Merchant Bank Saga: MD grabs ¢3bn ex-gratia

The immediate past Managing Director (MD) of troubled Merchant Bank, Joseph Nii Budu Tetteh, was given a whopping GH¢275, 400.00 (approximately ¢2.75billion in old currency) as his end of service benefit (ESB), also known as ex-gratia.

Information gathered by DAILY GUIDE from reliable sources indicates that the state-owned bank wired the mouth-watering ex-gratia into Mr. Tetteh’s account on December 4, 2013.

Interestingly, exactly five days after the amount was paid into his account, he quickly cleared all the ex-gratia from his account, DAILY GUIDE can confirm, ahead of the takeover by Fortiz, the new owners.

The new owners have appointed a new MD, Nilla Selormey from Ecobank, to take over from Mr Tetteh.

Merchant Bank has been making losses in the recent past, with the company’s account allegedly in the red under Mr Tetteh’s administration, raising questions about the rationale behind the payments of huge ESB to him.

The icing on this string of lip-smacking trappings was a customized Mercedes Benz saloon car worth over $100,000 on the open market, sold to him for less than $10,000. He was made to pay GH¢19,195 for the luxurious Benz.

In total, an amount of more than GH¢455,000 including Merbank’s subsidy on the luxurious Mercedez Benz was spent on Mr. Tetteh for his retirement.

This amount, given to the MD, who is currently on leave prior to his retirement, has raised eyebrows, especially because it is coming from a bank caught in dire financial straits, warranting its controversial sale to Fortiz Private Equity Fund.

Phone Call

Mr Tetteh refused to return calls made to him by this paper.

When DAILY GUIDE put a call through to Mr. Tetteh’s telephone on Friday, someone claiming to be his brother picked the call, saying Mr. Tetteh had stepped out.

Upon further prompting on how to get to the MD, the person said he had travelled to Koforidua leaving his phone behind.

As at press time last night, Mr Tetteh had not returned the call to give his side of the story.

Clementia Djameh, the Corporate Affairs Manager of Merbank, in a telephone conversation with DAILY GUIDE, could not ‘confirm or deny’ the fat payments.

According to her, she was not aware of the package given to the outgoing MD.

“I’m not aware of what he [Mr. Tetteh] is supposed to get on his retirement, so I cannot confirm or deny it.”

She however conceded that there were a lot of speculations making the rounds about the controversial retirement package.

Describing the MD as a ‘distinguished gentleman’, she said he duly applied for his appointment and whatever he was getting might be part of his conditions of employment with Merbank.

Distressed Bank

Mr. Tetteh, who served as the MD of Merbank between 2010 and 2013, oversaw the steady liquidity and profitability decline of the bank, which was in 2007 adjudged the Best Bank at the prestigious Ghana Banking Awards.

That year, Merbank bagged awards in the Best Bank in Advisory Services, Short-term Loan Financing, Long-term Financing, Competitive Banking, and the Retail Bank of the Year. It was also the first runner-up in IT and Electronic Banking and the second runner-up in Customer Care.

That year, the bank was credited with making profitable gains, remaining in the tier two categories in the banking survey report by PricewaterhouseCoopers.

Since then, there had been a steady plummeting of the bank’s fortunes, finally completely deteriorating under the stewardship of Nii-Budu Tetteh.

Mr. Tetteh has been blamed for continuing the legacy of the former sacked MD of Merbank, Blaise Menkwa, to run aground the bank set up predominantly with pension funds of Ghanaian workers.

The downturn of the bank was predicted by the workers union when they asked the outgoing MD to provide them with his strategic plan for the bank, which never came.

The workers leader, Jonas Koranteng-Smart, for his foresight in asking for the strategic plan since they had shares in the entity, was dismissed. Not even a court order to reinstate him was carried out.

The MD attracted criticisms for firing Reverend Koranteng-Smart, the Merbank Local Workers’ Union chairman, for calling for restructuring of the bank to turn around its gloomy prospect.

Virtual Death

Financial experts, who have been baffled by the sudden virtual death of Merbank, blamed it on incompetent management, robbing it of the competitive edge in mobilizing deposits and making profits.

Merbank’s Capital Adequacy Ratio (CAR) and its liquidity had gone completely dry, noted Mawuli Hedo, the lead Financial Analyst for Fortiz Private Equity, new owners of Merbank.

In the BoG regulations, of all total deposits that the banks receive, they must have at least 10 percent of that amount in the vaults of the central bank as CAR, as funds that it could fall on when in distress. “Merchant Bank’s situation was not like that…I will say it was not good, that was the problem,” Mr. Hedo told journalists recently in Accra.

“We need a dramatic shift [in the way the bank is being run],” Mr. Hedo admitted.

Engineers And Planners

Part of Merbank’s woes was also caused by a huge bad debt portfolio, particularly from Engineers and Planners (E&P), an equipment company owned by Ibrahim Mahama, the younger brother of President John Dramani Mahama.

E&P owes the bank, formed with pension funds of Ghanaian workers, an amount estimated at over GH¢60million since 2007. It has refused to repay the debt which forms 30 percent of the bank’s bad debt portfolio.

Ibrahim pledged to pay $28million last Friday. It is not clear if he paid to allow the bank a breather.

Currently, Merbank is being forced sell to Fortiz for GH¢90 million given its non-performance. The money goes back to Fortiz to use to run the entity.

Several bidders have been turned away by the majority shareholders -Social Security and National Insurance Trust (SSNIT) – preferring Fortiz which has been criticized for not possessing the track record, experience and financial muscle to buy over such a giant entity.

The sale has attracted intense controversy and led to a lawsuit filed by the Centre for Freedom and Accuracy (CFA), an advocacy group that believes that the country is not getting value for money from the transaction, especially when the pension manager, SSNIT, is not getting anything from the deal.

Andrew Awuni, the Executive Director of CFA, described the deal as fraudulent, dragging 13 persons to an Accra Commercial High Court, including SSNIT, which he believes deliberately made it too easy for Fortiz to take over its interest in Merchant Bank in what Awuni described as insider trading.

But Fortiz said it was a smart move and that it was the essence of equity fund.

Fortiz is said to have already moved in a transitional team of executive staff who would be running the bank when the deal is finalized. Ms. Dzameh would not confirm this either, saying the case was still pending in court, hence she would not want to make any prejudicial statement.

Appeal

On Wednesday, the commercial division of an Accra High Court presided over by Justice Sophia R. Bernasko Essah upheld the application by Tony Lithur, lawyer for Fortiz and Ibrahim Mahama, praying the court to dismiss Mr Awuni’s suit.

The court ruled that only a member of the Board of Trustees of SSNIT has the right to file a lawsuit against the pension fund. The ruling has sparked intense criticism.

But Lawyers for Mr. Awuni have filed an appeal seeking to overturn Wednesday’s ruling.

Indeed, checks at the High Court registry indicates that the promised appeal was filed after the court proceedings ended at about 2.35pm. According to Mr. Faibile Jnr, his client was unfazed d by the court ruling and will pursue the matter to the highest judicial level.