How ADB was raped (Part I)

.Imprest system abused to steal over ¢10bn

Unimpeachable information available to The Republic has blown the cover of some hirelings and hawks associated with both the National Democratic Congress (NDC) and the erstwhile Kufuor Government for creating a big hole of over ¢10billion in the coffers of the Agricultural Development Bank (ADB).

Because of the non-existent of an effective system of monitoring under the previous management, these individuals at the bank managed to use the imprest system to steal as much as $575,000 and GH¢101,000 ( over ¢10 billion) from the bank's coffers. Imprest is an internal arrangement within an institution where workers can go for cash to aid their activities.

Imprest is supposed to be paid back by those who have accessed it. Information however available to The Republic indicates that the over ¢10billion accessed imprest has not been paid back.

The intention of these economic saboteurs, The Republic has learnt, was to deliberately mismanage and run down the ADB in order to make it a non-viable financial institution, a condition to robustly offer it for sale.

“What happened was that these crooks would just sign an imprest and then walk to the counter and take the money without accounting for it,” a top management member, who wanted his identity to be concealed, told this reporter.

“They were just chopping, chopping,” was how this official described the situation. According to him, the bank had “become Trading Account for a small group of people.”

The bank has also had to contend with the astronomical level of debt it is saddled with. Financial analysts observe that no competent manager or passionate shareholder will entertain a company to set aside funds in anticipation of losses to levels far and above its stated capital.

However, the management of ADB, had surreptitiously set aside a staggering GH¢63m as at November 2009 for bad and doubtful debts, an amount that is more than its GH¢50m stated capital.

Bad debts are debts which are non-recoverable; Doubtful debts are debts that are unlikely to be recovered (may or may not be recovered). Out of the total 'indebtedness' of a whopping over GH¢74m, some “NPP and NDC crooks and apparatchiks individually” owe ADB between GH¢18m and GH¢54m. An ADB insider revealed that the intention of these imprest-owing individuals is that “by the end of the next banking year, these debts who would have been written off as bad debts and, therefore non-recoverable.”

According to him, “This debt is virtually another bank sitting out there and although we are above the minimum capital requirement demanded by the central bank, what is due us must be collected as we look to doubling our stated capital to GH¢100m by the close of 2012.”

The provision for bad debt was more than twice the minimum capital requirement for local banks in the country as spelt out by the Central Bank.

Some of these officials, according to investigations, have already been found culpable by a forensic audit report and have been interdicted, awaiting further actions. A very senior management member has this to say, “One would have thought that operating within an increasingly competitive environment, the ADB, would embrace a modicum of best practices and inject good governance in its operations, but, corruption, mismanagement, lack of effective monitoring and lackadaisical attitude towards operations has been the bane of the ADB for all these years.” ADB was set up by an Act of Parliament (ACT 286) in 1965 to promote and modernise the agricultural sector through appropriate but profitable financial intermediation. Its original name then was the Agricultural Credit and Co-operative Bank. The enabling Act gave its main object as “to provide credit facilities to agriculturists and persons for connected purposes.” It assumed its present name in 1970 when a subsequent Act of Parliament (Act 352) amended the earlier legal instrument of the bank and thereby broadened its functions to make it a fully-fledged banking institution.

The Government owns 51.83 per cent shares, while the Bank of Ghana owns the remaining 48.17 per cent shares.

In 2007, under the Kufuor Administration, workers of the Bank accused the then management and the Standard Bank of South Africa, owners of Stanbic Bank, of trying to reap where they had not sown and thus, calling on the Bank of Ghana not to sell its shares to the bank.

According to the workers, relinquishing control of the only bank where farmers source funds would be tantamount to relinquishing security to a foreign bank. The workers of ADB were the most vociferous group that kicked against the privatisation of the bank, saying that the alleged sale of the Bank of Ghana's interests in the ADB would not be in the best interest of the nation. Renewed moves of selling the bank to Rabobank of Netherlands are also set for a major resistance.

WHO IS LYING OVER ADB?

...as spokesperson contradicts Finance Minister

It is now certain! The Minister of Finance and Economic Planning, Dr Kwabena Duffuor has confirmed that officials of Rabobank had met with some Government members in connection with the sale of the Agricultural Development Bank (ADB).

“Rabobank has shown interest in the ADB for a very long time…They came to Ghana; I was very busy so I could not meet them but my Deputy did,” the minister told this paper in a telephone interview.

Dr Duffuor also revealed that Former Managing Director (MD) of the bank, Mr. Kuranchie, who is now the MD for the National Investment Bank (NIB), was the one who was fronting the deal prior to the Mills Administration;

“Former MD for ADB, Mr Kuranchie was the one championing the sale.” The Finance Minister said that there was no document at all from Rabobank on the sale of ADB. He also denied ever sighting or sending any document to ADB that shows that the Mills Government was interested in disposing off Bank of Ghana's 48.17% shares in ADB to Rabobank; “I have never sighted or received any document let alone send any document to ADB. No, my brother, I will never do that.”

However, in a sharp contradiction to the minister's claim, his spokesperson, Abdul Hakim, told The Republic in a telephone interview that there was a document from the officials of Rabobank to the Mills Government.

According to the spokesperson, there had also been a corresponding letter to the Chief of Staff, Mr. Newman and other members in government.

“They (Rabobank) expressed their interest in ADB in either January or February this year (2010). Nobody has responded to their letter. There is a document from them to the Chief of Staff and others but nobody has responded to their letter,” minister's spokesperson revealed.

Even though the Minister said that Rabobank officials had a meeting with his Deputy, his spokesperson said; “It is true that they have expressed interest but there has been no discussion to that effect.”

In ADB, the Government owns 51.83 per cent shares, while the Bank of Ghana owns the remaining 48.17 per cent shares.

Rabobank, a Dutch co-operative local bank with total assets of about 570 billion Euros and equity of 31 billion Euros, has been holding series of discussions with some officials in government for some time now.

A document, authored by Mr Arnold J.A.M. Kuijpers, Managing Director of Rabobank was sent to the NDC government in February this year.

It read in part, “Further to previous meetings and discussions, we would like to inform you that Rabobank would be interested to purchase 48% of the shares of ADB, currently being held by the Bank of Ghana. The reason why we would like to invest in ADB and in Ghana is because both meet the selection criteria that we have set for ourselves for both country and bank.” Stay tuned