HFC Bank, SEC battle rages on

The on-going legal tussle between HFC Bank on one hand and the Republic Bank of Trinidad and Tobago and Ghana’s Securities Exchange Commission (SEC) on the other must be of great interest those who appreciate the importance of the Capital Market to the Country’s economic growth and development.

SEC is the regulator of the capital market and therefore, like Caesar’s wife, must be beyond suspicion. Which is why eye-brows twitched and there was public concern when, immediately after the HFC Bank’s Annual General Meeting, the Managing Director, Mr. Asare Akuffo, in an interview with the Business and Financial Times, reportedly accused SEC of bias in its handling of Republic Bank’s efforts to take over HFC Bank.


The MD specifically made three straight accusations which any concerned observer cannot gloss over: First, that SEC gave Republic Bank the go ahead to effect a mandatory takeover of HFC without any reference to Bank of Ghana, the primary regulator, contrary to SEC’s own rules.


Secondly, that although SEC ate humble pie by belatedly accepting Bank of Ghana’s prime jurisdiction in matters regarding ownership of Banks, it refused to accept cogent reasons advanced by Bank of Ghana to grant a waiver of the mandatory takeover process.


And finally, that SEC in April 2012, granted a waiver of the mandatory takeover process to Abrajj, a foreign Company which had already acquired 57% of another foreign Company, Fan Milk Ghana Limited.


It is even more disturbing that, the Commission, previously chaired by Professor E.V.O Dankwa and made up of a good crop of professionals, could not issue an official response to these serious accusations. Instead, its Director General, Mr Adu Anane-Antwi, got on radio to respond only to the third accusation in a manner which may best be described as rather lame and even deceptive. Said the Director General, “Abrajj acquired Fan Milk’s Holding Company, so ownership of Fan Milk Ghana did not change”. Was he saying that the takeover rules only apply to direct acquisition of shares in a Company listed on the Ghana Stock Exchange?

For those closely watching the drama, the simple question that keeps begging for an answer is why Abrajj would apply for the waiver in the first place if it was not a requirement”? Now HFC Bank has gone to Court accusing the Republic Bank of the serious offence of insider trading among other serious claims. The charge is that, whist Republic Bank was pursuing a mandatory takeover of HFC, which required making the same offer to all shareholders; they were busy buying HFC shares on the side as situated in the court action.


The ruling of His Lordship, Justice George K. Koomson on a motion by Republic Bank to dismiss HFC’s suit has raised a new matter regarding the conduct of SEC vis-à-vis Republic Bank.


In the matter of the purchase of shares which is the subject matter of HFC Bank’s suit, SEC “…is said to have conducted an investigation in the matter without reference to the main actors, HFC Bank and Republic Bank but rather dealt with Stanbic Bank Brokerage and the Ghana Stock Exchange”


One then wonders why the Board of Directors of HFC Bank would be kept in the dark about questionable dealings in the Bank’s shares which was the subject of a SEC investigation.


While the public waits for the determination of the court case, it will be prudent for SEC to provide answers to these nagging concerns.