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The prosecution yesterday called its first witness in the trial of the founder and Chief Executive Officer (CEO) of defunct Capital Bank, Ato Essien, and three others who were put before an Accra High Court over their alleged involvement in the misappropriation of funds leading to the collapse of the private bank.
In his evidence, the witness, Vish Ashiagbor, a Director at Pricewaterhouse Coopers (PwC), an auditing firm, told the court about some “suspicious transactions” initiated by the accused persons in the aftermath of a GH¢620 million received by Capital Bank as liquidity support from the Bank of Ghana (BoG).
The former Managing Director of the defunct bank, Fitzgerald Odonkor, together with Tetteh Nettey, a former Managing Director of MC Management Service owned by Mr. Essien, as well as a businesswoman, Kate Quartye-Papafio, are before the court charged with 26 counts of conspiracy, stealing and money laundering.
The four are alleged to have misappropriated a total of GH¢620 million liquidity support given to the bank by the central bank to enable it to service its maturing debt.
The accused persons, according to the prosecution, opened various bank accounts with Capital Bank through which the GH¢675 million BoG liquidity support was transferred, while others were carried in jute bags to Ato Essien.
Mr. Ashiagbor, together with Eric Nana Nipah, who are the receivers of the defunct bank, told the court that in the course of their investigations, they found that out of the GH¢620 million liquidity support Capital Bank received from BoG, approximately GH¢27.5 million was paid to Ato Essien to be used as payment for ‘business promotion’.
The court also heard how some GH¢120 million out of the liquidity support was transferred to All Time Capital Limited who were acting as arrangers of commercial payment, but the money was later used for the establishment of Sovereign Bank.
Mr. Ashiagbor also told the court that another ‘suspicious’ transaction discovered during their investigations was the ‘rediscounting’ of invoices for three companies which rendered services to the Department of Urban Roads.
He said these companies made arrangements with Capital Bank Ghana Limited to discount their invoices and the bank paid a total of GH¢105 million to the three companies.
Again, he said they noted during their investigations that GH¢70 million was transferred to the account of Kate Quartye-Papafio at Cal Bank, and she also transferred the funds back to Capital Bank to be used ostensibly ‘for the purchase of shares in Capital Bank.’
Mr. Ashiagbor also told the court that in August 2017, after Capital Bank had been placed in receivership, Kate Quartye-Papafio went to GCB Bank Ghana Limited in an attempt to withdraw the funds, but she was prevented from doing so.
He said on September 18, 2017, Mrs. Quartye-Papafio wrote to the joint receivers of Capital Bank requesting that the said funds should be released to her.
Mr. Ashiagbor said he then wrote to her on October 19, 2017 requesting her to complete a proof of debt form and to submit her claim for consideration subject to further investigations that they were undertaking on the transactions that formed the basis of the claim.
He said investigations revealed that the transaction was part of the ‘financial re-engineering scheme’ adopted by Capital Bank to give the appearance of raising new capital.
Thaddeus Sory, counsel for Ato Essien, began his cross-examination of the witness.
Mr. Sory suggested that the PwC report was prepared contrary to the requirements of the Act 930 as Nana Ashiagbor and Eric Nana Nipah who are both directors of the auditing firm and at the same time receivers of the defunct bank cannot be the same to carry out the investigations, as it amounted to conflict of interest.
The witness disagreed and stated that the Act permitted the receiver to engage the services of other professionals in the course of their work and “so we as joint receivers used the services of PwC to produce this report.”
“Did you inform the BoG in your capacity as joint receivers that you intended to appoint the very institutions which you are directors to carry out functions relating to your joint receivership?”counsel queried.
The witness answered in the affirmative and Mr. Sory asked whether there was a written document to that effect and if the witness could provide it to the court and Mr. Ashiagbor said he could do that.
The case was adjourned to July 16, 2020 for continuation.
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