I have followed the debate on whether or not BOG breached the Banks and Specialised Deposit Taking Institutions Act, 2016 (Act 930) by not giving the banks whose licences have been revoked, PRIOR written notice. My view is that as long as the BOG determined that there were (i) grounds of emergency, (ii) public interest considerations, or (iii) ground of insolvency, NO PRIOR WRITTEN NOTICE WAS REQUIRED.
The Act provides, arguably, 8 grounds for revoking a licence. 7 of these 8 are listed under section 16(1) as follows:
(1) providing false, misleading or inaccurate information or suppressing material information;
(2) failure to commence business within one year;
(3) failure to fulfil or comply with the licence’s terms and conditions;
(4) carrying on business in a manner which is contrary/detrimental to the interests of depositors or the public;
(5) conviction of a crime related to money laundering/terrorist financing or being an affiliate or subsidiary of a parent or holding company that has been so convicted;
(6) engaging in unsafe or unsound practices; or
(7) persistently contravening the Act, or Regulations, directives or orders made under it.
Under section 16(2), BOG also has the power “to take any other remedial or penal action.” Section 16(3) and (4) contains detailed provisions about BOG giving prior written notice of revocation, and giving an opportunity for the institution to make written representations, etc.
The catch is however in section 16(7). It says that in cases of (i) emergency or (ii) public interest, BOG may revoke a licence without following the notice provisions in section 16(3) and (4). The question is whether these two constitute separate grounds for revocation or simply amount to situations where the first 7 grounds are compounded by emergency or public interest considerations so that no notice is required.
Note: Although there is no general definition of the word “emergency” in the Act, there is interesting learning from section 77, which specifically defines the term “a case of emergency” for the purposes of that section to mean “any situation that may pose a threat to the stability of the financial system.” Not a general definition, but certainly instructive. However, the term “public interest” is generally defined in section 156 to include “a right or advantage which enures or is intended to enure to the general benefit of the people of this country.”
The 8th ground for revoking a licence has its original source in section 16(8) which applies the receivership provisions in sections 123 to 139 to revocations as the mandatory consequence and then requires ANOTHER notification to “the institution responsible” but this time for the purpose of “deposit protection” ONLY.
Section 123, titled “mandatory revocation of licence and initiation of receivership,” says that where the institution is insolvent or likely to become insolvent within 60 days, the BOG has the power to revoke its licence. This introduces the 8th ground for revocation, and it does not have any PRIOR notification requirement. The notice required under section 123, is an immediate notice of the BOG’s decision, also for the purpose of “deposit protection” ONLY.
By the way, section 123(4) defines “insolvent” as the institution’s inability “to pay its obligations as they fall due or the circumstance where the value of [its] liabilities… exceeds the value of its assets.”
What is apparent is that although the Act imposes PRIOR notification requirements in respect of the first 7 revocation grounds, it creates exceptions either in cases of emergency or for public interest considerations, where BOG is allowed to act without the PRIOR written, and is only bound to give the ‘Deposit Protection Only’ notification under section 16(8), because of the subsequent and consequent receivership matters. Also, where the revocation ground is “insolvency,” as contained in section 123(1), no PRIOR written notice is required. Just like section 16(8), what is required is the ‘ex-post facto’ notice for ‘Deposit Protection Only.’
So whether emergency and public interest constitute separate grounds for revocation or are additional situations that compound the 7 grounds in section 16(1), as long as BOG determines that they exist (whether independently or in addition to any other ground), no PRIOR written notice is required. Simply, whenever they exist, the BOG is permitted to ignore the PRIOR notice requirements under section 16(3) and (4). And also in cases of insolvency under section 123, no PRIOR written notice is required.
And to those screaming "Judicial Review" kindly read section 141 of the Act which requires all grievances arising from licence revocations etc. to be submitted to compulsory arbitration. Also, read very carefully the 30th November 2017 High Court decision in John Ofori v. Bank of Ghana, where, although the court left open the likelihood of challenging the BOG in such matters through a Judicial Review application where public law remedies are sought, also stated in part that “the Act has envisaged that a situation like the Plaintiff has found himself in can arise and therefore has provided in section 141 the mode of resolving such disputes. This is the mode that the Act has provided, and that option ought to be engaged and exhausted before, to my mind, this court can intervene.”
Just my 2 pesewas.
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