The issue of the DKM Diamond Microfinance Company Ltd and other savings and loans companies operating mainly in the Brong-Ahafo Region and the three northern regions stirred emotions and angered most Members of Parliament (MPs) when the Minister of Finance, Seth Terkper, came to brief them on the matter yesterday.
Mr Terkper said over GH¢100 million of depositor funds could not be accounted for by the operators of DKM as the money had been diverted into other businesses.
DKM and other companies are said to have duped several of their customers, making some of them commit suicide.
The Finance Minister indicated that DKM was given licence to operate in April, 2013 and by the time the issue of duping came to the attention of the government, the company had GH¢10.8 million in its accounts out of the total of GH¢115.2 million that had been collected from depositors.
According to the minister, the company was attracting deposit from the public at interest rate ranging from 40% to 55% for two months – which were unrealistic and unsustainable.
He said government had frozen all the accounts of DKM and other such defaulting savings and loans companies and had also placed a moratorium on their operations.
“DMK has made several promises to pay its customers but these have not materialised and the Bank of Ghana has initiated an action to revoke DKM’s licence and the process of liquidating the assets of DKM and its subsidiaries to pay off the depositors has commenced,” the minister assured.
The MP for New Juaben South and member of the Finance Committee, Dr Mark Assibey-Yeboah, responding, said government failed to do proper oversight on the Bank of Ghana (BoG) which has the responsibility of regulating the non-banking sector of the economy.
He noted that DKM did not meet all the requirements to enable it operate as micro-finance company but the BoG gave it a licence to operate because there was probably some pressure coming from somewhere to allow DKM to operate.
Dr Mark Assibey-Yeboah said DKM, after starting its operation, diverted the monies collected into mining, transport business, shea butter business, gas filling station business and even airline operations with affiliate names like DKM Mining Ltd, DKM Transport Ltd, DKM Shea Butter Ltd, DKM Gas Filling Station and DKM Cement Depot Ltd.
According to the New Juaben South MP, BoG requirement was that not more than 25% of the initial paid-up capital shall be spent on property, plant and equipment (capital equipment) while at least 75% of the initial paid-up capital shall be in liquid cash resources to support operations, but DKM went contrary to that and invested over GH¢100 million of its paid-up capital of GH¢115 million – representing about 85% – into property, plant and equipment, which created the problem.
“The government must be blamed for this mess,” he pointed out.
Members of Parliament, mostly from the Brong-Ahafo Region such as Ignatius Baffour-Awuah; MP for Nkoranza North, Major Derek Oduro (rtd); Member for Berekum East, Dr Kwabena Twum-Nuamah; Member for Berekum West, Kwaku Agyenim Boateng; Member for Dormaa Central, Kwaku Agyemam-Manu and National Democratic Congress (NDC) Member for Banda, Ahmed Ibrahim – who is also the second deputy Majority Chief Whip led a crusade on the floor of the House.
According to them, the Minister of Finance must immediately consult the Finance Committee of Parliament as to how a possible governmental bail-out could be extended to victims of the financial scam to enable them carry out their day-to-day activities.
Mr Baffour-Awuah, MP for Sunyani West, said the whole economy of the Brong-Ahafo Region had ground to a halt because a whopping amount of about GH¢1 billion had been sunk into the operations of these distressed micro-finance companies operating in the region by residents.
Mr Baffour Awuah, who is also the second Deputy Minority Chief Whip, noted that if the current government could dole out $3 millions to support earthquake victims in far-away Haiti, why can’t the government do same to Ghanaians, who through no fault of theirs, have found their life-time investments melted away as a result of some public officials’ negligence.
The MP for Banda, Ahmed Ibrahim, who prevailed on leadership of parliament to summon the minister of finance to brief MPs on the current situation of those micro-finance companies, said he personally received 494 text messages from victims as to what the MPs were doing about the situation.
He said that farmers and traders in the region are the worst affected because they made those investments to improve on their farming and trading activities.
“Mr Speaker, if care is not taken we will face food shortage or crisis in the country because the Brong-Ahafo Region is undoubtedly the food basket of the nation; and farmers in the region decided to put their monies there to be able to expand their farms and produce on a larger scale, but now all their monies are locked up and cannot do anything,” he said.
The MP for Berekum East, Dr Twum-Nuamah, said that in his constituency where many people had fallen victim to this scam, most of the affected people had either died or suffered stroke after realising that their huge investments had gone with the wind.
He called on the government to see the issue as a disaster like flood, fire or vehicular accident and pay compensation to the victims as well.
“We want the government to show a little bit of care because people have died because of this thing,” he entreated.
The MP for Dormaa Central, Kwaku Agyeman-Manu, noted that the whole issue could even have serious implications for the country’s security, adding that the Bank of Ghana officials and officers of the National Security do not do any checks on the background of these people who operate in the savings and loans industry.
The Majority Leader, Alban Bagbin said the Bank of Ghana should take steps to refund the money to the victims and strengthen its supervisory role, stressing that the operation in the non-banking sector is a major risk which requires constant vigilance from the BoG.
By Thomas Fosu Jnr