To: HON. GLORIA AFUA AKUFFO
The Attorney General
The Attorney General’s Department
22nd October 2020
NOTICE OF INTENTION TO ISSUE A CIVIL SUIT AGAINST THE REPUBLIC REGARDING MENZGOLD GHANA LIMITED AND BREW MARKETING CONSULT LIMITED
- Further to our letter in January 2020, kindly take notice of our firm’s intention to issue a Civil Suit within 1 month of the date of this letter against the Criminal Investigation Department, the Security and Exchange Commission, Bank of Ghana, the Minerals Commission as well as the Attorney General’s department.
- The names and addresses of our clients are attached to this letter.
- The Menzgold matter although deeply unfortunate and preventable may be an opportunity for Ghana to define in court the extent to which government institutions owe a specific class of investors a duty of care if the State fails to intervene in terms of shutting down a white-collar criminal enterprise at the earliest possible opportunity instead of much later, when most clients invested from 2017 onwards.
- By beginning to define where one institution’s duty begins and another one ends, we may in future be able to ensure the public as well as agencies are more versed in understanding and preventing the actions of those who employ long-term and not short-term strategies to defraud in the unregulated financial sector.
- For the regulators exist more so to detect, apprehend and penalize entities that are unregulated so as to prevent them from causing mass financial loss to the general public, the longer the illegal operations go on.
- Our position is that public interest far outweighs the State’s interest in not paying out to unregulated financial companies. This is 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 an unprecedented financial loss to the general public.
CAUSE OF ACTION
- Our clients have not been able to access and retrieve their invested funds when the Securities and Exchange Commission suspended the operations of Menzgold Ghana Limited on the 7th day of September, 2018.
MENZGOLD GHANA LIMITED AND BREW MARKETING CONSULT LIMITED WERE TAKING IN MORE MONIES THAN THE AVERAGE BANK IN GHANA
- I am sure your investigations have confirmed what our investigations have shown. Having spoken to bankers and investors in Ghana, Ghanaians on average were removing their monies from most banks in Ghana in order to put their monies into Menzgold and Brew Marketing which lead to mass financial loss to the general public 5 years after Menzgold was established with thousands more investors investing higher sums of monies the longer the illegal enterprise was allowed to operate. Ultimately when the State is besieged by those engaged in a criminal enterprise and in particular a typical Ponzi scheme, the rule of thumb is to shut down operations earlier so as to prevent more investors investing larger amounts of monies the longer the operation continues.
- Furthermore, astronomical domestic and international bank transfers as well as large cash deposits were paid to Menzgold and Brew when they were in operation, so much so that most banks in Ghana do not have as many deposits per day as these entities did. For that alone, state institutions should have shut down the the operation of Menzgold and Brew within the first few months of their operation; like they did with Menzbank and Menzbanc. Both Menzgold and Brew operated without adequate government licenses over an unusually prolonged period of time and there was enough of a prima facie case to have demanded the closure of both institutions including the history and propensity of the directors to commit similar type offences.
THE BASIS OF SHUTTING DOWN MENZGOLD GHANA LIMITED AND BREW MARKETING CONSULT LIMITED COULD HAVE APPLIED WITHIN THE FIRST THREE MONTHS OF OPERATION INSTEAD OF 5 YEARS LATER
- It is unfortunate that the reason in which S.E.C ultimately shut down the operations of Menzgold Ghana Limited on the 7th day of September, 2018 existed at the very first instance when the company began its operations and thus S.E.C was reckless in not shutting down Menzgold Ghana Limited much earlier when they began operating. Furthermore the history and the propensity of the Directors were known to state agencies and the delay in shutting down the operation lead to thousands more investors being able to invest in the companies over time much larger amounts, since this is the nature of any Ponzi scheme, they exist to entice the bigger investors towards the end of their operation.
CLAIM AGAINST THE CRIMINAL INVESTIGATION DEPARTMENT
- It is our client’s firm position that the Criminal Investigation Department failed in its duty to thoroughly investigate and prosecute the criminal case reported to them in 2011-2012 which involved Mr. Nana Appiah Mensah who committed a similar type offence to the one that the State is now pursuing him for (which has been delayed in court where the Prosecutor in the case recently asked for another long adjournment).
- I.D in 2011-2012 received evidence that Mr. Nana Appiah Mensah, a director of both Menzgold Ghana Limited and Brew Marketing Consult Limited had set up SF Gold Ghana Limited to defraud upwards of 53 people within the Weija enclave through a company known as SF Gold Ghana Limited. Although C.I.D charged Nana Appiah Mensah, a director of both Menzgold Ghana Limited and Brew Marketing Consult Limited for defrauding by false pretences and prosecuting him for conspiracy to defraud the complainants in before 2012; C.I.D did not follow the case to its natural end when Nana Appiah Mensah did not fulfil his bail terms and absconded.
- Had Mr. Mensah been properly pursued by C.I.D in 2011-2012, he may well have been put in jail instead of conceptualizing and actualizing the entities known as Menzgold and Brew to the absolute financial detriment of countless Ghanaians which is against public interest.
NOTICES ISSUED BY REGULATORS
- Although S.E.C and Bank of Ghana issued various notices and disclaimers to the public about the operations of Menzgold Ghana Limited; respectfully these warnings after more than three years of Menzgold Ghana Limited operating were not enough and S.E.C and Bank of Ghana had the authority and the discretion to identify and shut down the fraudulent business activities of Menzgold Ghana Limited and in turn Brew Marketing Consult Limited before they became completely dangerous and pervasive when defrauding large sections of the general public.
THE STATE’S UNREASONABLE DELAY IN FREEZING ASSETS IN A PUBLIC INTEREST MATTER, GIVEN THE HUGE VOLUMES OF MONIES FRAUDULENTLY TAKEN FROM THE PUBLIC
- Our clients are of the view that the Government of Ghana and by extension, the Attorney General department’s delay in freezing the accounts and confiscating the assets of Menzgold Ghana Limited, Brew Marketing Consult Limited and their respective Directors, after a formal criminal complaint was filed, was careless and thus contributed to the inability of the Plaintiffs in retrieving their locked-up funds given that freezing orders are normally applied swiftly so as to avoid further dissipation of assets.
PROPER DUE DILIGENCE INVESTIGATIONS WERE NOT CARRIED OUT BY ALL STATE INSTITUTIONS CITED
- Proper Due Diligence Investigations were not carried out by the State Institutions cited at the top of this letter, since they failed to investigate Menzgold Ghana Limited and Brew Marketing Consult Limited at the earliest possible opportunity despite these directors having also been directors of Menzbank and Menzbanc which was swiftly shut down for illegal deposit-taking activities.
- The prima facie basis for having a suspicion to shut down Menzgold Ghana Limited and Brew Marketing Consult Limited existed right from the beginning of their operations since the directors were the same with some of them well known to the State.
- Had the State carried out their mandates to the highest standard by undertaking even the most basic Due Diligence investigation, they would have discovered that the directors inMenzgold and Brew Marketing used the same modus operandi and evasive techniques in Menzbank and Menzbanc in order to direct investors to invest monies in Menzgold and Brew Marketing. As such, from inception of these companies being formed the State had enough evidence to shut down Menzgold Ghana Limited and Brew Marketing Consult Limited and failure to do so meant their fraudulent activities gained momentum, customers and more money the longer they stayed in operation.
- It is further my clients position that had the State further undertaken the most basic Due Diligence Investigation at C.I.D, they would have discovered the criminal history of some if not all the directors who had committed similar type of offences and who would not have realistically been capable of defraud thousands of Ghanaians on a mass scale, had they not done so before on a smaller scale (2011-2012 I.D received evidence that Nana Appiah Mensah, a director of both Menzgold Ghana Limited and Brew Marketing Consult Limited had set up SF Gold Ghana Limited to defraud upwards of 53 people within the Weija enclave through a company known as SF Gold Ghana Limited).
BREACH OF ARTICLE 20 OF OUR CLIENTS CONSTITUTIONAL RIGHTS-THE DELAY IN FREEZING MENZGOLD GHANA LIMITED, BREW MARKETING CONSULT LIMITED AND THE DIRECTORS OF BOTH COMPANIES
- It is our position that the State failed to protect our clients financial property and thus denied them this right guaranteed by the 1992 Constitution of Ghana. By the state acquiring the financial property in Menzgold Ghana Limited and Brew Marketing Consult Limited 4 months afterE.C suspended the operations of Menzgold Ghana Limited on the 7th day of September, 2018; most of the assets had dissipated.
- Our clients are of the view that in the State acquiring the financial property in Menzgold Ghana Limited and Brew Marketing Consult Limited 4 months after S.E.C suspended the operations of Menzgold Ghana Limited, they did not promote the public benefit; given that assets are often frozen before they can be dissipated by companies and individuals who defraud the general public
- Our clients are of the view that in the State acquiring the financial property in Menzgold Ghana Limited and Brew Marketing Consult Limited 4 months after the 1st Defendant suspended the operations of Menzgold Ghana Limited, the State did not provide reasonable justification for causing financial, mental and physical hardship to the Plaintiffs who had an interest in and right over the financial property as guaranteed by the 1992 Constitution of Ghana.
FAILURE BY THE SECURITIES EXCHANGE COMMISION
- The Securities and Exchange Commission had the mandate to regulate the activities of Menzgold Ghana Limited since it is the statutory body which inter alia has the mandate to maintain surveillance over the activities in securities to ensure orderly, fair and equitable dealings in securities. Furthermore, the Securities and Exchange Commission failed to properly enforce their duty to regulate the operations of Menzgold Ghana Limited and Brew Marketing Consult Limited at the earliest possible opportunity which led to the loss of our clients investments and in general a financial bloodbath in the marketplace.
FAILURE BY BANK OF GHANA
- It is further our clients position that Bank of Ghana had the mandate to supervise the activities of Menzgold Ghana Limited at first instance when it was unlawfully engaged in deposit-taking activities under the guise of being a gold dealership company but failed to do so. Furthermore, Bank of Ghana failed to regulate Menzgold Ghana Limited’s deposit taking activities which were contrary to law for a period of five (5) years, which boosted the public’s confidence in the fraudulent schemes of Menzgold Ghana Limited and Brew Marketing Consult Limited.
FAILURE BY BOTH S.E.C AND BANK OF GHANA
- Our clients position is that since S.E.C and Bank of Ghana are regulators of the Securities market and deposit-taking institutions, they were in a position of authority and thus had a statutory duty and the requisite capacity to shut down the operations of Menzgold Ghana Limited at first instance, in order to protect vast sections of the public.
- Our clients are also of the position that since S.E.C and Bank of Ghana are professional regulators who have previously seen the repercussions of such sophisticated and fraudulent financial schemes, they should have halted the operations of Menzgold Ghana Limited and in turn Brew Marketing Consult Limited in the 1st year of operation when less investors came in and less monies were deposited, in order to protect unsuspecting members of the public at a much earlier period. This is especially given that the majority of investors invested from 2017 onwards when the financial model of Menzgold Ghana Limited and Brew Marketing Consult Limited gained more momentum in the open financial marketplace.
- It is altogether our position that S.E.C and Bank of Ghana failed in the duty owed to the Ghanaian public when they omitted to shut down the operations of Menzgold Ghana Limited at its inception and allowed the Company metamorphosise 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.
- Our clients are of the view that the omission by S.E.C and Bank of Ghana in not halting the operations of Menzgold Ghana Limited thereby caused them to invest in same.
- It is also our clients position that the Minerals Commission failed in the performance of its mandate when it watched on for innocent investors to partake in an unlicensed trading of gold through the auspices of Menzgold Ghana Limited and Brew Marketing Consult Limited.
- Given the failure of the State to take appropriate steps and apply sanctions, this was negligent on the part of the State which caused pecuniary losses my clients have suffered.
- It is further my clients position that their inability to retrieve their locked-up funds has had a severe impact on them economically which has in turn affected them psychologically, mentally and they have even been branded as ‘greedy investors’ by some government officials who in their profession know that fraudulent products on the market entice the public when entities are not shut down earlier.
- An amount of GHC 11,402,000.00 plus interest plus general damages for a cross-section of my current clients.
- Should the Attorney General’s department want to enter negotiations with our firm regarding our clients loss as outlined in this letter, we are open to seeking a swift resolution to the matter, failing which we will file the matter in court 1 month from the date of this letter.
AMANDA AKUOKOR CLINTON
HEAD OF CHAMBERS