Parliamentary politics descend on financial issues

The newly constituted Parliament, made up of member s from the ruling New Patriotic Party and the main opposition National Democratic Congress in almost equal numbers has found itself thrust deeply into some of the most controversial issues in Ghana’s financial sector over the past few days.

It is currently dealing with three different issues, some usual, some unusual, some current, some historical, but all highly controversial. How parliament handles them will have a deep insight into how the legislature will operate over the next four years, in a situation where its unusual composition will allow for its usual partisan politics driven voting patterns to encroach on the technicalities of running the economy in particular and financial sector management in particular.

The first warning about the shape of things to come was served when parliament needed a head count before approval was given to the 2021 budget proposals presented to it by government a fortnight ago. The approval process for the budget – usually a controversial but ultimately straight forward matter – came close to high drama this time around.

Approval was secured through a narrow majority decision of 137 to 134 after four days of heated debate in the House.

This has paved the way for the government to spend GH¢113.75 billion to implement its policies and programmes this year. However Parliament will now begin debating the various estimates themselves, a process that has the potential for major friction.

Instructively a head count was required before the overall budget was approved, because the minority rejected the Speaker’s initial assertion that a voice vote had approved it. After a lot of back and forth it was agreed that a head count be done which eventually saw the budget approved narrowly.

Instructively, the Minority as a group had earlier announced their intention to vote against approving the budget on the grounds that government had provided inaccurate fiscal deficit data to Parliament since 2019 which conflicted with less complimentary data reported to the International Monetary Fund, insisting that they would not be part of a process of deliberate mis-reporting that, among other things, concealed the true size of the fiscal deficit.

The next step is to debate and approve the various revenue and expenditure estimates in the budget and the signs are that this will be even more cantankerous with the Minority protesting the new taxes and levies being proposed.

Last week the debates moved to Parliament’s Appointments Committee which is tasked with vetting the Finance Minister nominee Ken Ofori-Atta whose original vetting schedule was postponed because he needed medical treatment in the United States for COVID-19 related health complications.

As expected, the Majority members of the committee asked questions aimed at bringing out his triumphs with regards to economic management performance while the Minority simply tried to give him a hard time; neither side attempted to evince a balanced assessment of his first four year term in office.

Consequently the script went basically as expected. The Minister designate defended his record with regards to the Agyapa Gold Royalties initiative which had generated a wide up-swell of opposition from a wide range of stakeholders and eventually was shot down by the erstwhile Special Prosecutor, leading to the President withdrawing the proposal for repackaging and the Special Prosecutor resigning, claiming that this was due to pressure from senior government officials.

The nominee asserted that The Special Prosecutor was wrong to have not allowed for the Finance Ministry’s response to his conclusions – describing his stance as a national disservice – and promised to work with Parliament and other stakeholders to come up with a more widely acceptable framework for monetizing incoming gold royalties which he still believes is the best way forward for Ghana

He also defended the new taxes proposed in the 2021 budget arguing that Ghana’s fiscal predicament demands that the burden be shared between government and governed and assured that the GH¢100 million Ghana CARES programme will enable the country to achieve 5.0 percent growth this year and sustain it over the medium term while transforming the structure of the national economy for the better.

He also claimed that the accusation by the Public Interest and Accountability Committee that the Ministry of Finance has acted with impunity over the past four years with regards to non-utilization and non-disclosure of petroleum revenues meant to support the annual national budgets was actually the result of the inability of the two institutions to reconcile their respective figures, a task which would soon be completed.

While all this back and forth was expected in the parliamentary vetting process, certain questions exposed the sheer level of politicking that parliament will engage in while dealing with supposedly technical issues particularly when NDC MP Samuel Okudjeto digressed from technicalities and went into the murky waters of political allegations.

First he dubiously tried to relate the success of one of Databank’s mutual funds, its money market fund – simply called the M-Fund – in recent years, to Ofori-Atta’s becoming Finance Minister.

Basically he tried to infer that in some way, Ofori-Atta had leveraged on his position in government to significantly improve the number of investors subscribing to a collective investment scheme managed by the investment bank which he co-founded and which he remains a major shareholder in, albeit indirectly for now.

Anyone with a basic understanding of how such funds work knows that this is simply not possible; mutual funds are retail level financial products and so there is absolutely no way a finance minister – or any other public official matter for that matter – can influence subscriptions.

Clearly the MP was simply deliberately trying to bring the Finance Minister designate into disrepute by making it look as if he was using his office to improve the fortunes of Databank.

Okudjeto’s sympathizers could give him the benefit of the doubt, on the basis that he himself does not know better although considering his level of enlightenment on such matters this is most unlikely. Besides, his next question to Ofori-Atta appeared to confirm his political agenda.

That question was actually an accusation – that the Finance Minister, during his first term had placed close associates in key positions in the financial regulation framework: Keli Gadzekpo, his partner in founding Databank as a board member of the Bank of Ghana; his former senior management employee Daniel Ogbarmey Tetteh as CEO of the Securities and Exchange Commission; and another one, Sampson Akligoh, as a Director in the Ministry of Finance itself. Okudjeto assets that this underpins an attempt at state capture.

Again, to all those who know how regulatory processes work, this is largely nonsense – only the appointment of Ogbarmey Tetteh at SEC could possibly give Ofori-Atta’s private business interests any form of advantage.

In reply to the accusation, Ofori-Atta pointed out that the appointments derived from his confidence in the professional capabilities of all of them and their respective track records of professional accomplishment makes this assertion hard to dispute.

Finally Okudjeto effectively accused Ofori-Atta of influencing the decision of government to insure some of its assets – most notably the ambulances it acquired recently – through Enterprise Insurance, in which he again has a significant interest although again held indirectly.

However the MP failed to acknowledge that Enterprise is the largest and most financially solid, privately owned general (non-life) insurance company in Ghana, with the best rating in Ghana’s insurance industry from Global Credit Ratings and therefore deserving of handling some of government’s asset insurances purely on merit.

This line of questioning was not lost on neutrals who saw it for its true purely political agenda and who now fear this will be standard operating procedure for MPs from both sides of the political divide going forward.

But potentially the most dangerous assignment Parliament has given itself is its impending investigation into the liquidation of both UT Bank and Unibank during the recent financial sector reforms conducted by the Bank of Ghana.

Here, the Speaker of Parliament, Alban Bagbin, has formed a seven-member committee to probe the petition filed by Dr. Kwabena Duffour and Prince Kofi Amoabeng following the Bank of Ghana revoking the licenses of uniBank and UT Bank respectively.

The move is taking the liquidation of Unibank in particular out of the technical arena used by BoG for its action into the murky arena of partisan politics which is being used by Dr Duffuor’s supporters to claim he has been unfairly victimized.

While the case of UT Bank is less related to partisan politics, supporters of its owners allege that the BoG distorted the facts and misinterpreted them in its assessment of the bank’s financial position that resulted in its liquidation.

The petition was laid by the Member of Parliament for Bawku Central Mahama Ayariga.

The motion laid before the Speaker of Parliament was challenged by Minister for Parliamentary Affairs Osei Kyei-Mensah-Bonsu who said the matter was before a court.

But the Speaker overruled the challenge and said the report of the committee’s work will be handled in a manner such that it will not affect the court procedure.

“The very important thing is the whole idea that a bipartisan forum is being created for the examination of the conduct of a key state institution like the Central Bank so at the end of the day not only shareholders are being provided an opportunity to vindicate their case but then also the bank is being provided a platform to show that its conduct was not a bad one and that will enhance confidence in the Central bank itself,” asserted Mahama Ayariga who has welcomed the decision by Parliament to investigate the collapse of these banks.

In a petition to the legislators, Dr. Kwabena Duffour listed three key points he’s seeking Parliament to investigate.

He said Parliament needs to Investigate the conduct of the Bank of Ghana in the takeover, the appointment of an Official Administrator of uniBank Ghana Limited, and the circumstances surrounding the revocation of the banking license of uniBank Ghana Limited:

Direct the restoration of the banking license of uniBank Ghana Limited by the Bank of Ghana and the remedying of the harms done the shareholders’ property rights as a result of the conduct of the Bank of Ghana;

Give any other directives that Parliament may deem appropriate.

Prince Kofi Amoabeng has requested for exactly the same with regards to the closure of UT Bank.

The BoG revoked the licenses of both banks (along with nine others) on technical grounds that they were irrepairably insolvent as individual institutions

These actions according to the BoG are in line with the provisions of section 123 of the Banks and Specialised Deposit-Taking Institutions (SDIs) Act, 2016 (Act 930).

However while Dr Duffuor has been contesting the BoG’s actions on technical grounds, his supporters have informally been claiming that he is a victim of politics; he was Minister of Finance from 2009 to 2012 under the most recent NDC administration.

This argument alleges that his bank was liquidated on the instructions of the ruling NPP to impair his ability to provide political campaign funding for the NDC.

In court, Dr Duffuor has been challenging the technical grounds on which the BoG determined that Unibank was irrepairably insolvent rather than playing the political victimization card which could gain credence in Parliament as a political institution but not in a law court.

Parliament’s entry into the fray risks damaging the BoG ‘s reputation as an independent, technically driven institution – which was voted as the best central bank in the world last year – while allowing political considerations to override technical ones in charting a course for the development and evolution of Ghana’s financial services industry.

All this has put a lot on Parliament’s plate But the big question now is whether the legislature will attend to these issues from a technical point of view with Ghana’s best economic interests in mind or whether it will allow the narrow political interests of its individual members and the parties they represent to become the overriding considerations as the early signs seem to be warning.