bank of Ghana (BoG) and the SEC against the operations of Menzgold.
The suit, which was filed at the Commercial Division of the Accra High Court yesterday by its lawyer, Mr Kwame Akuffo, described the two regulators as indulging in activities that were “harmful” to its operations.
It claimed that certain notices issued by the BoG and the SEC in relation to its operations were “arbitrary, capricious and contrary to articles 23 and 296 of the 1992 Constitution’’.
The plaintiff, therefore, wants an order setting aside the SEC’s directive of September 7, 2018 for the company to suspend its operations.
Modalities for payment
At the press conference, Nana Offei, who was flanked by the Chairman of the Menzgold Board, Mr Fred Boafo, explained that customers who were entitled to the dividends would receive text messages notifying them to when and which branch of the company they could go for their benefits.
“Customers are urged to only visit their branches for their entitlements on the dates scheduled for their payment because the schedule will be strictly adhered to as a measure to avoid overcrowding at our branches,” he said.
When asked how much would be paid to the customers, he declined to comment on it.
He also failed to disclose the number of customers involved.
Responding to questions from journalists, Nana Offei declared that customers who wanted to withdraw their principal could do so.
“There is no need for our customers to panic because, as we have always stated, we are operating under the law. We leave the case to the court to decide, but we are confident that at the end of the day, we will be back in business,” he added.
The company wants, among other reliefs, a declaration from the court that its activities do not fall under the scope of the BoG or the SEC’s regulations.
Other reliefs include “an order of perpetual injunction to restrain the BoG and the SEC from interfering with its business activities or further acts by publishing any derogatory notices’’.
Menzgold has been on a collision course with the BoG and the SEC over the company’s gold vault trading platform that allowed subscribers to earn what Menzgold describes as “extra values’’ monthly.
The BoG issued two public notices on November 1, 2017 and August 6, 2018, warning the public that Menzgold was not licensed to take deposits and that people who dealt with the company did so at their own risk.
Menzgold, however, denied engaging in deposit-taking and explained that it engaged in gold trading and rather shared the earnings of the trade with subscribers.
On September 13, 2018, the company shut down its operations following the SEC’s directive that its gold vault trading platform contravened the Securities Industry Act, 2016 (Act 929).
The temporary halt, which was to last six days, was, however, extended to today, September 28, 2018.
The postponement, however, did not sit well with its customers, who thronged the premises of the company to demand their money and explanations.
In an interview with Accra-based Joy TV on September 25, 2018, the Deputy Director of the SEC, Mr Paul Ababio, said its order to the management of Menzgold was for the company to halt advertising its business and desist from creating new contracts with depositors.
On the same day, the management of Menzgold issued a statement that it was unable to pay the “extra value” to customers because of the SEC’s order.
According to Menzgold, it paid profits to customers based on the profits it earned on trading.
It, however, said since the suspension of its operations on Thursday, September 13, 2018, the company had not been able to generate any revenue out of which profits could be paid to customers.
In its statement of claim attached to its writ, Menzgold averred that the BoG, without providing any proof of illegality, had directed certain banks not to conduct business with it.
It further described the shutdown of its operations by the SEC as “without any legal basis”.
“The second defendant (SEC) did not describe the business module, which had been ongoing for more than 3 years, as an illegality per se but one which required licensing,’’ it added.