Shareholders of the Mponua Rural Bank at Amuana Praso in the Birim North District in the Eastern Region have dissolved the eight-member Board of Directors of the bank for alleged gross financial malpractices which has affected the effective operations of the financial institution.
The appointment of the Supervising Manager, Mr Emmanuel Opoku, and the external auditors, Messrs Kobina Whyte and Co Limited, have also been terminated.
Consequently, a five-member Interim Management Committee (IMC) and a relieving manager have been appointed to manage the affairs of the bank.
A Chief Manager of the Banking Supervision Department of the Bank of Ghana, Mr Daniel K. Owusu, announced these at an extraordinary general meeting of the bank at Amuana Praso.
He said as a result of extremely weak oversight on the part of the board, substantial credit facilities were granted to some directors, their spouses and the external auditors without approval by the Bank of Ghana, as required by Section 43 of the Banking Act.
Mr Owusu said management of the bank also ignored the advice of the Bank of Ghana on the construction of its head office building and borrowed money in respect of the project, saying that affected the profitability of the bank, while the management also concealed substantial expenses on items purchased by falsification of financial statements to the Bank of Ghana.
The chief manager said an ineffective internal audit system led to a pre-signed payment order instrument, which resulted in fraudulent practices at the bank's agencies, resulting in an overdrawn balance of ¢418 million in the payment order account.
He said the bank also failed to prepare periodic reconciliation for accounts in relation to cocoa purchase payment order, treasury bills and other investments, which led to imbalance in its ledgers.
Mr Owusu said when the board realised the serious nature of the supervising manager's misconduct, he was summarily dismissed, while the directors resigned en bloc, which paved the way for the recruitment of a new supervising manager to manage the bank.
He advised the IMC members to provide effective oversight and corporate direction for the bank to remain focused and to organise an annual general meeting to elect a substantive board within one year.
Mr Owusu urged the IMC to introduce measures to control cost, increase deposits and ensure early recovery of all overdue loans, including those granted to the ex-directors and staff.
He urged the IMC to also strengthen internal control systems to safeguard the bank's assets.
In an address read on his behalf, the Managing Director of the ARB Apex Bank, Mr Emmanuel Kwapong, said the country's economy was predominantly cash-based, with more money outside the banking system.
He called for effective deposit mobilisation efforts through the development of appropriate packages and products to enable all banks to mop up the excess liquidity outside the banking system.
Mr Kwapong said rural banks needed efficient and effective management to harness resources and advised that persons appointed to serve on the boards and management of rural banks must have the requisite academic and moral background to meet the challenges peculiar to the banking industry.
He said the Apex Bank, in collaboration with the Bank of Ghana, was organising a nation-wide training on the cedi re-denomination exercise and urged directors, management and staff of all rural and community banks to be part of the exercise to enable them to effectively educate the public on the exercise.