This article begins with ringing a bell with my mantra, “as you know”. This is because I have used it on many occasions as the opener to introduce issues I feel you might be more informed about than I am, but then analyse them with a different touch. I will crave your indulgence to use it once again to lay the foundation for today’s discussion. As you know, within the space of one year, the Bank of Ghana revoked the licences of seven banks.
With a feeling of nostalgia, we remember UT Bank and the Capital Bank were liquidated in August 2017. Five others – the Royal Bank, uniBank, the Beige Bank, Construction Bank and Sovereign Bank also had their licences revoked in August 2018 for what the Bank of Ghana described as serious offences they had committed. The grounds for revoking their licences are clearly defined in the Banks and Specialised Deposit-Taking Institution Act (930) 2016. The crisis indeed provided time for deep introspection by every player in the industry.
Since the seven banks’ fall, a lot of issues have come up and continued to dominate public discussions. As human beings with emotions, the discussions have been characterised by the usual blame-game and laden with value judgements about the apparent misconduct of stakeholders in the banking sector. The Bank of Ghana (regulator), shareholders, directors, auditors and government could not escape blame. KPMG and PwC, two of the big-four auditing firms operating in the country, have also been accused of conflict of interest for acting either as the bank(s)’ official administrator or the receiver.
A couple of days after the recent revocation exercise, officials of the Royal Bank had reasons to reject in no uncertain terms the facts and figures which the Bank of Ghana presented concerning non-performing loans, mis-reporting and shareholder transactions against the bank. For instance, the officials disputed the Bank of Ghana’s figure of GH¢161.92million for shareholder transactions. To those officials, an amount of Gh¢49million posted in the bank’s audited account was the true representation of the facts. They considered the reports which the Bank of Ghana used to affirm its decision to revoke the bank’s licence as untenable. Thus, they stated that “there was absolutely no need for the central bank to add the Royal Bank to the Consolidated Bank”.
In relation to that, grievances which came up included what other complainants considered the central bank’s failure to inform shareholders or directors before going public with the announcement, acting in bad faith or ill-motive, unlawful expropriation of property, and government’s insincerity in honouring accumulated contract-related debts on schedule.
You will agree with me that these are serious grievances with furious feelings. As a matter of economic interest, the aggrieved persons have an inalienable right to seek justice by pursuing the matter within the ambit of law. But what the does the Banks and Specialised Deposit-Taking Institutions Act (930) 2016 say in respect of grievance resolution concerning banking licence revocation and other related matters?
It is worth recognising that with the exception of the other liquidated banks, uniBank and its key person(s) and shareholders filed a suit in court to seek justice on the matter. I do not attempt to go into the merit of the claims because I have no legal training to do so; the court and its officers owe us that duty. I therefore entreat you to consider my viewpoint as a banker’s unsigned opinion on account of sentiments or grievances in the public domain. Nonetheless, I will lace this side of the conversation with my basic understanding of the legal provisions on how the Bank of Ghana’s decisions regarding revocation can be reviewed as stipulated in Act 930. I venture to say it is informative and will stimulate further discussions.
The Act 930 provides for reviewing decisions by the Bank of Ghana on official administration, liquidation and receivership by arbitration – clearly stated in Section 141.
(1) Where a person is aggrieved with a decision of the Bank of Ghana in respect of:
-(a) matters under sections 107 to 122 or sections 123 to 139;
-(b) withdrawal of the registration of a financial holding company;
-(c) matters which involve the revocation of a licence of a bank or a specialised deposit-taking institution; or
-(d) an action under sections 102 to 106 and where the Bank of Ghana determines that there is a serious risk to the financial stability or of material loss to that bank or specialised deposit-taking institution or financial holding company and that person desires redress of such grievances, that person shall resort to arbitration under the rules of the Alternative Dispute Resolution Centre established under the Alternative Dispute Resolution Act, 2010 (Act 798).
Since the grievances came from the banks’ liquidation, I deem it necessary to re-emphasise 141(1c) with clarity and to suggest a point of law relevant to this discussion. “Where a person is aggrieved with a decision of the Bank of Ghana in respect of matters which involve the revocation of a licence from a bank and that person desires redress of such grievances, that person shall resort to arbitration under the rules of the Alternative Dispute Resolution Centre established under the Alternative Dispute Resolution Act, 2010 (Act 798).
To my mind, the use of “shall” in this context evokes a mandatory submission to arbitration to resolve the grievances. Arbitration provides alternative methods for resolving disputes instead of the normal court trial processes. Be that as it may, it is a trite statement that the constitution is supreme and any law or Act of Parliament inconsistent with it is null and void. In that respect, we keep our cool and wait to witness proceedings and eventual outcome of the banking licence revocation cases pending before court or yet to go to court but not through an arbitration process.
As you know, God willing, this column is alive this and every Monday. Thanks for reading. Your suggestions and comments are always welcome. God bless You!