It has emerged that Menzgold's business module of buying gold and subsequently advancing interests to investors in Ghana is in clear breach of its licence agreement.

The licence agreement between the Government of Ghana and Menzbanc Ghana Company Limited [the parent company of Menzgold], which is in the exclusive possession of Joy News gives the strongest indication that the concerns of the Bank of Ghana, and the Precious Minerals Marketing Company (PMMC) may well be justified.

The relevant section of the Licence Agreement states the following:

“The company [Menzbanc] is hereby authorised to purchase gold locally from any person holding a small-scale mining licence (“small scale miner”) at the Company’s registered offices in Ghana and to export same in accordance with the terms of this Agreement.”

This has been interpreted to mean that the company can only do two things: 

1. Buy gold but from only small-scale miners.

2. Export the precious stones.

This, therefore, raises questions as to whether Menzgold has power under the licence to engage in any trade in gold in Ghana in the manner it is doing.

In 2016, the Minerals Commission stated in a letter that the Minister of Lands and Natural Resources granted Menzgold a "License to Buy and Export Gold." The license required that Menzgold "purchase gold from any person holding a small scale mining license and to export the gold."

The letter continued: "The license also entitled Menzgold to register persons who would be certified by the Commission as licensed buying agents of Menzgold to enable them to buy gold on behalf of the company."

During discussions with Menzgold, the letter reads, the company attempted its right to buy and export gold but the Commission maintained that their license would only allow Menzgold to buy and export gold to authorised persons. The Commission further advised that Menzgold abstain from any business activity involving the sale of gold to unauthorised persons. 

The company has been fighting off pressure from the Bank of Ghana that it is operating an illegal venture. The central bank recently published a firmly-worded caution to the public, warning investors against making financial deposits in cash or via gold deposits with the company.

The gold dealership states on its website that its gold trading platform offers 10% monthly return on investment, touting that it “has produced an unblemished 100% records since its inception last year…”

The public notice issued by the central bank stated that the company has no authority to engage in what it says are the “solicitation, receipt of money or investment and the payment of dividends or returns to its clients.” The central bank maintained that Menzgold is in breach of section 6(1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

However, the gold dealership insisted in a rebuttal that its activities are restricted to allowing customers to purchase gold or deal in gold as an alternative investment. Menzgold has said in a statement that, “The Bank of Ghana is clearly aware that these activities are outside the scope of The Banks and Specialised Deposit-Taking Institutions, Act, 2016, Act 930."

Apart from the Bank of Ghana, the Precious Minerals Marketing Company (PMMC) has also said Menzgold is not licenced to buy and sell gold.

Ready to comply with SEC

Meanwhile, Counsel for the gold dealership, Kwame Akuffo, has said the company is ready to work with the Securities and Exchange Commission (SEC) to quell concerns that it may be breaching its Licence Agreement.

Speaking on the matter on Joy FM/MultiTV news analysis programme Newsfile on Saturday, Mr Akuffo said, “If the Securities and Exchange Commission comes to us and says to us ‘this is the way you are to work’ we will gladly comply with the regulations.”

But Mr. Akuffo suggests that the approach by the Bank of Ghana and PMMC to dealing with their concern is bad for the company’s product, urging instead for a “quiet” approach.

“…what you have to understand is that this is an institution which is carrying a financial product. You cannot be making these noises out there with the intention to undermine and at the same time try to engage. The proper thing to do…is for the state to engage with us quietly and for us to have a safe landing in all these milieu,” Mr. Akuffo said on Saturday.

Related: EOCO wades into MenzGold saga, invites CEO for questioning

Background

According to the Central Bank, MenzGold, which is known as a precious minerals trading company, is carrying out unlawful transactions by taking deposits.

Menzgold is currently operating with a license granted it by the Minerals Commission and the Ministry of Lands and Natural Resources.

In a public notice issued by the BoG, it said the company has no authority to engage in what it says are the “solicitation, receipt of money or investment and the payment of dividends or returns to its clients.”

The central bank maintained that Menzgold is in breach of section 6(1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

BoG further said in spite of several warnings to the company, MenzGold continues to engage in the illegality; hinting that discussions were already underway with regulatory authorities to enforce the appropriate action on the company.

“Accordingly, anyone who transacts any of the above-mentioned businesses with MenzGold Ghana Company Limited does so at his or her own risk and the Bank of Ghana will not be liable in the event of loss of investments or deposits.”

MenzGold’s response

But MenzGold in a statement on Tuesday explained: “The activities of MenzGold Ghana Limited is restricted to allowing customers to purchase gold or deal in gold as an alternative investment. The Bank of Ghana is clearly aware that these activities are outside the scope of The Banks and Specialised Deposit-Taking Institutions, Act, 2016, Act 930."

“MenzGold Ghana finds it unfortunate and disparaging that the Bank of Ghana, with whom we have had a number of engagements over the years and taken them through our business procedures would still issue such a statement. Unfortunate and insensitive as the statement may be, we are resolved and even keener to continue to deliver the best of service to our customers in Ghana and beyond."

“Management assures the general public that doing business with MenzGold is safe. The Company is growing in strength and expanding with offices recently opened in United Kingdom, Spain and soon in Nigeria. Our doors as always are open to the Bank of Ghana and any other organization that would want to seek clarity on our business."

“That said, it is imperative that Government and other State Intuitions support indigenous business initiatives to thrive in this economy while putting in the correct supervisory mechanisms to ensure that they operate within the remits of the law. We pray that authorities will show more interest in building, nurturing and supporting business growth in an enabling atmosphere as anything to the contrary could be detrimental to the economy of the Nation.”