By William
Yaw Owusu
Monday August
13, 2018
Details are emerging about how two of the seven defunct
private banks spent huge amounts of money given to them by the Bank of Ghana
(BoG) as bailout to save them from collapse.
Reports indicate UT Bank and Capital Bank were given
a total of over GH¢1.47 billion of the taxpayer’s money.
Investigations by the Central Bank revealed that the
handlers of the two private entities engaged in ‘willful deceit.’
Apart from UT and Capital Bank, which were taken
over by the BoG and given to the GCB Bank per Section 123 of the Banks and
Specialised Deposit-Taking Institutions (SDIs) Act, 2016 (Act 930) August last
year, Beige Capital, Sovereign Bank, Construction Bank, UniBank and Royal Bank
have recently been taken over and merged into Consolidated Bank Ghana Limited.
Critics are calling for the arrest of the directors
of the banks, as well as the BoG officials, who supervised the plundering of
the cash. The current management of the Central Bank is fixing the mess it
inherited from the administrations of Henry Kofi Wampah and Abdul Nashiru
Issahaku.
Tongues are wagging at the level of rot in the banking
sector with public confidence at an all-time low.
Bailout
Cash
UT is said to have been given over GH¢860 million by
the BoG while Capital Bank got GH¢610 million, all in the form of liquidity
support to enable them to improve the fortunes of the financial institutions but
the directors blew all the money, putting customers’ deposits and investments
in danger.
It has emerged that as at 2015 financial year,
Capital Bank had depleted its capital base to the point where it could no
longer meet the request of depositors, and that compelled the Central Bank to provide
the bailout.
First
Class Tickets
Bizarrely, the BoG’s investigative report revealed that
when the Capital Bank Board of Directors met to decide how to use the bailout,
they allegedly gave GH¢27 million to a member to promote the business and GH¢2.5
million was dished out for rebranding.
Capital Bank was established by William Ato Essien
with Mensa Otabil as its Board Chairman.
Fees and benefits of the Board of Directors were reportedly
increased at the same meeting, and two first and business class air tickets were
given to each member at the same meeting from the BoG’s money.
Fronting
For Companies
Reports say GH¢130 million was given to another
company that fronted for two other companies.
According to the report, the GH¢130 million came back to the BoG through the establishment
of Sovereign Bank.
In effect, part of the money given to Capital Bank as
bailout was rather diverted to start a new bank altogether.
Twelve months after Capital Bank received GH¢610
million from BoG, it collapsed, but interestingly, this was at a time when the
threshold for operating a bank was GH¢120 million.
The stories about how the local banks collapsed have
set tongues wagging, with the majority of the public calling for prosecutions
and punitive sanctions against the errant bank owners and their board of
directors.
Experts have said their actions breached the
provision which prohibits placement of forex with a savings and loans company
and also breached the provision which says Savings and Loans cannot give forex
loans.
BoG
Report
A BoG Examination and Inspection Report by Boulders
and Advisors Limited in 2014, for instance, found that there was a significant
amount of inter-group lending within UT and Capital Bank.
This was after a review of two forms of related
party transactions; first was loans granted to individuals and companies
related to the bank and loans granted to companies connected to one another by
ownership and directorship but unrelated to the bank group.
“Capital Bank was a web of transactions involving
insider parties, that is, directors, shareholders and their related companies,”
the report said, adding “the initial transactions imply willful deceit at the
conversion stage from a saving and loan to a full Tier 1 banking license. At
this stage, the shareholders appear to re-engineer capital amounting to GH¢56
million through a suspect placement to local financial institutions.”
“On March 30, 2016, the CEO of the Capital Bank
wrote to the Head of Banking Supervision requesting that a non-existent
investment of GH¢482.4 million, which included the GH¢56 million, should be
converted into a five-year debt.
“The BSD, in a letter dated June 3, 2016 referenced
BSD/52/2016 to the Managing Director of Capital Bank that the BoG granted
approval in principle for the non-existent investment of GH¢482.4 million to be
structured in a loan facility to be paid by the following shareholders over a
period not to exceed five years: Ato Essien, Oheneba Osei Akoto, Stephen
Enchill and Kingsley Atta Ghansah. This action granted by the BoG could have
been avoided in 2015 when the Risk Assessment report indicated that no capital
had been introduced into the bank for the Class 1 Licence.”
UT
Bank
In the case of UT Bank, the report said two payments
were made to the former CEO and Director, Prince Kofi Amoabeng from a loan defaulting
entity, Kofi Jobs Limited, adding that the loans totaling GH¢5 million were
never disclosed to the Board of Directors of the bank.
Kofi Jobs Limited is allegedly linked to Ibrahim
Mahama’s Engineers and Planners. Some of the contracts won by Kofi Jobs under previous
Mahama administration were executed with Engineers and Planners’ equipment.
"There was a significant amount of inter-group
lending, involving other subsidiaries of the holding company, UT Holdings
(¢71.6 and $14.3 million),” it added.
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