General News Tue, 18 Dec 2018

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I didn’t collapse Capital Bank — Otabil

The General Overseer of the International Central Gospel Church (ICGC), Pastor Mensa Otabil, has denied claims that he acted in a manner that led to the collapse of Capital Bank.

In his defence filed at the Commercial Division of the Accra High Court, Pastor Otabil, who was the Board Chairman of the bank, refuted assertions by the receivers of the bank that he had connived with other directors and shareholders of the bank to mismanage funds at the bank.

The statement of defence, signed by his lawyer, Mr Yonny Kulendi, and which is a response to a suit filed by the receivers, also refuted claims that Pastor Otabil and the board that he chaired breached banking, company law or any other related laws during their tenure.

“The defendant (Otabil) was appointed Chairman of the board in 2009 and in all of his tenure as a Director and Chairman of the Board, he did not apply for, neither was he offered, nor did he receive any loan, overdraft or any credit facility from the plaintiff (defunct Capital Bank).

“The board, under his chairmanship, acted diligently, faithfully and in the best interest of the plaintiff and, therefore, he did not, as Director, use or allow to be used by any director or shareholder related entities to siphon funds belonging to the plaintiff,’’ it said.

Receivers’ suit

On August 14, 2017, the licences of the Capital Bank and the UT Bank were revoked by the Bank of Ghana (BoG) after the BoG had declared them insolvent.

The BoG allowed the state-owned bank, the GCB Bank, to acquire the two banks in order to protect depositors’ funds and also enable them to stay afloat.

The assets of the banks were then placed in receivership.

Following the revocation, on November 11, 2018, receivers of the bank — Mr Vish Ashiagbor and Mr Eric Nipah, both of PricewaterhouseCoopers (PwC) — sued Pastor Otabil, the ICGC and 13 other shareholders and directors at the Commercial Division of the Accra High Court.

The plaintiffs accused the 15 defendants of mismanaging about GH¢837 million in the coffers of the bank and a GH¢620 million liquidity support given to the bank by the BoG.

The receivers wanted to use the legal action to recover all the money that they claimed the defendants owed the bank.

Among other accusations, the plaintiffs accused the defendants of allocating onto themselves loans amounting to about GH¢482 million, which they had refused to repay, and the use of a non-existent GH¢52.3 million investment certificate to top up the capital of the bank to obtain a universal banking licence from the BoG.

They further claimed that one of the defendants, Mr William Ato Essien, who was the founder of the bank, transferred GH¢130 million of the BoG liquidity support into his personal company and also used GH¢27.5 million for what was described as ‘protocol payments’.

The receivers alleged that it was those ‘illegal’ transfers that Mr Essien used to establish another bank known as the Sovereign Bank.

Not loans

Pastor Otabil, in his statement of defence, denied all the claims made by the receivers and urged the court not to grant any of the reliefs sought by them.

With regard to accusations that the shareholders allocated onto themselves GH¢420 million as loans and had refused to pay, Pastor Otabil said the said amount was actually not a loan but ‘just’ debts that the bank incurred during the time it operated as a microfinance company.

The said amount, he said, was still on the books of the company when it became a savings and loans company and finally a bank.

It was his case that the GH¢420 million was ‘impaired investments’ and not ‘non-existent’ investment, as claimed by the receivers.

He contended that in order to help the bank have a better balance book, the board, with the approval of the BoG, allowed shareholders to assume responsibility for the impaired investments and, therefore, they were restructured into a five-year loan.

“Upon this, four of the bank’s shareholders signed a memorandum of undertaking in May, 2016 to pay the sum, with the approval and understanding of the Bank of Ghana that payments by the four (4) shareholders would be set off against their future dividends,’’ he said.

According to Pastor Otabil, the four shareholders who were to pay the restructured GH¢420 million “impaired investments” were Ato Essien, Oheneba Osei Akoto, Stephen Enchill and Kingsley Atta Ghansah.

Liquidity support

Pastor Otabil also denied claims by the receivers that the defendants mismanaged the GH¢620 million liquidity support that the BoG provided the bank.

According to him, the BoG provided the liquidity support not because of mismanagement at Capital Bank but rather it was a loan facility to help stabilise the bank “when it was faced with liquidity challenges arising out of the normal course of banking business’’.

“The liquidity support attracted an average interest rate of 25.1 per cent per annum and the bank was discharging its repayment obligations until the revocation of its banking licence,’’ he contended.

He said the board, under his stewardship, did not approve the payment of GH¢27.5 million from the liquidity support as ‘protocol payment’, as had been alleged by the receivers.

It was also his argument that the board, “acting through the relevant subcommittee, followed due process and the disbursement of the liquidity support was done in line with banking regulations, with due regard to Bank of Ghana guidelines’’.

“The second defendant (Pastor Otabil) discharged his duties as a Director and specifically as Chairman of the board faithfully, diligently and to the best of his abilities,’’ the statement of defence added.

Source: Graphic.com.gh

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