Background

This is a suit arising from the operations of the 2^nd Defendant herein and the regulatory duty of the central bank, Bank of Ghana (1^st Defendant herein). It is about whether the Bank of Ghana was the regulator of the 2^nd Defendant herein and if yes, whether it was negligent in its regulatory duty.

The Plaintiffs were described as customers of the 2^nd Defendant herein. The 2^nd Defendant was an incorporated limited liability company under the laws of Ghana. The 1^st Defendant herein, Bank of Ghana is a constitutional and statutory body responsible for the regulation of banks and non-bank financial institutions among other functions. It must be noted that the names of the then Governor of the Bank of Ghana, Paa Kwesi Amissah Arthur and the Head of Banking Supervision, Franklin Belnye who were originally the 2nd and 3rd Defendants respectively have been struck out of the suit as non- proper parties to the suit. Consequently, Onward Investment Limited is now the 2^nd Defendant while the Bank of Ghana remains the 1st Defendant. The 2^nd Defendant has undergone liquidation and so did not participate in the trial.

By a Writ of Summons and Statement of Claim dated the 29th day of June, 2012, the Plaintiffs are seeking the following reliefs against the Defendants therein:

“a. A Declaration that the deliberate and or intentional act of 1st defendant, 2nd defendant & 3^rd defendant permitting and or indulging the 4th defendant to operate commercially as a bank concern in the Greater Accra region, Ashanti region, and Brong Ahafo region respectively for over 2 years without the requisite Bank of Ghana banking Licence was not only negligent and or unconscionable but unconstitutional, fraudulent and legally impermissible and as a result have caused substantial miscarriage of justice and civil injuries to plaintiffs.

b. A Declaration that by the testimony of the Representative of the Governor of Bank of Ghana and Head of Banking Supervision (i.e. 2nd & 3rd defendants) herein on oath in civil Suit No. RPC 102/2012 admitting and confirming that the Bank of Ghana was aware that 4th defendant had no Licence from the Bank of Ghana whilst it (4th) defendant was operating and also failing to warn the General Public from dealing with the 4th defendant who was operating illegally and fraudulently in foreign transactions/ exchange amounted to a breach of article 183 (2)(d) of the 1992 Constitution of Ghana, the Bank of Ghana Act, 2002 (Act 612) and the Banking Act, 2004 (Act 673).

c. A Declaration that whatever the 1st, 2nd & 3rd defendants did, whether deliberately, negligently or by omission or commission by allowing, permitting or indulging the 4th defendant to illegally and fraudulently operate by receiving cash deposits from the general public including the Plaintiff without any Licence so to do amounted to a serious breach of duty in a high voltage of bad faith and irrationality.

d. The recovery of the judgment debt of GH₵7,269,718.38 from the 1st, 2nd & 3rd which was obtained in favour of the Plaintiff against the 4th defendant in Suit Nos. RPC 102/2012 and HRC/24/12A being the quantum of cash deposits with the 4th defendant inclusive of cost and interest on account of the 1st, 2nd & 3rd defendants’ admission and contribution to the 4th defendant’s commission of fraud against the Plaintiffs herein.

e. A Declaration that the 1st, 2nd & 3rd defendants owe a duty of care to the Plaintiffs to protect them (plaintiffs) from illegal and fraudulent activities of banks and financial and non-financial institutions in the country but the 1st, 2nd & 3rd defendants with a blameworthy mindset deliberately and unconscionably breached this duty when the 1st, 2nd & 3rd defendants failed/refused to stop the 4th defendant’s illegalities and fraudulent activities or behaviour by passively allowing the 4th defendant to engage in On Line Forex Trading/foreign exchange transactions with the Plaintiff’s deposits or cash investments.

f. A declaration that the 1st, 2nd & 3rd defendants by their conduct and behaviour instrumentally aided, abetted and or contributed to the fraud perpetrated on the plaintiffs by the 4th defendant by partnering/indulging and or allowing the 4th defendant to operate in its illegal and fraudulent activities/commerciality against the plaintiffs herein who invested with the 4th defendant as a bank concern.”

On 16^thof July, 2012 the Plaintiffs obtained judgment in default of appearance against all the Defendants therein, and proceeded to enter judgment. Upon becoming aware of the default judgment obtained by Plaintiffs against them, 1^st, 2^nd and 3rd Defendants therein applied for a stay of execution of the judgment of the court and an order to set aside the default judgment, and for leave to enter appearance out of time. This application was refused by the High Court which entered the default judgment.

Dissatisfied with the ruling of the High Court, 1^st, 2^nd and 3^rd Defendants therein appealed to the Court of Appeal against the entire decision. The Court of Appeal dismissed the appeal but struck out the names of 2^nd and 3^rd Defendants therein as being unnecessary and improper parties to the suit. Dissatisfied with the judgment of the Court of Appeal not to set aside the default judgment and for refusing it leave to enter appearance out of time, 1st Defendant appealed further to the Supreme Court. The Supreme Court set aside the default judgment and granted 1^st Defendant leave to enter appearance out of time.

1^st Defendant, therefore, filed its notice of entry of appearance on the 24^th day of November, 2015, and thereafter proceeded to file its defence on the 4th day of February, 2016.

The Plaintiffs’ Case

From the pleadings, the Plaintiffs’ allegation is that the 2^nd Defendant operated as a bank for over 2 years without a valid license and that the 1st Defendant was aware of such operation but neither retrained the latter from doing so nor warned the general public from dealing with it. The Plaintiffs further alleged that the applicant intentionally or negligently allowed the 2nd Defendant to operate as a bank by receiving deposits from the general public. They also alleged that it was fraudulent on the part of the 1^st Defendant to allow the 2^nd Defendant to operate in the way it did resulting in the loss of substantial sums of money belonging to the plaintiffs. In sum, the Plaintiffs are alleging that the 1^st Defendant was the regulator of the 2^nd Defendant and that the former failed in its regulatory role relating to the latter. They are therefore by this suit seeking to recover from 1^st Defendant the monies they claim to have lost as a result of depositing the same with 2^nd Defendant on the basis of the alleged negligent and or fraudulent conduct of 1st Defendant.

The 1^stDefendant’s Case

The 1^st Defendant’s case as contained in its Statement of Defence filed on the 4th day of February, 2016 and neatly rendered by its counsel is that it got to know about the operations of 2^nd Defendant sometime in the year 2011 after it had received complaints from the general public about 2^nd Defendant’s operations. It (1^st Defendant), on receiving the said complaints reported the matter to the Ghana Police Service (Police) and the Economic and Organized Crimes Office (EOCO) since it had not licenced 2^nd Defendant to carry on any business, and as such could not exercise its regulatory and supervisory mandate over 2^nd Defendant’s activities. It is also 1^st Defendant’s case that the Police and EOCO conducted their investigations into the activities of 2^nd Defendant, and thereafter closed down 2^nd Defendant. 1^st Defendant contends that it played no role whatsoever in the closure of 2^nd Defendant, same having been done by the Police and EOCO upon the completion of their investigations into the activities of 2^nd Defendant.

The 1^st Defendant states further that the 2^nd Defendant, to the knowledge of Plaintiffs, was engaged in the business of investment, same being outside its (1st Defendant’s) mandate. It is therefore the contention of 1^st Defendant that it is in no way liable to Plaintiffs for their claims since its mandate is limited to banks and non-bank financial institutions such as savings and loans companies and microfinance companies. 1st Defendant contends further that if any entity is responsible for the regulation and supervision of 2^nd Defendant’s activities, it would be the Securities and Exchange Commission, since 2^nd Defendant’s activities were investment in nature.

Issues set down for trial

As required under Order 58 rule 4 of the High Court (Civil Procedure) Rules, 2004, CI 47, there was an attempt at settlement but the parties were unable to reach an agreement. The following issues were therefore set down for trial:

1. Whether or not 2^nd Defendant in its operations guaranteed as a bank and or bank concern?

2. Whether or not the 2^nd defendant in its operations operated as an investment house?

3. Whether or not the 2^nd defendant’s operations were within the ambit of 1^st Defendant’s constitutional and statutory mandate?

4. Whether or not the 1^st defendant owed a duty of care to the Plaintiffs?

5. Whether or not the 1^st Defendant is liable to Plaintiffs for their claims?

There was a preliminary issue relating to the status of the 2^nd and 3^rd Defendantsbut the same was dismissed by this court when it held that the 2^nd and 3^rd Defendants were not proper parties to the suit as their names had already been struck out by the Court of Appeal.

It must also be noted that on 18^th of October, 2017, this court refused an application by 1^st Defendant herein to strike out the pleadings of the plaintiffs. The court ordered a full trial of the case, as on the face of the statement of claim, there was the need for further interrogation of the allegations against the 1^st Defendant.

The Burden of Proof in Civil Suits Generally

As in all civil suits, the legal burden of proof is placed on the party who asserts the existence of a fact in issue or any relevant fact. Depending on the admissions made, the party on whom the burden of proof lies is enjoined by the provisions of sections 10, 11(4), 12 and 14 of the Evidence Act, 1975 (NRCD 323) to lead cogent evidence such that on the totality of the evidence on record, the court will find that party's version in relation to the rival accounts to be more probable than its non-existence.

This basic principle of proof in civil suits, is expounded in Zambrama v Segbedzie (1991) 2 GLR 221 and the same has been applied in numerous cases including Takoradi Floor Mills v Samir Faris (2005/06) SCGLR 882; Continental Plastics Ltd v IMC Industries (2009) SCGLR 298 at pages 306 to 307; Abbey v Antwi (2010) SCGLR 17 at 19 (holding 2); and Ackah v. Pergah Transport Limited and Others [2010] SCGLR 728.

In Ackah v. Pergah Transport Limited and Others (supra), Adinyira, JSC succinctly summed up the law, at page 736:

“It is a basic principle of law on evidence that a party who bears the burden of proof is to produce the required evidence of the facts in issue that has the quality of credibility short of which his claim may fail…It is trite law that matters that are capable of proof must be proved by producing sufficient evidence so that, on all the evidence, a reasonable mind could conclude that the existence of a fact is more reasonable than it’s non-existence. This is the requirement of the law on evidence under section 10 (1) and (2) and 11 (1) and (4) of the Evidence Act, 1975 (NRCD 323).”

There is, indeed, a clear distinction between the legal burden of proof and evidential burden of proof. Whilst the legal burden of proof is mostly borne by the plaintiff or whoever makes an assertion, evidential burden exists to produce evidence in support of an assertion or exists in the form of tactical onus to contradict or weaken the evidence that has been led by an adversary.

Thus, at the trial the Plaintiffs bore the burden of producing evidence and the burden of persuasion on the issues set down for trial. The 1^st Defendant was also at liberty to introduce evidence to contradict the assertions of the Plaintiffs.

Tackling the Issues

I shall now proceed to resolve the issues which were set down for trial. In the analysis, the court shall also consider the written address of counsel for the 1^st Defendant. In fact, at the close of the case both counsel were ordered to file their written submissions. Counsel for the 1^st Defendant filed his written address but counsel for the Plaintiffs failed to do so. This judgment is therefore delivered without the input (in terms of written address) of counsel for the Plaintiffs.

First, issues 1 and 2 shall be tackled together since they all border on the operations of the 2^nd

Defendant. Assessment of Issue 3 which relates to the regulatory role of the 1^st defendant shall follow.

Flowing from the analysis, the court shall then answer the questions contained in Issues 4 and 5.

Did the 2^nd Defendant provide banking services or investment services?

A bank is a financial institution which provides banking and other financial services to its customers. It provides fundamental banking services such as accepting deposits and providing loans. However, there are also non-bank institutions that provide certain banking services. Banks are a subset of the financial services industry.

Section 18 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) provides a list of the various banking services as follows: (a) acceptance of deposits and other repayable funds from the public; (b) lending; (c) financial leasing; (d) investment in financial securities; (e) money transmission services; (f) issuing and administering of means of payment including credit cards, travellers cheques, bankers’ drafts and electronic money; (g) guarantees and commitments; (h) trading for own account or for account of customers in (i) money market instruments, (ii) foreign exchange, or transferable securities; (i) participation in securities issues and provision of services related to those issues; (j) advice to undertakings on capital structure, acquisition and merger of undertaking; (k) portfolio management and advice; (l) keeping and administration of securities; (m) credit reference services; (n) safe custody of valuables; (o) electronic banking; (p) payment and collection services; (q) bancassurance; (r) non interest banking services; and (s) any other services that the Bank of Ghana may determine.

This provision is similar to the repealed Banking Act, 2004 (Act 673), section 11 which was in force at the time the Plaintiffs dealt with the 2^nd Defendant.

There are different definitions of the term “investment”. The Black’s Law Dictionary 7th Edition defines investment as a term where capital is committed to make an income from it.Also the Business Dictionary, accessed online at www.businessdictionary.com defines investment as money committed or property acquired for future income. Merriam-Webster Dictionary, accessed online at www.merriam-webster.comalso defines investment as the outlay of money usually for income or profit.

Within the context of the financial services industry, investment can be defined as money committed by a customer to a financial institution for profit payable by the latter after a fixed term.

A distinguishing feature of investment service is that it leads to payment of profit to the investor.

At the heart of the plaintiffs’ case is the fact that the 2^nd defendant undertook banking services to the knowledge and implied consent of the 1^st Defendant from the beginning of the year 2010 until the activities of the 2^nd Defendant were terminated in December, 2011 by the Economic and Organized

Crime Office (EOCO) on the authority of the 1^st Defendant. This is best told by the 1^st Plaintiff’s witness statement as follows:

6. The 2nd Defendant has been in existence and had been carrying on banking activities in the country in the full view of the 1st Defendant since the beginning of the year 2010 as a banking concern to the knowledge and implied and or tacit permission of the 1st Defendant.

7. It is my case that Plaintiffs learnt of the existence, operations and business and or banking activities of the 2nd Defendant through Television announcements/advertisement as well as the major FM stations in the country in and around the later part 2010 and in the year 2011.

8. It is also my case that 2nd Defendant in order to make its operations and activities known, organized floats throughout some principal streets of Accra, Kumasi, Techiman and Sunyani. The 2nd Defendant in the course of these floats distributed tracts, souvenirs and brouchers containing its business activities vis, plans and policies to the general public to the knowledge of 1st Defendant.

9. It is my case that myself and the other Plaintiffs eventually became customers of the 2nd Defendant as a result of the multiple advertisements and announcements, and Plaintiffs dealt with the 2nd Defendant until the 17th day of December, 2011 when its accounts were frozen and its business activities were terminated by the Economic and Organized Crime Office (EOCO) on the mandate of the 1st Defendant.

To ascertain whether the 2^nd defendant was providing banking services during its operation, it is important to refer to the object of its business. Since labelling is not the only factor that determines the raison d’etre of a business organization, we need to go into the mode of operation of the business as well.

The 2^nd Defendant herein, Ownward Investment Limited is a limited liability company. The primary document that spells out the object of the company is the registration form. Exhibit 1 is a copy of the registration form 3 of 2^nd Defendant and it indicates amongst others, the objects of 2^nd Defendant.

The objects of 2^nd Defendant as stated in Exhibit 1 are:

i. Online Forex Trading and Training

ii. General Merchandise

iii. Investment Services

From Exhibit 1, it is palpably clear that the 2^nd Defendant was never registered to undertake the business of banking. It was amongst others meant to provide investment products and services to its investors, partners and or customers; and that is what it portrayed to the world.

Exhibit 7 is one of the tracts that were widely circulated by the 2^nd defendant when it advertised its operations. This tract was used as the medium to advertise the 2^nd defendant’s business plans and policies to the public. It describes the mode of operation of the 2^nd defendant. From the Plaintiffs’ own account, they relied heavily on the tracts together with announcements and advertisement in the media in their decision to deal with the 2^nd Defendant.

In Exhibit 7, the 2^nd Defendant states its mission as follows:

“To become an outstanding provider of legitimate investment services with a view to enhancing the financial capability of our partners and customers.”

The 2^nd Defendant further states its vision inthe said Exhibit 7 as follows:

“To achieve a comparative advantage among the leading investment companies known for legitimacy, effectiveness and prompt payment of returns/profits on investment.”

I agree with counsel for the 1^st Defendant that the fact that 2nd Defendant never claimed to be operating as a bank and or bank concern is laid to rest when the portion of Exhibit 7 captioned “HOW TO BECOME OUR TRADING PARTNER” is considered. The said portion of Exhibit 7 provides as follows:

“After being trained, every trained person may commence the forex trading on his/her own. Considering the volatile nature of the market, however, every trained person may equally decide to partner with us by contributing to the trading capital of the company as an investment. Also, those who may not wish to undergo the training, but wish to partner with us by allowing our experts trade for them are equally free to invest with us. This investment is in multiple of GHC50 (Fifty Ghana Cedis) and it attracts 20% profit (after Tax) in a trading period of 21 working days. On due date, both the capital invested and the 20% profit on investment are paid to the partner. On every payment date, partners may re-invest their capital and or profit or take any decision with their investment. The investment decision at any point in time is solely that of the investor.”

Plaintiffs’ Exhibit A is the PARTNERSHIP BOOKLET. This booklet keeps record of monies advanced to the 2^nd Defendant by the Plaintiffs and other customers. A portion of Exhibit A states:

“PLEASE NOTE THAT

(a) We shall accept all currencies from partners.

(b) We pay in Ghana Cedis (GHc) only.

(c) Payment of profits and/or capital is due after 42 working days.

(d) Partnership booklet should be kept safely and presentable by the partner (in person) for payment.

(e) On every payment date, partners may re-invest their capital and or profit or take any decision with the investment. The investment decision at any point in time is solely that of the investor.”

In respect of the Partnership Booklet (Exhibit A), the following transpired during cross examination of the 1^st Plaintiff on 13^th July, 2018:

Q. From exhibits A series and specifically on the page which contains the entry of your investment especially the units and the amount, what was the amount of profit you were to get or you got as stated in the fourth column under the inscription or the column amount of profit in Ghana cedis?

A: GHC 750.00.

Q: And in the fifth column, what was the tax on profit?

A: GHC 37.5

Q: In the sixth column, you have profit and capital payable, what is the amount stated?

A: GHC 3,712.50.

Q: Then what was the due date?

A: 14th November, 2011.

Q. From when you deposited your money i.e. on the 17th October, 2011 to 14^th day of November, 2011, how many days is that?

A: 27 days per my calculation.

Q. After the 27 days, the payment cashier paid you the sum of GHC3,712.50 as it is contained in your partnership booklet?

A: That is what is on the face of the document.

Q. So from the document, after you were paid the money, on the same day, you took the interest and deposited 60 units of investment with Onward as you have stated in your partnership booklet, isn't it?

A: That is correct.

Q: And the percentage profit paid on your investment after the 27 days is 23.75 percent as contained in your own exhibit A?

A: I cannot tell because I do not work at Onward.

Q: From exhibit A, that you have tendered, on which day did or was your investment due, that is, the 2nd investment on the 14th November, 2011?

A: 13th December, 2011.

Q: How many days did you invest this 2nd sum?

A: 29 days on the face of the document.

Q: On this day again, you received on the document GHC 3,712.50 profit on investment after tax?

A: That is correct.

Q: So again, from your own exhibits A series, when you received this sum, you again put the profit of GHC 3,712.50 and reinvested in 60 units of multiples of 50 which is GHC 3,000.00.

A: That is correct.

Q: This was on the 13th of December, 2011?

A: Yes.

Q. Then this money or 60 units according to your own exhibit A became due on the 19^th January, 2012, isn't it?

A: That is correct.

Q. And from Exhibit A series, how many days was this investment due from the 13/12/2011 to 19/01/2012?

A: Per my calculation it is 38 days.

Q: You were due an amount of GHC1050.00 as profit but after tax was deducted, you were paid GHC3,997.50?

A: That is not correct because the said money has not been paid to me, it is with the 1st Defendant.

Q: From the evidence you have given, you received at least two profits payments of GHC3,712.50 each on your investment?

A: That is correct.

It is apparent from the evidencethat the 2^nd Defendant always projected itselfas an investment services provider, and that it in fact operated as such. The 2^nd Defendant never claimed to be a bank and or bank concern, and it never operated as such. The 2^nd Defendant in all its dealings with the Plaintiffs, acted in line with its objects as stated in Exhibit 1, and operated as an investment services provider offering investment services and products. This is also evidenced by Exhibits 7 and A.

In Duah v Yorkwa (1993-94) GLR 217 it was held that whenever there was a written document and oral evidence in respect of a transaction, it is better for the court to lean favourably towards the documentary evidence after considering all the evidence, especially where the documentary evidence was found to be authentic and the oral evidence is conflicting. The Plaintiff’s evidence in chief relating to the operations of 2^nd Defendant is in stark contrast with the documents on record. From the documentary evidence, it is not in doubt that the 2^nd Defendant was an investment house.

Also the fact that the 1^st Plaintiff’s own evidence during cross examination suggests that he received profits on his investments is another reason to conclude that the issue has been laid to rest, as receipt of profit is synonymous with investment.

In his written address, counsel for the 1^st Defendant also referred to an admission made by the 1^st

Plaintiff, who testified for himself and on behalf of all the other plaintiff thus:

Q: I am putting it to you that the brochures, souvenirs and flyers of 2nd Defendant which you state influenced you to commence business with 2nd Defendant are explicit and unambiguous to the fact that 2nd Defendant is not a Bank and or authorized by 1st Defendant in any shape or form.

A: My lord I cannot tell whether it was a bank or not.

Q: I am putting it to you that you never had any doubt whatsoever that all monies you were paying to 2nd Defendant was an investment for which you would be paid profit as contained in your own booklet exhibit A which you tendered in court.

A: Yes My lord, I agree.

Counsel for the 1^st Defendant argued that these answers by 1st Plaintiff completely shatters the case of the Plaintiffs. as they eventually, after extensive cross-examination admitted that what they were engaged in with 2^nd Defendant was investment for which they received profits and not banking as they had all along claimed.

Admission is defined by the 7th edition of the Black’s Law Dictionary as a voluntary acknowledgment of the existence of facts relevant to an adversary’s case. Justice Brobbey in his book, Essentials of Ghana Law of Evidence at page 112 explained admissions to mean the fact or issue which has been conceded and is no longer in contention. It was held in Samuel Okudzeto Ablakwa & Anor v Jake Obetsebi Lamptey& Anor [2013-2014] 1 SCGLR 16 that where a matter is admitted proof is dispensed with.

Also, in the case of In re Asere Stool; Nikoi Olai Amontai IV (Substituted by)Tafo Amon II vrs Akotia Owirsika III (Substituted by)Laryea Ayiku III [2005-2006] SCGLR 637 at 656, which was quoted with approval in Fynn v Fynn [2013-2014] SCGLR 727 at 738, it was held that there cannot be any better proof than an adversary admitting a fact in contention.

The admission made by the 1^st Plaintiff for and on behalf of all the plaintiffs that the 2^nd defendant was involved in investment services adds to the credibility of the 1^st Defendant representative’s testimony on the issue and the 1^st Defendant’s case as a whole. The admission is also consistent with the documentary evidence on record.

From the foregoing, I make a finding of fact that the 2^nd Defendant operated investment services and not banking services.

Was the 1^st Defendant the regulator of the 2^nd Defendant?

I now turn to the regulatory and supervisory functions of the 1^st defendant, Bank of Ghana (BOG) to ascertain whether the BOG was the regulator of the 2^nd Defendant.

The Banking Act, 2004 (Act 673) gave the Bank of Ghana its regulatory and supervisory mandate. This Act has been repealed and re-enacted as the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930). At the time Plaintiffs dealt with the 2^nd Defendant, Act 673 was in operation and so the rights accrued by the parties under Act 673 are not affected by the repeal of the Act. See Industrial and Commercial Workers Union of the Trade Union Congress v Bank of Ghana [2003-2005] 1 GLR 37.

The Banking Act, 2004 was originally enacted in 2002. The preamble of the 2004 Act provided:

“AN ACT to amend and consolidate the laws relating to banking, to regulate institutions which carry on banking business and to provide for related matters.”

By section 2 (1) of the Act 673, the Bank of Ghana was empowered to exercise supervisory and regulatory authority in all matters relating to banking business and is responsible for(a) promoting an effective banking system,(b) dealing with an unlawful or improper practice of a bank and(c) considering and proposing reforms of the laws relating to banking business.

Under section 52(1) “the Bank of Ghana may issue directives to banks generally or to a particular bank where it is satisfied (a) that it is necessary to secure the proper management of a bank generally,(b) that it is necessary to prevent the affairs of a bank being conducted in a manner detrimental to the interests of depositors or prejudicial to the interests of the bank …”

Under Section 11 of Act 673, the banking services which the 1^st Defendant regulated and supervised and still does under the existing law (Act 930) include acceptance of deposits from the public and lending.

The Non-Bank Financial Institutions Act, 2008 (Act 774) provided for the regulation of non-bank financial institutions and for related matters. The Act applied to non-bank institutions and non-banking financial services providing services listed in the First Schedule as follows:

1. Leasing Operations

2. Mortgage Finance Operations

3. Money Lending Operations

4. Money Transfer Services

5. Non deposit taking microfinance services

6. Credit Union Operations

A careful reading of Act 774 as a whole show clearly that the Bank of Ghana regulated and supervised the non-bank financial institutions defined under the Act, as the word Bank was used whenever the regulator is referred to. The interpretation section of the Act stated that “Bank” means the Bank of Ghana.

It is the 1^st Defendant’s case that it was not the regulatory body responsible for regulating and supervising the activities of 2nd Defendant and therefore could not in any manner or form be said to have acted negligently and or fraudulently in allowing 2^nd Defendant to operate without a licence.

Under cross examining, the representative of the 1^st Defendant insisted that the activities of 2nd Defendant which were investment in nature fell under the ambit of the Securities and Exchange

Commission and not 1^st Defendant. The following transpired during cross-examination on the 18th day of January, 2019:

Q: I therefore suggest to you that Onward Investment Limited is a non-depository financial institution and therefore 1st Defendant has a supervising role referable to its activities and operations.

A: That is not so my lord, Onward is a non-depositing institution. Onward is an investment entity and my lord it falls under the Securities and Exchange Commission just like Menzgold which is the regulator. Bank of Ghana had never even licensed Onward as a non-depository institution or entity.

Q: I suggest to you that it is because of the fact that the 1st Defendant reneged on its responsibility among others including the supervision of 2nd defendant that led the investment losses incurred by the Plaintiffs.

A: My Lord that is not so the Bank of Ghana never reneged on its supervisory role because 1. BOG never licenced it 2. When you look at the objects of the Company Onward per their Form 3, they talked about online forex trading and training, it talks about general merchandise and investment services. My lord BOG has no right to supervise this entity.

Q: You agree with me that supervising of the activities of investment firms which are non-depository is one of the functions of the 1st Defendant.

A: No, Bank of Ghana does not supervise investment entities. My lord in the financial industry we have four (4) regulators. Bank of Ghana takes care of the Banks and the non-banks. Securities and Exchange Commission takes care of the Investment entities, National Insurance Commission takes care of the Insurance companies and then National Pensions Regulatory Authority takes care of the Pensions. So when you talk about regulators there are four (4) and BOG does not take care of Onward.

Q: I suggest to you that by extension all the institutions mentioned by you are all under the ambit of BOG in respect of supervising those institutions.

A: That is not so my Lord.

The 1^st Defendant’s representative was very resolute in her testimony and never wavered under cross examination. Indeed, the combined effect of those enabling Acts at the time the Plaintiffs dealt with the 2^nd Defendant i.e. Banking Act, 2004 (Act 673) and Non-Bank Financial Institutions Act 2008 (Act show clearly that the 1^st Defendant was and per the existing regime remains responsible for the regulation and supervision of banks and non-banks financial institution. Investment services operated by investment houses fall outside the regulatory and supervisory purview of the 1^st Defendant. If the legislature wanted the Bank of Ghana to regulate and supervise investment services it would have stated so in the law.

Presently, investment services fall within the mandate of the Securities and Exchange Commission established under the Securities Industry Act, 2016 (Act 929). Before the coming into force of Act 929, the Securities and Exchange Commission established under the Securities Industry Act, 1993 (PNDCL was the entity responsible for regulating the securities and investment industry including the activities of the 2^nd Defendant.

On whether the 1^st Defendant acted as the regulator of 2^nd Defendant when it lodged a complaint to the Police and EOCO leading to the close down of 2^nd Defendant’s operations, it is my considered opinion that the 1^st Defendant reported the illegal activities of the 2^nd Defendant to the Police and EOCO in its capacity as a corporate citizen of Ghana imbibed with legal and moral obligation to report criminal conduct to relevant agencies. The 1^st Defendant only lived up to its civic duty and by no stretch of imagination can it be suggested that it reported the 2^nd Defendant in its capacity as a regulator. Closing down of the 2^nd Defendant’s business by the Police and EOCO officials was not at the unilateral insistence of the 1^st Defendant. It was just another case of law enforcement agencies clamping down on a criminal activity.

Thus, in answer to Issue 3: the 2nd defendant’s operations were outside the ambit of 1st Defendant’s constitutional and statutory mandate.

Issues 4 and 5

Having established that the 1^st defendant was not the regulator of the 2^nd Defendant, the issue of whether the 1^st Defendant owed a duty of care to the Plaintiffs has become redundant. It is not worth considering since there is no basis for assessing whether there is a proximate relationship between the 1^st Defendant on one hand and the Plaintiffs on the other for duty of care to lie. Consequently, negligence will not lie.

In sum, the Plaintiffs’ action fails, as they have failed to proof their case on a balance of probabilities.

Conclusion

It is very sad that ordinary citizens have lost their hard earned income through the operations of the 2^ndDefendant. I empathise with all those (including the plaintiffs) who might have lost their money to the 2^nd Defendant but this empathy cannot be translated into a sympathetic consideration of the instant claim, as the plaintiffs have failed to establish their claim against the 1^st Defendant. It is gathered from the proceedings that the liquidator has made some part payments to some customers of the 2^nd Defendants including some of the Plaintiffs. Without prejudice to any future action, I only hope the liquidator is able to at least mitigate the loses of all affected persons. The action is dismissed with no order as to costs. Each party shall bear its own costs.

SGD.

DR. RICHMOND OSEI-HWERE

JUSTICE OF THE HIGH COURT

29/03/2019