WE DID NOT COLLAPSE DUFFUOR, NDUOM BANKS -DI

The Danquah Institute (DI) says claims that the think tank, together with the government, conspired to collapse banks are a complete fabrication and distortion of the facts. The reaction of the institute follows video making rounds on social media alleging a conspiracy by the above-mentioned institutions against the banking sector, under the guise of a clean-up.

In the video, as played to the media by the DI, it was alleged that the conspirators were the Governor of the Bank of Ghana, the Finance Minister, and Gabby Otchere Asare Darko. It added that the targets were Dr Kwabena Dufuor of the now defunct Unibank, and Dr Papa Kwesi Nduom, GN Bank.

Yesterday, the Executive Director of DI, Richard Ahiagbah, held a press conference, where he described the video with its content as one that appeared to implicate the institute in a ploy to willfully collapse some banks, when the contrary is the fact.

“Unless you are a mischief-preneur, you know that a wilful collapse of banks or financial institutions, as claimed in the video, is not the disposition of a center-right policy institute or government whose policy bias is the growth and wellness of private enterprise, property and property rights, economic freedom, and the rule of law among others,” Mr Ahiagbah asserted.

According to him, the government chose the most challenging approach, but one that is realistic and consistent with its compassionate liberal conservative values, to protect the interest of depositors, employees, and the economy.

Government’s approach, according to the Executive Director, has saved the solvent but struggling banks through the Ghana Amalgamated Trust (GAT) and a clean-up of the insolvent banks to promote long-term growth and confidence in the sector.

He continued that “the decision was a choice between a comprehensive clean-up, or the failed liquidity support approach of [the] John Mahama administration. Recall in 2015 and 2016, the IMF supported the Bank of Ghana to undertake an asset quality review. The exercise revealed severe challenges with solvency, asset quality, and liquidity. In fact, some banks were significantly under-provisioned and suffered capital shortfalls.

“To respond to the report, the John Mahama administration opted to use liquidity support without a plan to address the underlying regulatory deficits and corporate governance malpractices. As it turned out, much of the liquidity support given to its friends were diverted to fund unrelated investments. Poor corporate governance practices ruled the day, paving the way for related interest deals, to the detriment of employees, depositors and investors.”

Mr Ahiagbah further opined that owners of some financial institutions appeared to be in lockstep with the regulators, which may have caused them to look away as depositors’ funds were funnelled into personal investments.

These owners and directors, he remarked, were emboldened and threw all caution to the wind. He explained that “for instance, under the NDC-Mahama government, shareholders and directors of a bank advanced personal loans to themselves, contrary to Section 70 (4) of Act 930. Again, four owners and directors of one of the collapsed banks owed the bank a sum of GH¢494.6 million.”

Referring to a statement by the receiver of the insolvent financial institutions, Eric Nana Nipah, that some owners bought houses outside Ghana with depositors’ monies, Mr Ahiagbah recalled from the video that “the narrator talks about peoples’ ‘bojaboja,’ it is clear now that the owners of financial institutions are the ones using depositors bojaboja under the NDC to acquire foreign homes.”

However, he indicated that measures put in place by the Akufo-Addo government in the financial sector were yielding positive results.

“Liquidity and capital adequacy, which, in 2017 were 25% and 14.6% respectively, have improved as of May 2020 to 39% and 21% respectively. Good corporate governance and prudence have led to a drastic reduction in non-performing loans, from 21% to 14.3%, or in cedi terms about GH¢1.46 billion. This is building the banking sector, not collapsing it.

“Ladies and gentlemen of the media, these are the facts. I submit to you that the video circulating on social media, which claims the Danquah Institute has conspired with the government to collapse UniBank and others, is nothing but a callous plot to besmirch our (DI) reputation and mischaracterise the government’s honest effort to see through a painful necessary clean-up exercise,” he added.

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