Collapse of 23 financial companies a travesty of justice - Minority

The Minority Caucus of the opposition National Democratic Congress (NDC) in Parliament on Tuesday criticised the Government for the failure of 23 savings and loans companies, saying it is a travesty of justice.

“The collapse of the 23 savings and loans companies was a travesty of justice. These savings and loans companies were strong by the end of 2016 and have suffered from acute panic withdrawals and systemic impact of the banking sector mess created by BOG," Mr. Isaac Adongo, MP for Bolgatanga Central, said a NDC News conference in Parliament.

The News conference was to throw more light on the financial sector reforms and also react to “some alleged misleading statements made by government officials.”

Mr Adongo indicated that at the time the NDC exited power,”these savings and loans companies were strong by the end of 2016.”

The companies, he said, rather suffered from acute panic withdrawals and systemic impact of the banking sector mess created by BOG.

“It was the improper handling of the interconnectedness of these banks to the rest of the financial systems that has resulted in a melt-down of the financial sector.”

Mr Adongo said the position of Vice President Bawumia, blaming the former president on the collapse of the savings and loans companies was laughable, as he explained that the former President rather began a reform agenda, which started under the NDC and was built around “carefully crafted inter-related pillars to produce a solid, well capitalised and globally compliant competitive banking sector.”

On the “Too big to fail” theory, Mr Adongo said “although the jury is still out there regarding the pros and cons, the fallouts from the liquidation of Unibank for example has shown that the cost of liquidation has greatly outweighed the cost of simply repaying the bank what it was owed by government and doing so promptly.

He blamed the ruling government for poor implementation of a minimum capital regime, which he said virtually destroyed Ghana’s financial sector."



"There are unanswered questions with regard to how we spent GHC23 billions of taxpayers' money just to collapse financial institutions, create massive unemployment and turn entrepreneurs into idle hands.

"Why would the government be ready to borrow GHC14 billion to close down banks and a further GHC7 billion to close down savings and loans companies as well as GHC2 billion to shut down microfinance companies, but was not ready to use a fraction of this amount to pay government’s debts to contractors, which largely accounted for the slide into insolvency of several cases of the collapsed banks?"

"The Ghanaian taxpayer would have been spared the high cost of this chaotic reform with Bank of Ghana, if the Bank of Ghana had listened and followed the reform programme initiated by the NDC”, Mr Adongo said.

He added: “The people of Ghana are reeling under the unwarranted collapse of scores of financial institutions and are expecting concrete measures to deal with the excruciating unemployment caused by the collapse and the loss of livelihoods, credit and liquidity crunch and dwindling confidence in the financial sector."