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Pay attention to GH¢19bn spent to save banks – Dr. Ernest Addison to Parliament.

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Pay attention to GH¢19bn spent to save banks – Dr. Ernest Addison to Parliament. 46

 

 

The Governor of the Bank of Ghana (BoG), Dr Ernest Addison, has responded to the petition presented to Parliament by Dr Kwabena Duffuor and Prince Kofi Amoabeng, owners of the defunct Unibank and UT respectively, following the closure of their banks during the recapitalisation exercise.

In his keynote address at the Ghana National Chamber of Commerce Industry CEO business forum, Dr Addison said “We understand Parliament’s continued interest in the clean-up exercises especially given the public funds that were used to settle depositors’ claims in order to promote the stability of our financial system.

“While the legal processes in court and at arbitration run their course, we would respectfully ask that Parliament and indeed all Ghanaians take a serious view of the GH¢ 19.0 billion Government had to provide out of taxpayers’ money to settle claims of depositors following the mismanagement and siphoning out of several billions of Ghana Cedis from the defunct institutions by their shareholders.

“We all need to lend our support to the Receivers to help retrieve these amounts of money and reallocate them to productive uses to build our economy forward, particularly in the midst of the pandemic.”
He further revealed that shareholders of failed banks frustrating attempt to hold them accountable.

Dr Addison said “at this stage, permit me to use this platform to provide some updates on the banking sector clean-up we undertook a few years ago.

“The decision to close (9) banks and (411) SDIs was necessitated by the urgent need to protect the financial system from institutions that had become insolvent and unable to meet depositor withdrawals due to erosion of their capital base through excessive risk-taking, mismanagement, and poor corporate governance. Government’s decision to provide funds to the tune of GHC 19 billion for payment of depositors whose funds had been locked up in the failed banks and

SDIs, helped to provide liquidity in the system and thereby helped to prevent our economy from grinding to a halt.”

He added that the receivers appointed by the Bank of Ghana to wind down the affairs of the failed banks and SDIs have been tasked to realise value by repossessing and selling the remaining assets of these banks to enable the Government to recover the money spent, which has contributed to the high level of debt of the country. Over the last three years, the Receivers’ asset recovery efforts including chasing those who borrowed money and shareholders of these defunct banks and SDIs who took loans and advances from them and never paid back, has been frustrated especially through the use of the Court system.

“Some of these Court proceedings have been delayed by shareholders who have tried to use unwarranted challenges to the statutory powers of the Bank of Ghana and the Receivers, to frustrate all attempts to hold them accountable for the mismanagement of depositor funds.

“The relevant laws provide for redress for persons who feel aggrieved by the exercise of the Bank of Ghana of its statutory powers, and while there are laid down procedures prescribed by law to seek redress, and these laws are not intended to subvert the course of justice for depositors and taxpayers whose funds were used by Government to pay for depositors’ claims,” Dr Addison added.

“While I am on this, I might add that running to Parliament to seek redress for the revocation of an institution’s licence, is not one of the processes laid down under law for those who feel aggrieved by a licence revocation by the Bank of Ghana. There are already a number of actions filed in court and at the arbitration by the same persons who run to Parliament for cover, and the Bank of Ghana’s simple response to

“Parliament is respectfully to allow the pending legal processes to run their course.

“Indeed, sometime in September 2018, the 7th Parliament undertook a formal inquiry into the Financial Sector Clean-up, the factors that led to it, and the manner in which it was carried out.

“Among other things, the Finance Committee of Parliament invited all the key actors such as the Ministry of Finance, the Governor of the Bank of Ghana, the shareholders of the defunct institutions, the Receivers, among others to appear before it and to answer specific questions aimed at assisting the Committee to understand the events surrounding the clean-up exercise.

“The Bank of Ghana cooperated fully with the Committee and provided all the necessary information to assist its members to reach their own conclusions. We had hoped that the Committee would make its Report available to the House and to the public after its deliberations, but we heard nothing more on that.”

In their petition, Dr Duffuor and Mr Amoabeng are asking the Committee to “Investigate the conduct of the Bank of Ghana and the Ghana Stock Exchange for the revocation of UT Bank’s licence and delisting the bank without due regard to the rules of Administrative Justice guaranteed under Article 23 of the 1992 Constitution.

“Direct the restoration of the banking licence of UT Bank Limited by the Bank of Ghana and the remedying of the harms done to the shareholders’ property rights as a result of the conduct of the Bank of Ghana.”

They also said “Investigate the conduct of the Bank of Ghana in the takeover, the appointment of an Official Administrator of uniBank Ghana Limited and the circumstances surrounding the revocation of the banking licence of uniBank Ghana Limited;

“Direct the restoration of the banking licence of uniBank Ghana Limited by the Bank of Ghana and the remedying of the harms done the shareholders’ property rights as a result of the conduct of the Bank of Ghana.”

The Bank of Ghana (BoG) in August 2018 announced that it has revoked the licences of five banks and put them together as Consolidated Bank Ghana Limited. The banks were uniBank Ghana Limited, The Royal Bank Limited, Beige Bank Limited, Sovereign Bank Limited, and Construction Bank Limited and appointed Nii Amanor Dodoo of KPMG as the Receiver for the five banks.

Meanwhile, the BoG has said the decision by Duffuor and Mr Amoabeng to resort to parliament over the collapse of their banks was wrong.

The central bank says Parliament is not one of the mechanisms available to aggrieved persons within the laws to use.

Therefore, the regulator said, it cannot honour an invitation by Parliament to assist in the investigation after the two personalities petitioned the lawmaking body to probe the circumstances that resulted in the collapse of their banks.

“The BSDTI Act provides how persons who are aggrieved with such decisions may seek redress for their grievances, and the prescribed resolution mechanisms do not include recourse to Parliament,” the BoG said through its lawyers, Bentsi-Enchill Letsa and Ankomah.