Three Strikes

Nana Yaa Ofori Atta

This is not California or any of the other 21 states in America that effect rules for habitual offenders. More is the pity.

The public notice issued last week by the Securities and Exchange Commission (SEC), the emphatic public statement made by the Governor of the Central Bank, Dr. Ernest Addison and the swift suspension by the Ghana Stock Exchange (GSE) in the trading of shares of the ailing Agricultural Development  Bank Limited (ADB), all within a 24 hour period, has called it.  Definitively.

The 4 shareholders of the ADB  – Belstar, Starmount Development Co. Ltd, SIC Financial Services Limited and EDC Investment Ltd – in concert, the consortium own more than 50% of the ADB, attempted what many consider a flagrant ill adviced coup with far reaching effects. 

First, they played a dangerously cynical game with the media, including the Business and Financial Times (I am one of their columnists), Joyonline (I read their portal regularly and they publish some of my columns online), respected international media and via them, the public.

In short, ‘the dodgy 4’ have apparently pledged their shares in ADB to Unibank, they have not secured ownership as required by law and yet their representatives were personally calling the media on Monday, March 5th, to provide ‘scoops’ of what they said was a takeover by Unibank of the ADB.  If the dodgy 4 wanted to test the mettle of the Central Bank, the GSE and the SEC, they got their answer.  Upfront.


Class Begins

Secondly they tried to force the hand of government.  The Banking Law, Act 930 requires anyone including existing shareholders who wish to increase their holdings in a Bank by a threshold, 5 percent or more, to seek approval from the Central Bank.  Before they unilaterally declared, Section 49 to 53 of the 2016 Banks and Specliased Deposit-Taking Institutions Law should have exercised the minds and actions of ‘the dodgy 4’.

Further, ADB is a listed company.  The relevant laws including the SEC Ghana Code on takeovers and mergers requires that any person(s) seeking to acquire more than 25% of a listed company brings their matter as many others have done before, for approvals.  Takeovers and mergers are not new.  The takeover of HFC by the Republic Bank is an example.  The Republic Bank first bought 8.9% of HFC in 2012, they bought an additional 23% in 2013, taking their shareholding to 32%, after that, they moved, definitively.

There are 35 Class A Banks listed by the Central Bank.  The news that a Ghanaian owned bank, Unibank, had found the wherewithal and confidence to acquire another Ghanaian bank, ADB, one that in spite of its liquidity challenges has lucrative Government shareholding and a niche in funding agricultural projects, should have been welcomed by investors in our capital markets.  Instead, within 24 hours, we were witness to a sordid desperate display.

The advisors and executives of the ADB 4 must have known, even as they drafted and gave their irresponsibly hopeful press statements, that they had made no attempts to meet the fundamental requirements.  What they banked on, was a journalist not asking if they had or knowing that they should have.



On March 7th, the game was up.  A day after the 61st independence anniversary of Ghana, even as the media breathlessly reported on the takeover, the SEC issued a crushing statement that in part reads:

‘The SEC has taken notice of a publication on page 3 of the 7th March 2018 edition of the Business and Financial Times newspaper with the caption “Unibank takes over ADB”.  It has also taken note of the GSE press release issued 7th March 2018, suspending trading in ADB shares on the Ghana Stock Exchange in relation to the purported takeover.

It is worth noting that for a takeover or merger involving a bank or a specialised deposit-taking institution to occur, the parties to the transaction shall submit an application on the proposed transaction to the Bank of Ghana for approval in accordance with Section 52 of the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930).

Act 930 further states in section 54 (6) that any such acquisition of shares shall first meet the requirements of the Act before the application is sent to the SEC for review and final approval under Act 929.

The SEC wishes to inform the general public that it has not received any takeover application from Unibank involving ADB shares.  There is therefore no takeover of ADB by Unibank or any other entity.

This public notice is issued pursuant to Sections 3 and 208 (c) of the Securities Industry Act, 2016 (Act 929).’

The Governor of the Central Bank dismissed the purported Unibank takeover and the ADB itself also released a statement rejecting that it had been taken over.  Its statement read in part,  “A pledge does not have the effect of the transfer of ownership.”  ADB went into negotiations with the GSE to restore trading in its shares.  They can ill afford to be toyed with by the backwash of ‘the dodgy 4.’

Rowing Back

By close of day, Unibank had also issued a statement seeking to desperately row back, after the fact, the improbable impression it deliberately created of ‘a frog swallowing a chicken.’  A beautiful graphic description I did not originate, and it fits this scenario.

From the initial boastful statements a representative issued of not wanting to change the name and management of the ADB, a bank that they claimed they had acquired, UniBank was now clarifying that they had neither sought nor received approval for an alleged share swap that would have enabled 4 shareholders of ADB to surreptitiously takeover the management of another.  Online and elsewhere, local and international media were also retracting and clarifying by close of play on Wednesday, March 7th, 2018.


I Put It To You

There is a reason why I did not apply to law school.  Too many years of my frivolous life would have had to be applied to rigorous reading of large books.  Far too many precedents to muster so I can ‘put it to my learned counsel’, whilst wearing an itchy horse hair wig in a crowded hot court room, that he/she should provide better and further particulars.

The sheer joy of being a journalist is for me the ability to ask the 6 questions – ‘why, what, who, were, when, how’.  I always add and segue to my 7th rule – And So What exactly does this mean, how does this tie in to anything you have said/or done before?  Show me the evidence, the law, the data.  Cynical me.

So who are these 4 principals and why are they so desperate to lay claim to the ADB, a bank listed in 2015, that is essentially insolvent, it reportedly has some Ghc2.7 billion of liquidity support from the Central Bank?

The answer may be found in the Central Bank’s drive to rationalise and consolidate the market.  By raising capitalisation requirements, the Central Bank is essentially asking Class A Banks like Unibank to fly straight, merge or stand down themselves.  Or be stood down.  Other categories of institutions that the Central Bank regulates are Savings and Loans companies, Microfinance as well Non Banking Financial Institutions and rural banks based in communities.

I put it you that instead of organic growth, ‘the dodgy 4’ via Unibank attempted to access an existing bank that has traffic through their existing network and potential government traffic to support agricultural projects.  And if you can spook the market by hoodwinking the media …  Three Strikes?  You should be out.

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