Collapse of Local Banks borne out of greed and wickedness - Isaac Adongo

The Member of Parliament (MP) for Bolgatanga Central constituency, Hon Isaac Adongo has singled out the Governor of the Bank of Ghana Dr. Ernest Addison for unjustly collapsing some local banks in the country, accusing him of violating key principle of public policy out of greed and wickedness.

According to the outspoken lawmaker, the recently executed banking sector clean up exercise did not achieve its supposed purpose of strengthening the banking sector as claimed by government and the Bank of Ghana.

Isaac Adongo has incessantly accused the regulator for not using discernment in handling the sector reforms, arguing that a bailout strategy could have been a cheaper option to the taxpayer and could have saved a lot of lost jobs rather than collapsing the banks and using over GH¢10 billion to protect depositors’ funds.

However, Dr. Ernest Addison has maintained that it was the right decision to collapse some local banks as their level of insolvency and poor corporate governance structures did not make bail out a good option.

Speaking at the Ghana Association of Bankers annual working luncheon, Dr Addison said “The question on people’s minds is whether the Bank of Ghana could have used the bail-out money to keep the banks in operation. Ladies and Gentlemen, such reasoning suggests a lack of understanding of the fundamental issues at play. Let me say that the underlying factors that accounted for the resolution of the banks were deeper than liquidity issues.

Here, one can mention very serious infractions, weak governance structures and related-party transactions which rendered those defunct banks insolvent. I will not rehash these issues but rather look forward to the emergence of a stronger and well-capitalized banking sector, and as major stakeholders of the financial sector, we should all commit ourselves to never roll back the gains we have achieved in the industry”.

This position by the BoG boss has again been challenged by the Bolgatanga Central Member of Parliament who said “While Ghana was busy pumping billions of scarce tax resources to collapse banks, China recently saved two banks in order to strengthen their financial system without collapsing them “Not all the banks that survived the so called clean up exercise are better than those Dr Addison collapsed under the guise of them being beyond redemption. It is clear that Bank of Ghana allowed weaker banks without the requisite recapitalization that continue to pose a greater systemic threat to the banking sector to remain in operation.

That is why Ghanaians want to know from Dr Addison, where the minimum paid up capital of Prudential Bank, Omni-BSIC Bank, NIB, UMB and ADB are?” He questioned.

In the view of the legislator, “It is obvious from actions and utterances that Dr Ernest Addison is obviously motivated by personal greed and wickedness to brazenly violate this key principle of Public Policy. That personal stance of his, which is unfortunately against businesses of fellow Ghanaians, has been fertilised by the vindictive political dispensation that brought him into office two years ago”.

He further stated in an article seen by MyNewsGh.com that “It is a shame that Dr Addison has used his tenure to destroy what we set out to build over 3 decades; a strong Ghanaian controlled financial sector, which saw the likes of Captain Kofi Amoanbeng (rtd),Dr Kwabena Duffour, Dr Papa Kwesi Nduom, Alhaji Seidu Agongo, Alhaji Adam Iddrisu and Mr Emmanuel Adu Sarkodie rising up for the occasion”.