Kwabena Duffour sues BoG over uniBank license revocation

Dr Kwabena Duffour

Graphic Online, Tue, Aug 21, 2018

by Enoch Darfah Frimpong

Dr Kwabena Duffour, a shareholder of the defunct uniBank Ghana Limited, has initiated a fight to reclaim uniBank, which the Bank of Ghana (BoG) on August 1, 2018, collapsed along with four other banks on grounds of insolvency.

The Bank of Ghana on August 1, 2018 merged five banks into a Consolidated Bank of Ghana Limited with the explanation that, investigations had established that the five banks were insolvent.

The banks are BEIGE, Sovereign, Construction, uniBank and Royal.

However, through his lawyer, Professor Raymond A. Atuguba of Atuguba and Associates, Dr Kwabena Duffuor has filed a suit against the Bank of Ghana over the revocation of the license of uniBank.

Dr Duffour, who is a former Minister of Finance and also a former Governor of the Bank of Ghana wants the High Court in Accra to order the Bank of Ghana to give him back his bank, according to the Statement of Claim, a copy of which has been made available to Graphic Online.

Why BoG collapsed uniBank

When the Governor of the Bank of Ghana, Dr Ernest Addison announced the withdrawal of the license of uniBank on August 1, he explained that the government has issued a bond totaling GHc5.6 billion to cater for bad assets of the five collapsed banks.

The Governor said unibank was under capitalised and that the bank was beyond rehabilitation since an Asset Quality Review (AQR) update exercise in 2016 revealed that it was significantly undercapitalized.

According to the BoG, even though uniBank submitted a capital restoration plan, the plan however, yielded no success in returning it to solvency and compliance with prudential requirements.

The BoG said an Official Administrator appointed for uniBank in March 2018 found that the bank was beyond rehabilitation.

This was because, shareholders, related and connected parties had taken amounts totaling GH¢3.7 billion which were neither granted through the normal credit delivery process nor reported as part of the bank’s loan portfolio.

In addition, amounts totaling GH¢1.6 billion had been granted to shareholders, related and connected parties in the form of loans and advances without due process and in breach of relevant provisions of Act 930.

Altogether, the BoG said shareholders, related and connected parties of uniBank had taken out an amount of GH¢5.3 billion from the bank, constituting 75 percent of total assets of the bank.

Duffuor's statement of claim

However, in the suit filed on Monday August 20, 2018, Dr Duffour is asking for an order of injunction restraining the Bank of Ghana from expropriating uniBank by its purported vesting of “good assets and liabilities” in Consolidated Bank Ghana Limited.

Other reliefs are that, he wants a declaration that the license purportedly granted to the Consolidated Bank Ghana Limited was not granted in accordance with Act 930 and therefore is "null and void."

He is also seeking a declaration that the “good assets and liabilities of uniBank, including deposits of depositors, cannot be lawfully vested in Consolidated Bank Ghana Limited.

Filing the suit together with Integrated Properties Limited of Top Base in Gbawe, Accra, as plaintiffs, Dr Duffuor also wants an order of injunction restraining the Bank of Ghana from "arbitrary and capriciously impairing almost the entire loan book, including debts of Government and quasi-Government institutions and shareholders’s advances in the accounts of uniBank to justify its purported revocation of the license of uniBank."

He further wants a declaration that the purported revocation of the license constitutes unlawful expropriation of the property of the Plaintiffs and other shareholders of uniBank in breach of Articles 18 and 20 of the 1992 Constitution of Ghana.

He is also asking for an order of mandatory injunction requiring the Bank of Ghana to restore uniBank to private management and shareholding and any other reliefs which the court deems fit or considers just.

Lawyers for Dr Duffuor argues in the suit that, the BoG acted “unreasonable” and in bad faith in revoking the license of uniBank.

The statement of claim attached to the writ stated in August, 2017, the Banking Supervision Department (BSD) of the BoG audited the books of uniBank to review the state of the bank.

After the audit, the BSD, it said, downgraded the Capital Adequacy Ratio (CAR) of the Bank from 10.7 per cent to 8.24 per cent.

It added that further visits by officials of the BSD led to further downgrading of the CAR until November 2017 when the BSD said the CAR of the uniBank was negative.

“The purported downgrading of the financial position of uniBank by the defendant (BoG) was, in significant part, due to the defendant’s unreasonable and unjustifiable impairing even government and quasi-government exposures to uniBank, including validated payment certificates issued to contractors by government,’’ it added.

Management of the bank, it said, expressed their dissatisfaction of the “purported downgrades of its accounts,” but the BoG did not pay heed to the concern of uniBank’s management.

The BoG, it added, rather released a press statement on March 20, 2018, and announced that it had appointed an official Administrator for uniBank

‘Money owed by government’

According to the plaintiffs, the government’s indebtedness to uniBank was communicated to the Minister of Finance by the administrator on June 22, 2018.

“The Official Administrator notified the Minister of Finance of ‘overdue amounts from Government and Government – related activities “totaling Gh¢ 868,973,599 as at May 31, 2018 and requested settlements of these amounts,” they said.

The plaintiff averred that the government had an obligation to settle the debt and that, payment of the debt would “have a positive effect on the capital and balance sheet of uniBank.’’

Capital injection

Dr Duffuor further argued that after the administrator took over uniBank, shareholders of the bank led by him proposed to inject new capital into uniBank.

The proposal, the statement of claim revealed, was sent to the administrator on July 30, 2018.

“The commitment expressed by the shareholders of uniBank to inject further capital into uniBank would make it wholly unnecessary for taxpayers resources to be used to capitalize uniBank,” it said.

According to the plaintiffs, the BoG, however, disregarded the proposal.

To read the full piece from Graphic Online, click here.