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General News of Saturday, 18 August 2018

Source: Myjoyonline.com

Stop stampeding BoG to jail bank directors - Kulendi tells critics

A private legal practitioner has condemned what he says is the indecent haste with which some Ghanaians are crucifying directors of failed banks even without the benefit of the full facts.

Yonny Kulendi insists the attempts by Ghanaians to “stampede decision makers” into jailing people may invariably end up with “failed outcomes,” as has happened in the past.

On the matter of the failed banks, Kulendi agrees with the government objective of ensuring a “robust well regulated and efficient banking institution” while making the issue of criminality a “lesser objective.”

Speaking on Joy FM’s news analysis programme Newsfile, Saturday, the legal practitioner was however quick to add that in the process of rebuilding the banking sector, persons found guilty of breaches must be made to face the rigors of law.



Background

At least seven banks have gone under over the last 12 months. According to the Bank of Ghana, the regulator, the banks were completely financially distressed, some irredeemably.

UT Bank, Capital Bank had its assets taken over by the Ghana Commercial Bank in August 2017.

In July of 2018, five other banks- Unibank, Beige Capital, Royal Bank, Construction Bank, Sovereign Bank- were collapsed and merged into one Consolidated Ghana bank.

The regulator cited various reasons for the collapse of the banks with some of the directors said to have engaged in acts of criminality.

A Boulders Report on the collapse of Capital and UT Banks made adverse findings on the part of the directors of the two banks.

While it cited Prince Kofi Amoabeng, Board Chair of UT Bank as having taken a whopping amount of ¢5million meant for the servicing of a loan without disclosing it to other Board members, it also accused the CEO of Capital Bank Ato Essien as using ¢80m depositors’ funds as a personal piggy bank.

Both men have challenged the outcome of the financial autopsy report presented in the Boulders Report but many Ghanaians feel the content of the report is sacrosanct.

Both traditional and social media have been flooded with criticisms of the directors and Board Chairmen of the seven banks.

Any attempt by any of the directors to explain or clarify their position has been met with some amount of cynicism.

Pastor Mensa Otabil who was the Board Chair of Capital Bank until its collapse has been the most vilified.

His statement, part of which said his “position was a non-executive role. I was therefore not involved in the day-to-day management and operations of the Bank,” has been met with a flurry of vilification.

Some have called for the jailing of the directors of the banks.

On Newsfile, Joe Jackson of Dalex Finance was highly critical of the directors. He had early expressed worry over why Ghanaians are not angry enough about the banking collapse.

But Yonny Kulendi who was also on the panel said cool heads must prevail.

“You don’t solve the problem by throwing a few people into jail,” he said, arguing when the allegations being thrown around are measured against the rigorous test of the law, it will implode.



Regulatory Failure

For a Bank of Ghana clothed with wide powers, Yonny Kulendi believes the failure in the sector should be put squarely at the doorsteps of the regulator.

He said the business of banking is the single most regulated activity; no activity is more regulated than banking, adding what we have seen “is a massive regulatory failure” by the Bank of Ghana.



Opinions or Facts

According to Kulendi both the Boulders Report and the KPMG reports which have served as the fodder of criticism of the directors of these banks are nothing more than one-sided opinions of professionals without soliciting the inputs of the persons against whom the findings were made.

For instance, he said while the Boulders Report suggests that the shareholder of Capital Bank each took ¢11 million as loans, Kulendi said one of the shareholders who he spoke to swore that he never took even 1 cedi as loan.

He reported that shareholder as saying with the bad debts the bank was engulfed in, as a result of failure by customers to pay loans collected, it was decided that each shareholder must take a portion of the debt as liability on their shares in order to make the books of bank favorable for other investors to invest.

“…If this explanation is true, what is this business about shareholders loans. So if Boulders had spoken to this shareholder, they would have had the benefit of this explanation and so this misleading information that has stoked people to go around shouting and calling for people’s heads [will not arise]” he said.

The content of the Boulder Report will not stand the rigorous test of the law, he suggested.

“People need to step backward and give the people charged with the responsibility, the space to be able to look into these things,” he stated.