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Business News of Wednesday, 22 August 2018

Source: citinewsroom.com

Inusah Fuseini questions legality of Consolidated Bank

A Member of Parliament’s Constitutional, Legal and Parliamentary Affairs Committee, Inusah Fuseini, has questioned the legality of the newly established Consolidated Bank.

According to him, the Bank of Ghana failed to notify Parliament for approval.

The Consolidated Bank Ghana was established after the BoG merged five ailing local banks namely, Sovereign, Royal, Construction, Beige and uniBank. Speaking on Citi TV’s Breakfast Daily Show,the Tamale Central Legislator however asked government to come clean on the status of the newly established bank.

“Is it an act of Parliament? Can the Bank of Ghana just set up a bank without Parliament establishing same? Is it a public office?. Is it a financial institution? Is it a public limited liability company?

“There are many questions that we need to look at. The Bank of Ghana has stepped in, but while they have stepped in and we commend them for that, we must also do an introspection.”

The Bank of Ghana a few weeks ago announced the consolidation of five local banks into a new entity called the Consolidated Bank Ghana Limited, which is 100 percent state-owned.

The banks are UniBank, Beige Bank, The Construction bank, The Royal Bank, and Sovereign Bank.

The decision to collapse all the banks were primarily because they had all become highly insolvent as a result of various reasons including poor corporate governance.

A recent investigative report further entrenched the sentiment that the directors and boards of these banks were guilty of gross mismanagement.

The BoG’s report noted that Capital Bank misused significant amount of support from the Bank of Ghana when it was struggling.

Among the flagged transactions were GHc 27.5 million used for business promotion and handled by a board member; transfers to IFS amounting to GHc 23.9 million, transfers to Nordea Capital amounting to GHc 65 million, and transfers to All-Time Capital amounting to GHc 130 million.

Part of this amount is believed to have been used to set up Sovereign Bank, which also collapsed.

On the UT Bank side of things, payments were made to former Chief Executive Officer and Director Mr. P.K Amoabeng from a loan defaulting entity, Kofi Jobs Limited.

The loans which amounted to GHC 5m were never disclosed to the Board of the U.T Bank.

The report also revealed that there was a significant amount of inter-group lending involving other subsidiaries of the holding company, UT Holdings, while connected party loans were made to some companies.

In a bid to tackle the crisis in the banking sector, the Finance Committee of Parliament has said it will soon hold hearings to probe the matter further.