Ask before investing – Ace Ankomah cautions public against Ponzi schemes

Business News of Thursday, 18 October 2018

Source: 3news.com

2018-10-18

Ace Ponzi2Ace Annan Ankomah

Private legal practitioner and managing partner at Bentsi-Enchil, Letsa and Ankomah, Ace Annan Ankomah, has cautioned Ghanaians to be diligent when investing their “hard earned” money.

Speaking at a Media General Economic Dialogue on Thursday, October 18, on the theme “Investment in the Face of Ponzi Schemes: How Do we Clean the Mess?” Mr. Ankomah observed that there is an upsurge of investment schemes that do not conform to the laws of Ghana and the public must be on a lookout.

According to him, it is very necessary for potential investors to look beyond the certificate of incorporation and the certificate to commence a business that companies usually display on their walls.

“So when you go to the companies, don’t be impressed by the Certificate of Incorporation and the Certificate to Commence a Business that you see on the wall, can you ask for their regulations, if they don’t give it to you, go to the company’s registry… and ask for the company’s regulation”, he advised.

Metal trading companies are licensed by Minerals Commission

With particular reference to companies claiming to be trading in the sale of precious metals, he said investors must demand to see license from the Minerals Commission because the law requires that such companies be licensed by the Commission.

“The Minerals Commission must license any metal trading company, so when a company says it deals in gold, let them show you their Minerals Commission license”.

He observed that most ponzi schemes that he has checked have been registered as private company but strangely regulation 8 (c) does not allow them to do the business of taking deposits.

“The company is a private company and accordingly, (C), the company is prohibited from making any invitation to the public to deposit money”, he quoted the 8(c) of the regulations governing private companies.

Fraud milking greed

Mr. Ankomah in his own way defined a ponzi scheme as “when fraud is milking greed” and observed it did not start today but even predates Charles Ponzi, the man after whom the scheme has been named.

He observed that it is a worry that Ghana has all the laws to fight ponzi schemes yet nobody has gone to jail after many years of their operation in the country. He blamed it on implementation, noting, “Ghana does not need many laws, the problem is with enforcement. Who will enforce the law [against ponzi schemes]?”

Ace Ankomah was on a panel together with IMANI Africa’s Vice President Kofi Bentil, deputy Director General of the Securities and Exchange Commission,Paul Ababio, and the Managing Director of Stanbic Bank, Alhassan Andani, who put the issues of ponzi schemes in perspective and proffer solutions to it.

Upsurge of ponzi schemes

The forum on Ponzi schemes came at a time when there is an upsurge in investments schemes in the past few years that have crumbled under some bizarre circumstances, which has raised questions among the public about the genuineness of these schemes.

Many, including investments analysts who have analysed the business modules of some of these investment companies or schemes say they bear semblances with what is referred to as ponzi schemes.

Ponzi schemes

A Ponzi scheme is a form of fraud in which the unsuspecting public is tricked to invest in a scheme, with the promise of offering them ridiculous percentage as their investment returns.

In order to build the scheme, the fraudsters pay earlier investors using funds from new investors, which entice more people to join.

Over the years, such schemes in Ghana have promised an investment rate of not less than 50 per cent. A case in point is the DKM Microfinance that promised investors a 60% return within a period of two months.

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