The DKM Diamond Microfinance Scandal In Personal Mirrors

Frankly speaking, the microfinance industry of Ghana was hard hit by some of the worst nightmares recorded since the take-off of the ‘microfinance revolution’ which dominated the financial and economic phase of the country some years back. The unfortunate scandal that hit the DKM Diamond Microfinance Company-owned and operated by Delle K Martin brought the industry under a severe shamble. Admittedly, more worrying was the fact that the story got into the press who claimed that the SEC, Ghana — The Securities and Exchange Commission had supposedly forewarned the customers to desist from trading with the defunct DKM.

Well, in the DKM saga, in which many were close friends and relatives of mine were victims, investigations revealed managers of the company invested a very huge chunk of mobilized funds into their own private long term maturity ventures and subsidiaries in Ghana and overseas with the hope to recoup it quickly and replace it. From financial experts who spoke on the DKM issue, this was done with so much greediness that it left the company almost completely drained of all its finances and any possible way of even coming around or regaining its grounds again. The result of this unfortunate incident was big panic withdrawals; after some customers had heard of these investments of the leaders of the company and feared for their monies. Now, with the company’s inability to honour the huge withdrawal demands of customers, the company came crashing on its toes. According to some financial gurus in the system, what happened with the DKM issue is never in any way different from the Pyram and R5 scandals that hit the microfinance industry in 1995 to which thousands of Ghanaians fell victims and lost billions of cedis back then. Similar to the DKM scandal, Pyram and R5 had only been in operation for just about two years when those predicaments began to hit the unsuspecting customers. With Ghana’s Central Bank’s widely known and criticized lack of supervision, these two Ponzi-schemed non-bank financial institutions started operating a Savings and Loans scheme without a license from the Central Bank and succeeded in luring unsuspecting members of the public and top government officials to deposit billions of cedis with them in return for unsustainable and outrageous interest rates within a very short period of time.

In all of these incidences, the accounts of the ‘dubious’ DKM company where people used few months to erect huge mansions and buy expensive cars were frozen and eventually led to hundreds of people losing their source of livelihood, marriages, and even lives. A buddy of mine, for one, nearly lost his life when he invested his school fees in Sunyani back then. After all these happenings, the numerous aggrieved investors and victims took to the streets of the various places where the DKM scandal was prevalent such as Nkoranza, Sunyani, Tuobodom, Techiman, and other towns to demonstrate against and plead with the government of the day to help them retrieve their lost investments from DKM. Prior to this very unfortunate incident was also revocation of the licenses of seventy microfinance companies by the Bank of Ghana (BoG).

It must be noted that, in Ghana, supported by the Microfinance and Small Loans Centre (MASLOC) and the Ghana Microfinance Institutions Network (GHAMFIN), the Central Bank (BoG) have the legal mandate and the overall responsibility to supervise and regulate the microfinance sub-sector – (Source: BoG official website). But do they do their jobs well given how all these schemes have wasted investors’ cash and killed their spirit in future endeavours? So, in what appears to be a fruitless exercise, in the long run, the Central bank, even though almost invariably stepped its foot on the ground and acted in the DKM scam, one would not be far from right in admitting that its response has only been reactive rather than proactive, knee-jerk rather than conscious, and ad hoc rather than permanent and that they had only waited after all the monies have been wasted before stepping in — which was a bit too late! (Kizi’s Diary)

What people even see as worse in this DKM saga was when the government of the day promised to pay these swindled customers on various campaign platforms in the then Brong Ahafo region of Ghana. In fact, the DKM issue was so politicized that aggrieved customers thought they were going to get all their cash as soon as a political figure was sworn in as the President of the Republic. Unfortunately, till now, most people have not had their monies and all they are left with is paying enormous debts and wishing that death comes for them as soon as possible.