Dr Ernest Addison, BoG Governor

Governor of the Bank of Ghana Dr. Ernest Addison has asked Parliament to allow the law to settle matters in the ongoing legal tussle regarding the revocation of licences of some financial institutions in the country.

Owners of defunct UniBank and UT Bank, Dr Kwabena Duffuor and Prince Kofi Amoabeng respectively have petitioned Parliament, requesting the legislature to among others, order the Central Bank to restore their banking licences to them.

The two banks were among some nine banks whose licences were revoked by the Central Bank for violating banking regulations and being insolvent.

BoG Governor Dr Addison said running to Parliament to seek redress for the revocation of an institution’s licence is not one of the processes laid down in law.

Government has so far commenced criminal proceedings against some shareholders of the financial institutions whose licences were revoked, others have also dragged the central bank to court to seek redress.

Speaking at the Ghana Chamber of Commerce and Industries’ Business Forum held on Wednesday, Dr Addison reiterated an earlier response to Parliament that legal processes should be allowed to take their course.

“Running to Parliament to seek redress for the revocation of an institution’s license is not one of the processes laid down under the law for those who feel aggrieved by a license revocation by the Bank of Ghana. There are already a number of actions filed in court and at arbitration by the same persons who run to Parliament for cover-up, and the Bank of Ghana’s simple response to Parliament is respectfully to allow the pending legal processes to run their course.

“Indeed, sometime in September 2018, the 7th Parliament undertook a formal inquiry into the financial sector clean-up, the key factors that led to it and the manner in which it was carried out.  Among other things, we were to appear before it and to answer specific questions aimed at assisting the committee to understand the events surrounding the clean-up exercise. The Bank of Ghana cooperated fully with the committee and provided all the necessary information to assist its members to reach their own conclusions,” Dr Addison stated.

He explained that the central bank had hoped the committee would have made available its report to Parliament and the public after deliberations, but nothing was heard.

Dr Addison entreated Ghanaians and Parliament to take a serious view at the GH¢19 billion used to settle depositors whose funds had been locked up in the failed banks and Specialised Deposit-taking Institutions (SDIs).

“We understand Parliament’s continued interest in the clean-up exercise, especially given the public funds that were used to settle depositors’ claims in order to promote the stability of our financial system. While the legal processes in court and at arbitration run their course, we would respectfully ask that Parliament and indeed all Ghanaians to take a serious view of the GH¢19.0 billion government had to provide out of taxpayers’ money to settle claims of depositors following the mismanagement and siphoning of several billions of Ghana cedis from the defunct institutions by their shareholders.

“We all need to lend our support to the Receivers to help retrieve these amounts of money and reallocate them to productive uses to build our economy forward, particularly in the midst of the pandemic”.

Licences of 386 FIs revoked

The BoG in May 2019 revoked the licences of 386 insolvent microfinance and microcredit companies.

This included 192 microfinance companies having their licenses revoked with another 155 insolvent companies that have ceased operations also suffering the same fate.

The Central Bank also revoked the licences of 29 insolvent microcredit companies.

BoG explained that regarding the microfinance companies, it took the action pursuant to section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

This provision mandates the BoG to revoke the licence of a bank or Specialised Deposit-taking Institution (SDI) where the Central Ghana determines that the institution is insolvent or is likely to become insolvent within the next 60 days.

Consequently, the BoG appointed Mr Eric Nipah as Receiver for the specified institutions in line with section 123 (2) of Act 930.

“The revocation of the licences of these institutions is to get rid of insolvent and dormant institutions that have no reasonable prospects of rehabilitation and have denied depositors access to their deposits, thereby constituting a threat to the stability of the financial system.

“By the revocation of these licences, the Bank of Ghana seeks to protect the stability of the financial system and to protect affected depositors,” the Central Bank explained in a statement.

It added that in order to salvage depositors’ funds, government had made funds available to enable the Receiver to pay depositors after their claims are validated. “In line with the hierarchy of creditor claims set out under Act 930, other creditors of the failed institutions will be settled by the Receiver upon validation of their claims and to the extent that the Receiver is able to realise value from the remaining assets of these institutions,” it said.