NIB envisions ‘bright future’ after clearing 7-year judgement debt hurdle

The National Investment Bank (NIB) has hailed the Supreme Court’s decision to uphold its earlier ruling that absolved the bank of a US$60million judgement debt suit, saying it has renewed investor confidence in its business.

The ruling will allow the bank to seek new business and will allow its corresponding foreign banks, colleague local banks and customers conduct business with it without second thoughts, its head of legal affairs, Robertson Kpatsa, told the B&FT.

“Now that these issues have been dealt with and we are free to fly, everyone will work with us. Our confidence level is high and we think we can confidently approach all the banks we want to deal with, with a clean sheet,” he said.

The banking business is an issue of trust. So, now that our customers know there is no judgement debt hanging over us they will expand their business dealings. That is the extent of the impact of this Supreme Court decision on our business and the future is bright,” Mr. Kpatsa said.

The suit begun in 2010 in a writ issued by Standard Bank Offshore Trust Company, substituted later by Dominion Corporate Trustees Limited.

It was in respect of an amount of US$60million, which the bank had guaranteed in respect of a promissory note issued by Eland Ghana which the plaintiff, Dominion Corporate Trustees, had purchased at US$45million.

NIB lost the first case at the High Court on the basis that the act of the bank’s Managing Director was the act of the bank and therefore the bank was liable.

Not satisfied with the decision –because the bank at every point in time led evidence to show that the whole transaction was done on the blind side of its board of directors and therefore the bank should not be held responsible for an act done by its managing director in his personal capacity – went to the Court of Appeal.

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The bank also led evidence to show that the US$45 million was not utilised for the advertised purpose but was rather distributed by its former MD, Daniel Charles Gyimah, to Eland Ghana Limited and companies connected to it.

Other beneficiaries were Iroko Securities Limited, London, as well as private individuals, including Mr. Gyimah’s son.

The largest beneficiary was Sphynx Limited, USA, which was given US$24million. It also emerged that Sphynx Limited was a fully owned subsidiary of Iroko Securities Limited.

“So, we were asked to pay the US$60million with interest, which rose to US$90million at the time. The bank appealed against it and unfortunately, in 2015, the Court of Appeal affirmed the decision of the High Court,” Mr. Kpatsa noted.

Still not satisfied, NIB went to the Supreme Court where it raised various grounds of appeal as to why the bank should not be held liable and one of the grounds was that the writ that was issued from the onset was defective.

“The Supreme Court found favour with that argument that the writ was defective and therefore all subsequent things that came up after the writ was void. Therefore, the judgement of the High Court and Appeal Court was set aside.

They not being satisfied with it, applied to the full bench of the Supreme Court for application and on Wednesday, the Supreme Court, by a 7 – 0 decision, dismissed the review application that it did not meet the criteria the Supreme Court has set for review applications,” he noted.

Mr. Kpatsa noted that the bank’s management felt right from the beginning that the debt was not the bank’s making and should not be saddled with it.

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But due to the court case, many of the bank’s business were curtailed, with the Central Bank asking it to make provision for bad debt it lost the case.

“At the time, NIB was restructuring and expanding and it was really difficult, with the Bank of Ghana on our neck. If you have a US$60million judgement debt hanging over you, with accruing interest, even though you have appealed, you have to make provisions. And do not forget that we lost at the High Court and Court of Appeal.

The confidence with which other foreign banks dealt with us was low and most of them shunned us. Locally, there were some foreign-owned local banks that were not prepared to deal with us. To them, the risk was too high. Business was therefore restricted to the very few that believed in us,” he said.

Beaming with confidence now, Mr. Kpatsa assured that NIB is going back to its core mandate of investment and development banking.

“Now that this cloak is no longer hanging over us, we now have the freedom to move into other areas and attract long term capital to lend out to government and the general public and expand our scope of business,” he said.

The court’s decision

In its ruling, on Wednesday, a seven-member panel, presided over by the Chief Justice, Justice Sophia Akuffo, held that the plaintiff’s review application lacked merit and failed to meet the conditions for a review, as stipulated by court rules. “The application for review is dismissed for being without merit,’’ the Chief Justice said.

The other members of the panel were Justices William Atuguba, Sophia Adinyera, Julius Ansah, Jones Dotse, Anin Yeboah and A.A. Benin.

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