A communiqué released on Thursday by workers of Merchant Bank Ghana Limited have further muddied the real situation about controversies surrounding the reported sale of the Bank to South African First Rand Bank.

“Following painstaking processes embarked upon by the Bank and its shareholders which include staff of the Bank acting through the Trustees of our Permanent Staff Provident Fund, an agreement was reached to welcome the participation of First Rand as a strategic investor. After reviewing the facts and figures behind the name First Rand and the dynamics of the transaction, we are fully convinced that our shareholders took the right decision in approving the transaction,” stated the communiqué from over 350 workers of the bank.

Per the communiqué, the deal has apparently been sealed, yet several officials and spokespersons of the ruling National Democratic Congress (NDC) including President John Mahama have strongly denied that the deal with First Rand has been closed.

Felix Ofosu Kwakye, the loquacious communications aide of government, Abdul Malik Kweku Baako, Managing Editor of the New Crusading Guide and a close confidant of President John Dramani Mahama and several others stated that even though there were talks between the Ghanaian bank and the South African banking giant, the management and the Board of the bank had not agreed to the sale.

The opposition New Patriotic Party (NPP) blew the whistle on the transaction, saying it was convinced the NDC government and majority shareholder of Merchant Bank, the Social Security and National Investment Trust (SSNIT) were clandestinely pushing for a $91 million takeover of the local bank.

Indeed in an August 22, 2012 article of global newswire, Reuters reported that First Rand had already paid $91million for majority stake in Merchant Bank.

“South Africa’s FirstRand was paying 746.2 million rand ($91m) for a 75 percent stake in Merchant Bank Ghana to expand its presence on the continent. The deal has the approval of Ghanaian shareholders, mainly the Government of Ghana.”

According to Reuters, “Merchant Bank, one of the very few remaining Ghanaian banks, was collapsing, reeling under some GHC330million of loans, much of which have been turned into bad debt.”

The workers of the bank confirmed that the precarious position of the bank was due to huge bad loans of the bank.

“We are fully aware of the challenges the Bank has been grappling with regarding its non-performing loan book over the last few years and the untiring efforts Management, staff and the Board of Directors have put in place to address same. These issues with the non-performing loans have led to a dire need for recapitalization if the bank is to regain its pride of place,” they stated.

According to the communiqué, the quest for recapitalization endeared Merchant bank to First Rand Bank.

The workers were full of glowing praises for the strong financial backbone of First Rand Bank which would be used to rescue the dying Merchant Bank.

The Mahama Influence

The NPP is convinced the predicament of the bank was necessitated by poor corporate governance of the management and possible official influence from the President.

According to reports, in 2007, the Bank’s Managing Director, Blaise Menkwah curiously approved a loan of over GHC57million to Engineers and Planners (E&P), the company of Ibrahim Mahama, junior brother of President John Mahama with no security.

The huge credit (19.2 per cent of Merchant Banks’ total liability) which was scheduled for maturity in three years (2010) was not secured.

The loan was reportedly left un-serviced by E&P since the NDC assumed power in 2009.

The NPP says it smells a rat because in the transaction with the South African bank, the reconditions was for some loans in the books of Merchant bank to be ring-fenced by the shareholders. As part of the excluded loans on MBG’s balance sheet is the GHC57 million extended to E&P.

“Top on the list of the companies whose debts have been forced down the throat of workers’ pension, owing 19.1% or GHC57.2m, is Engineers & Planners Company Limited, a business owned by the junior brother of President John Dramani Mahama,” said the NPP’s Deputy Communications Director, Yaw Buaben-Asamoah in a statement released last week. 

“When your company falls into bad debt and cannot service its loans and the pension fund of the workers of Ghana are forced by the President, who happens to be your brother, for that pension fund to ring fence and take on your debt, then we have to ask some serious questions,” the NPP said.

SSNIT, the pension fund, owns 98 per cent of Merchant Bank, with SIC Life and the staff of the bank owning the remaining 2 per cent.

According to Anthony Karbo, the National Youth organizer of the NPP, the NDC was trying to conceal something fishy about the Merchant Bank takeover, hence the conflicting information about the sale of the bank.