Financial Analyst, Jerry Afolabi, has lauded PricewaterhouseCoopers, receivers of defunct Capital bank for dragging renowned Preacher, Pastor Mensa Otabil, his church, International Central Gospel Church (ICGC) and 13 others to court over the collapse of Capital bank.
PricewaterhouseCoopers, represented by Vish Ashiagbor and Eric Nana Nipah are accusing former directors of the defunct bank for approving loans and placement of funds to themselves and related parties “without the requisite collaterals and in clear breach of the company’s internal policies and relevant banking regulations and Ghanaian company law.”
The plaintiffs are praying the court to order the defunct bank’s directors to pay compensatory damages to the receivers.
However, speaking on Anopa Kasapa, on Kasapa 102.5 FM, Mr. Afolabi indicated that the suit will go a long way to revamp the financial sector and make it more robust as well as correct certain defects weakening the sector.
He noted that, the suit seeks to outline the failures of the defunct bank’s director to follow due process and also adhere to standard financial practice.
“When I read the suit, I was happy because several things done in the financial sector is taking away confidence and this is due to the behavior of some people who didn’t follow laid down procedure. Cooperate governance is one big issue most board of directors and even shareholders do not comply to. And if you check carefully it’s one of the issues that led to the collapse of the bank, where board members approve loans for themselves” he said.
Capital Bank is among seven local banks that have collapsed in the country in the last 12 months after becoming highly insolvent.
According to a detailed assessment of the bank’s woes, the then-Board Chair, Dr. Mensa Otabil, had been party to the misuse of liquidity support given the bank by the Bank of Ghana (BoG).
The report cites an emergency board and Executive Committee meeting on October 13, 2015, which notes concern with the manner in which the GHc 610 million liquidity support to the struggling bank was being used.
Instead of using the money the central bank gave the Capital Bank as liquidity support for the bank’s business, the management with the approval of the Board Chair, diverted the money for other uses, leading to the eventual collapse of the Capital Bank in August 2017.
The monies were moved by a member of the Board, Ato Essien, into companies believed to be owned by him and others. Some of that money was reportedly presented as capital to secure a license for another collapsed bank, Sovereign Bank.
Among the flagged transactions were GHc 27.5 million used for business promotion and handled by a board member; transfers to IFS amounting to GHc 23.9 million, transfers to Nordea Capital amounting to GHc 65 million, and transfers to Alltime Capital amounting to GHc 130 million.