A Professor of Financial Economics at the University of Ghana Business School has said the Attorney General’s recent willingness to reconsider prosecuting Dr. Kwabena Duffuor and others, if 60% of the alleged financial losses are recovered, strongly suggests that the government itself played a part in the collapse of the affected banks.
According to Prof. Lord Mensah, this move indicates a shift in government strategy, implicitly admitting its involvement in the events that led to the banking sector clean-up.
The professor observed that the Attorney General’s change in approach reflects a broader recognition of state complicity in the matter, especially as the government now appears more inclined toward financial recovery than pursuing legal action.
He stressed that the state is choosing pragmatism over prosecution, aiming to recover a portion of the losses instead of potentially losing everything through prolonged litigation.
He further explained that financial institutions and government obligations are deeply interlinked. When a bank collapses and the government is among its debtors, it becomes necessary for the state to consider its own liabilities and offset them against any assets that can be reclaimed.
This, he argued, is a more logical and constructive approach than aggressively shutting down banks and initiating prosecutions, which may not resolve the underlying issues.
Touching on global best practices, Prof. Mensah noted that determining whether a troubled bank is facing a liquidity or solvency crisis is essential. If the issue is liquidity-related, then initial interventions should involve shareholder funding or identifying potential partners.
Should those efforts fail, the government can step in to provide support, not as a bailout, but in exchange for equity, ensuring that public investment results in temporary ownership with future returns.
He concluded that this strategy serves national interests by preserving employment, protecting household savings, maintaining tax flows to the government, and ultimately supporting the sustainability of the financial ecosystem. This approach, according to him, would have safeguarded more stakeholders and provided a structured pathway for distressed banks to recover and reintegrate into the economy.
