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Wed, Sep

BoG clarifies scam reports in Volta Region

Bank of Ghana

The companies which defrauded 200 people in the Volta Region, were not microfinance companies, the Bank of Ghana (BoG), has stated.

It said the companies were rather network marketing companies which promised to pay bonuses to their clients.

The Head of Other Financial Institutions at BoG, Mr J. Kofi Amoa-Awuah, told the Daily Graphic  last Monday  that checks by the central bank showed that the money was taken from the victims between 2014 and 2015 after the companies had pledged to pay them handsome bonuses should they make deposits.

He said the victims "have been looking for the operators but cannot find them" hence their recent agitations.

The companies which included Little Drops, Prosperity and Good Health Develop Winners, Royal Foundation Global Leads, Royal Care, Marceph Wealth, JODEQ Network Clear Image and Divine Rain, are rather network marketing operators.

Setting records straight 

Networking marketing, which thrives on referrals, is a specialised business model where individuals are made to buy into a company or a product and earn a commission after the product has been sold.

In Ghana, the model is still at its infancy, with majority of the companies being subsidiaries of established network marketing companies worldwide.

Given that the operations of such companies are not under the regulation of the central bank, Mr Amoa-Awuah said it would be wrong to hold the bank responsible for their omissions in the Volta Region.

That notwithstanding, he said, the central bank was working closely with the security agencies to help bring the perpetrators to book.

"We met the demonstrators, about 200 of them, last Friday to clarify that these are not microfinance institutions but network companies. Our regional administration is collaborating with them and if they can present evidence of contributions to these institutions, they can assist with where these eight companies are for them to make arrests.

"So, we are putting on record that this has nothing to do with BoG, the institutions involved are not under our control and therefore, we have nothing to do with them," Mr Amoa-Awuah explained.

Tightening regulation 

The BoG has, in the past, been harshly criticised for doing little to protect depositors from scamming financial institutions.

The freshest in the minds of people is the one that involved DKM Microfinance and God is Love, where thousands of people were defrauded after they had been promised high returns on their deposits.

Following the public backlash, the BoG responded by tightening its regulatory mechanisms which led to the closure of over 100 of such unlicensed companies.

Mr Amoa-Awuah, who is overseeing that exercise, told the Daily Graphic that some 20 such unlicensed companies had fallen victim lately.

"BoG has stepped up surveillance on unlicensed microfinance institutions around the country. We have placed staff in the regional offices of the bank and they are working with law enforcement agencies to gather some evidence, share the evidence and get the operations shutdown. Once we get the perpetrators of these things will be arrested and possibly prosecuted," he added.