An economist and lecturer at the University of Ghana has argued that financial schemes that promise extremely high returns are most likely to be fraudulent.
“To tell you the truth, if there is any scheme that promises an interest of 10 percent a month, I can comfortably say it is a ponzi,” Prof. Assibey said on news analysis show Newsfile on Joy FM Saturday.
His comments come amid a saga that poses a threat to the country’s financial sector. Described as a gold dealership firm, Menzgold Ghana Limited has defaulted in paying its hefty returns to clients.
In September 2018, the Securities and Exchange Commission (SEC) ordered Menzgold to close down its trading with the public as it was not licensed to do so.
Since then Menzgold has failed to pay returns to its 60,000 plus clients. The initial deposits are also locked up despite several promises to pay same.
In the capital, Accra, and the second busiest city, Kumasi; there have been protest matches to force the embattled company to honour its obligation to its customers.
The clients also want the government to come down hard on Menzgold CEO, Nana Appiah Mensah, and his directors.
After more four months protest, the government has budged. Earlier this week a warrant was issued ordering the arrest of Nana Appiah Mensah, otherwise called NAM1.
The authorities say they have informed Interpol to help track him down.
Meanwhile, the government says it won’t use taxpayers’ money to bailout Menzgold clients as both the central bank and the SEC gave countless warnings to the public not to transact business with Menzgold as they were under investigation.
These warnings were woefully ignored.
Speaking on the business model of Menzgold, Prof. Assibey noted that the returns they paid or purported to pay on the supposed gold deposits did not add up.
“If any agency promise stable and consistent return from dealing in gold, I don’t know where the returns will come from because gold prices do not go up consistently…”
“…so there is no way you can be guaranteed consistent returns more so 10%,” he stated. He added that it was “clearly written on the wall that this is ponzi”. “People should have known,” he added.
Greed or Naivety?
The Finance Minister, Ken Ofori Atta early on while speaking on Menzgold noted that there would be no government bailout for greed.
Many analysts have also called out the customers, accusing them of greed, since there were enough red flags.
Speaking on Newsfile, private legal practitioner, Ace Annan Ankomah noted that aside greed some may have been naive.