KPMG did not value shares before sale to Fortiz

The Social Security & National Insurance Trust (SSNIT) says KPMG did not undertake a valuation of the 90% of its 90.6% shares it held in Merchant Bank before the sale to Fortiz Private Equity Fund Limited.

An affidavit filed by SSNIT at the High Court, Commercial Division, Accra, that is hearing the suit filed by Andrew Awuni against Merchant Bank, SSNIT, Bank of Ghana and 10 others, a copy of which has been intercepted by The New Crusading GUIDE discloses that KPMG did not value the shares but merely evaluated proposals received by SSNIT from the various investors to ascertain which proposal was better to solve the capital adequacy and liquidity problems of Merchant Bank.

The affidavit, which is deposed to and signed by one Anthony Quarshie, who describes himself as a Senior Legal Clerk of the Legal Department of SSNIT and who deposes to the affidavit with the full authority and consent of SSNIT was filed on 10th December, 2013, in support of an application by SSNIT to the court to strike out Andrew Awuni’s pleadings and for a further order to dismiss Andrew Awuni’s suit. The said application will be heard by the High Court today.

Paragraph 19 of the affidavit reads: “That I am advised by Counsel and verily believe same to be true that the 2nd Defendant has a negative value and KPMG, the 5th Defendant engaged by the 2nd Defendant did not value any shares but merely evaluated proposals received from the various investors to ascertain which proposal was better to solve the Capital Adequacy and Liquidity problems of the 1st Defendant in order to operate successfully...”

SSNIT’s disclosure that the shares, which sale is at the centre of the litigation, were not valued brings a new twist to the matter. Many are wondering how a company’s shares can be sold by a shareholder when the said shares have not been valued.

Finance industry players say the development leaves a lot of questions unanswered. One of these is whether SSNIT which holds the said shares for and on behalf of all of its contributors got a good value for the sale of the shares.

In a related development, the High Court hearing the case brought by Andy Awuni against 13 Defendants in respect of the sale and purchase of the shares will today hear three separate applications brought by a number of the Defendants seeking to dismiss the case. One of the Applicants is the Bank of Ghana. The other applicants are SSNIT and Merchant Bank together with a number of its directors who have been sued as Defendants to the suit.