It has emerged at the High Court in Accra that the Gifty Afenye Dadzie’s led First Africa Servings and Loans (FASL) Company had been demanding for Capital injection from Beige Group despite Bank of Ghana’s notification to them that Beige Bank was under investigation.

Lawyers of Michael Nyineku led by Thaddeus Sory contend that, the former Managing Director (MD) of the FASL, Mrs Dadzie per a letter in 2018 had requested the Beige Bank to inject funds into the bank despite the BoG’s alert.

It’s also came up in court that, the First Africa Group, the mother company of FASL had also represented to the Beige Group, mother company of Beige Bank that Bank of Ghana (BoG) had approved processes leading to its takeover of FASL.

The Prosecution had presented former General Manager (GM) of the FASL Kwabena Osei Bonsu (Rtrd) as its fourth Witness and was put to scrutiny over claims that he did not know Beige had acquired 90% shares of FASL.

Michael Nyineku, the founder and Chief Executive Officer of the defunct bank, has been accused of allegedly siphoning customers funds and has been charged for stealing GH¢2.1 billion of depositors' money from the bank.

He has pleaded not guilty to 43 charges including stealing, fraudulent breach of trust and money laundering and has been granted bail.

Under Cross-Examination from defense lawyers led by Mr Sory, counsel said, the Beige Group had been assured by the FASL of the BoG approvals.

Counsel also said, when the Beige Group realized the FASL was not coming out clear, it expressed concerns that it was not going to make any further Capital injection until it has a positive response for BoG’s approvals.

“In the last sentence, it is clearly stated that the First Africa Group (FAG) had represented to the Beige Group that all Bank of Ghana approvals had been obtained,” Counsel asked of the Witness.
 
In his response however, the Witness said, “So far as I know, this agreement was never approved by Bank of Ghana to enable Beige Group to own shares in FASL and like I said, this can be cross-checked by the Bank of Ghana and the Receiver as well because at the point of revocation of the license of FASL, the only shareholder was First Africa Group (FAG).”

The Financial and Economic Court 2 presided over by Justice Afia Serwah Asare-Botwe, a Justice of the Court of Appeal sitting as an additional High Court judge has adjourned the case to July 8, for prosecution to call its next witness.

Below ate excerpt Ms of the cross-examination of Kwabena Osei-Bonsu by lawyer Thaddeus Sory

 
Q: I am further putting it to you that all times material, the First Africa Group including FASL kept assuring the Beige Group when they discovered that you had not completed the process of the Bank of Ghana’s approval and that Bank of Ghana will give the approval.
 
A: I am not aware of this. I was the General Manager of FASL but I am not aware of any such thing. Indeed, FASL kept following up with Bank of Ghana and approval was never given, for whatever reason, we did not know until Beige was dissolved.
 
Q: Since you testified in this court that the Bank of Ghana had assured you that the Beige Bank was under investigation, why did the First Africa Group not return the 9 Million that was given to them for the shares?
 
A: I cannot answer that because I am not in the capacity to answer that.
 
Q: Take a look at the second paragraph Exhibit 21, have you seen it?
 
A: Yes, I have seen it.
 
Q: In that paragraph, FASL was requesting a capital injection of 6.5 Million Ghana Cedis whiles waiting for Bank of Ghana’s approval, why did FASL ask for that amount if it was told that the Beige Bank was under investigation?
 
A: Bank of Ghana did not tell us they were investigating Beige Bank when we presented the documents regarding purchase of shares for their consideration and approval. In fact, we did a lot of follow-ups for the authorization until the final stage, just about the time Beige Bank was consolidated, that was when we were told that when the investigation is done, we will hear from them but we never heard from Bank of Ghana until the revocation of the license of Beige Bank.
 
Q: I am putting it to you that, at every point in time, the Beige Group expressed reservations but FASL kept assuring the Beige Group that the Bank of Ghana approvals would be obtained so they should inject the capital.
 
A: I do not know the assurances you are referring to but the fact is that, we put in application at Bank of Ghana and we were positive waiting for approval until at the tail end, we were told to wait for the investigations to be concluded.
 
Q: When you take a look at Exhibit 21 further, you would see that between paragraphs 1 and 2, there is a clear distinction between the 9 Million payment for shares and 6.5 Million Ghana Cedis requested as capital injection for FASL.
 
A: I do not get the import of this question.
 
Q: If you look at paragraph 1 of Exhibit 21, it talks about payments for shares whereas paragraph 2 talks about recapitalization of FASL in the sum of 6.5 Million Ghana Cedis, is that correct?
 
A: That is not correct and I want to explain. The whole transaction of purchasing shares in the company was to recapitalize the company. Indeed, if you look at the heading, it is clear that the whole transaction of purchasing shares was to recapitalize the company and as I said, since I do not know the details in the Shareholders Agreement and I do not know the total amount Beige Group was supposed to pay, I am not in the position to differentiate or link the two.
 
Q: In Exhibit 22, you describe yourself as an Accountant, is that correct?
 
A: My statement, I stated as the General Manager of First Africa Savings and Loans (FASL).
 
Q: There is a part that indicates occupation, do you have General Manager of FASL there?
 
A: Indeed, my first sentence states that I was the General Manager of FASL so that is my position.
 
Q: Have you seen the circle portion on the document?
 
A: Yes my lady.
 
Q: Can you read that to the court.
 
A: Witness reads to the hearing of the court.
 
Q: And what is there?
 
A: It is stated there, Accountant but that that does not mean I was not the General Manager of FASL.
 
Q: In basic accounting, when somebody buys shares from another shareholder of a company, the money is not paid to the company but it is paid to the shareholder from whom the shares were purchased, is that not so?
 
A: If the amount is paid to the shareholder, the intention is to put the money in the subsidiary company. Here, First Africa Group (FAG) was the shareholder of FASL and therefore if the money is paid to the subsidiary company, there is nothing wrong with that.
 
 Q: I am putting it to you that, if you look clearly at Exhibit 22, it is very clear between the distinction of payments for shares and the recapitalization of FASL.

A: The whole transaction is actually to recapitalize the company by purchasing shares so by purchasing shares, you recapitalize the company.

Q: Take a look at this document, the document you are holding is a letter from the Beige Group responding to Exhibit 21, is that correct?
A: Yes my lady.

Mr. Sory: My lady I want to tender the letter through the witness.

By Court: Any objection?

Mrs. Ohene-Appiah: My lady we have no objection.

BY COURT
 
The letter dated 4th April, 2018 is admitted without objection as  Exhibit 23.

Q: Take a look at this document, the letter you have is on the letterhead of FASL, is that correct?

A: Yes my lady.

Q: Signed by the Managing Director of FASL, Mrs. Gifty-Afenyi-Dadzie, is that correct?

A: Yes my lady

Mr. Sory: My lady I want to tender the document through the witness.

By Court: Any objection

Mrs. Ohene-Appiah: My lady we have no objection.

BY COURT
 
The document dated 25th day of May, 2018 is admitted without objection as Exhibit 24.
 
Q: Take a look at this document, it is a letter written on the letterhead of the Beige Group, is that correct?
 
A: Yes my lady.
 
Q: And it is written to FASL, is that correct?
A: Yes my lady.
 
Q: This letter you have in your hand responds to Exhibit 24 which is the letter dated 25th May, 2018, is that correct?
 
A: Yes my lady.

Mr. Sory: My lady I want to tender the document through the witness.

By Court: Any objection

Mrs. Ohene-Appiah: My lady we have no objection.
 
 BY COURT
 
The letter dated 31st May, 2018 is admitted without objection as Exhibit 25.
 
Q: In all of these letters that have been tendered through you from Exhibit 21, 23 to 25, FASL kept making a demand on the Beige Group to provide capital injection into FASL, it is contained in all those exhibits, I am putting that to you.

A: They were correspondences between FASL and Beige Group. On the transaction (i.e., the recapitalization of the purchase of shares

Q: The question in all of these letters that have been tendered through you from Exhibit 21, 23 to 25, FASL kept making a demand on the Beige Group to provide capital injection into FASL, it is contained in all those exhibits, I am putting that to you.

A: Yes my lady.

Q: The request to inject funds into FASL was not made by First Africa Group (FAG).

A: Yes my lady.
 
 Q: In Exhibits 21, 23 to 25, the Beige Group kept saying that they will provide additional funds for recapitalization only if they saw their way clear regarding FASL’s assurances on Bank of Ghana’s approvals.

A: I do not see any assurances in these correspondences.

Q: Take a look at Exhibit 23, if you read the third paragraph carefully, what it says is that, the understanding was that the Beige Group will introduce additional funding pending BOG’s approval and that the Beige Group had demonstrated that commitment so far, is that correct?

A: I do not know what initial understanding means here. If it is coming from the purchasing agreement, then I cannot talk to it but FASL had submitted all the relevant documentation to Bank of Ghana for approval which never came.

Q: In the very next paragraph of the same exhibit 23, the Beige Group tells FASL that it does not see what progress FASL has made with regards to approval from Bank of Ghana.

A: That is what the author of this letter is saying but I cannot confirm. So far as I know, there were follow-ups to Bank of Ghana in respect of the approval of this transaction but it never happened.

Q: So in the final paragraph of Exhibit 23, the Beige Group tells FASL that, until it sees clarity on the progress made on the approval from Bank of Ghana, it would not make any further disbursement.

A: That is their position but what I am saying is that, we never had approval from Bank of Ghana and this is the first time I am seeing all these correspondences.

Q: Take a look at Exhibit 24, that is FASL written to Beige Group after it received Exhibit 23.

A: Yes my lady.

Q: In this same letter, although the Beige Group had expressed concerns about the regulatory approvals which FASL had still not procured, FASL was still demanding additional injections, is that correct?

A: As I said, these correspondences related to same transaction which I have explained that, FASL was also in close contact with Bank of Ghana for the approval and at the same time, the company was running and the Bank of Ghana was also reviewing the financial statements of the company so even though FASL was following up from Bank of Ghana, the financial position of the company required that additional funds were needed to enable the company run whiles waiting for the approval from Bank of Ghana.

Q: From your last answer, it means that there was always a representation from FASL to the Beige Group that the approval from the Bank of Ghana was forthcoming.

A: No my lady. FASL was not in the position to determine whether the approval will be given or not because Bank of Ghana who are the regulators told us they were reviewing the documents and told us at the last stage that Beige was under investigation and soon after that, Beige Bank was collapsed into Consolidated Bank of Ghana. Indeed, the collapse of the bank was an indication that, something was being investigated about Beige and it confirms what Bank of Ghana told us that, Beige was being investigated and soon after that, the collapse came.

Q: Did the Beige Bank buy shares from FASL?

A: Beige Bank did not buy shares from FASL. It was Beige Group who intended to buy shares in FASL and Beige Bank is owned by Beige Group. Again, the main bank account of FASL was with Beige Bank.  
 
 Q: I am putting it to you that investigations on the Beige Bank of BOG had nothing to do with beige Group.

A: That is what Bank of Ghana told us and in fact, if Beige Bank is being investigated, and Beige Group is the shareholder, and Beige Group comes to buy shares in FASL, there is a relationship so that is how come Bank of Ghana warned us.


Q: I am finally putting it to you that, as an accountant, you know that the Bank of Ghana does not regulate Beige Group.

A: Even though Bank of Ghana does not regulate Beige Group, since Beige Bank is regulated by Bank of Ghana, the activities of Beige Group will come into play when Bank of Ghana is investigating Beige Bank.  The activities of Beige Group will be considered before a decision is taken. In fact, when Bank of Ghana Supervision Department visits any bank for its review, the activities of the Bank’s shareholders, it would be looked into because they are the owners of the bank so it has direct serious link with Beige Group.

Q: As General Manager for FASL, did the Bank of Ghana ever tell the FASL that it had made any adverse findings against the Beige Group.

A: No my lady, they did not tell us. All that they said was that, the Beige Bank was under investigation.

Source: Ghana/Starrfm.com.gh/Murtala Inusah