…In Ghana – SEC and RGD?

Story: Atta Kwaku BOADI

On 27th November 2019, the Registrar-General Mrs. Jemima Oware filed a petition at the High Court (Commercial Division) in Accra asking for BlackShield Capital Management Limited (formerly Gold Coast Fund Management Company) to be wound up under the provisions of the Bodies Corporate (Official Liquidations) Act, 1963 (Act 180). This petition was filed only some 19 days after the Securities & Exchange Commission (SEC) revoked the license of BlackShield on 8th November 2019. There appear to be reasons best known to the actors on the stage for the seeming haste and lack of transparency in these two related actions.

For the records, it is important to note that it is SEC that asked the RGD to liquidate BlackShield. SEC, our research shows, and they admit so on their own website that unlike the Bank of Ghana, it does not have powers to liquidate any company. This clearly is the reason for bringing in the Registrar-General’s Department.

It is instructive to note that at the time of these actions, Mrs. Oware the Registrar-General was also a member of the Board of Directors of SEC. She was a customer of BlackShield.

The Shareholders of BlackShield it must be pointed out had also engaged the RGD with proposals that would lead to the sorting out of the issues at hand.

Furthermore, is should be pointed out that the founder of BlackShield Dr. Papa Kwesi Nduom had sought the assistance of SEC, the regulator in a letter dated 22nd June 2019 to retrieve significant accounts receivable being held by government agencies that today are valued at almost GHS4 billion. The position of BlackShield has been that the receivables would be able to sort out customer demands for the redemption of their investments after proper valuation of each account given the liquidity crisis provoked by the non payment of the accounts receivable.

It is noteworthy that Mr. Paul Ababio SEC’s Deputy Director General after the request for help to retrieve the receivables went on public radio to claim that SEC is not a “debt collector”.

The records also show that BlackShield following the revocation of its license petitioned SEC in 2019 through the administrative hearing process to reconsider its revocation decision. This administrative hearing process was abruptly truncated unilaterally by SEC. After this, BlackShield sought assistance from the judiciary system to get SEC to return to the administrative hearing. This case has not been concluded.

What our investigations uncovered, a breach of the rights of shareholders, is the fact that while the administrative hearings were pending, the RGD on the blind side of BlackShield had filed for the liquidation in court. The RGD, it appears quite deliberately failed to serve BlackShield until after the hasty decision to stop the proceedings made by the Administrative Hearing Committee set up by SEC to study the appeal of BlackShield for the reconsideration of the license revocation decision. All this they did in the name of the Government Administration headed by H.E. Nana Akufo-Addo.

In due course, we will unveil the people SEC appointed to be members of the Administrative Hearing Committee.

A former Credit Union customer of BlackShield in Takoradi when contacted pointed out that the record of the President as a Human Rights campaigner is inconsistent with the hasty and back room decisions taken by those purported to be working on behalf of the regulator. The actions taken by SEC dirty the reputation of the President.

In his view, he will not lead his organization to invest with any company regulated by SEC any longer. To him, the only safe thing to do now is to buy government treasury bills from a foreign owned bank. No regulator will touch anyone’s treasury bill or disrupt a foreign owned financial institution in Ghana.

Prior to the revocation of the license, BlackShield submitted proposals to SEC to restructure its former structured finance product. Records available show that SEC rejected all of them. There are documents to prove this. Strangely enough, SEC turned around and found funds from the Government through the Ministry of Finance to engage the Amalgamated Fund Limited of GCB Capital Ltd. In effect the investors who sign up with the Amalgamated Fund cease to be customers of the former Fund Management companies. Interestingly, the bailout program is suspiciously similar to the one offered by BlackShield and rejected by SEC. The only difference is that instead of government paying the accounts receivable from its agencies so that BlackShield can pay its customers, SEC is getting funds directly from Government to pay the customers through GCB. An obvious concern is the potential for overpayment through overstatement of customers values. The other obvious concern is what happens to the receivables from government agencies?

At this point, neither SEC nor its Agent has engaged the shareholders of BlackShield to determine the amounts validated and being paid to the customers.

Legal experts consulted by Today confirm that SEC does not have a locus in the liquidation proceedings. However, they have “…constructively and illegally held the offices and assets of Blackshield since the revocation of the license”. Some of these assets are being used directly by the Agent appointed by SEC. Others have been abandoned to their fate. The BlackShield office in Takoradi has suffered a break-in.

It is true that BlackShield prior to the revocation of its license had more fund management clients than any other Fund Manager in the country. It had more field offices in the regions. Its clientele was also quite representative of the people, with teachers, soldiers, lawyers, judges, politicians, nurses, students, traders, fund managers and other financial institutions (including Databank), business people of all types, etc.

What happens to BlackShield experts are certain, will have a direct impact on the confidence people have about saving and investing in Ghana.

Unfortunately, some people are willing to play a dangerous political game with lives of BlackShield customers and employees. Some of them have thought that the liquidity crisis experienced by Ghana’s biggest fund manager was provoked by incompetent management. Twenty-five (25) years of its existence had proven that BlackShield did not lose one pesewa of investor funds. This is the reason why thousands of Ghanaians chose the company to be their fund manager.

We recall the words of the Minister of Finance at the World Bank and IMF meetings on 17th April 2020. We were struck by his call for the recognition of extraordinary circumstances faced by countries and the need for transparency in order to find liquidity needed by countries such as Ghana.

According to the Minister,

“The structures are shaken or fallen with no country spared.

The need for the additionality of fresh capital is clear to us if we are to offer the appropriate stimulus and this has been echoed for example by Africa, Latin America, Southeast Asia and Caribbean to address fiscal shock.
The need for a two year or longer standstill given that the nature of this pandemic is not a passing blizzard but truly a long winter, if not a mild ice age. And as indicated, a more comprehensive debt relief discussion and the US representative Mr. Mackintosh and David indicated to begin a dialogue with private sector creditors without coercion.
As we look at debt, the issue of transparencyshould be very clear to us so that no one abuses this opportunity.

It is in my view that this is a very awkward time for sovereign credit rating downgrading and talks of moral hazard in the face of an unknown attack by an unknown enemy for what is not a blizzard but at best a long winter……Let us remake ourselves to create a new era….Let us press forward the human genius and example of our leaders gone, so that our future will indeed be greater than our past, for in the end as the Bible said in Proverbs 11:4. Wealth is worthless in the day of wrath as we witness 2.2 million affected and nearly 150,000 dead recently and some 8 trillion disproportionately deployed.

May the Lord touch our hearts so we act in the interest of humanity.”

We are working to provide the details, blow by blow of what provoked the crisis, the lack of transparency (such as the one called for by the Minister on a global stage) and how no solution offered by BlackShield could be accepted by SEC.