A preliminary report by the Bank of Ghana (BoG), the nation's central bank on the current financial situation of the National Investment Bank (NIB), and the role of its Managing Director (MD) Daniel Gyimah, has revealed that the MD's oversight of the bank has been unsatisfactory, especially with regard to the liquidity management and credit delivery.
The report, which The Chronicle has sighted, indicated that excluding the US$60 million transaction that is in controversy, total liabilities of the bank stood at GH¢79.6 million at the end of December last year, representing 160% of net worth, which is above the prudential level of 100%.
According to the report, large contingent liabilities have been contracted on behalf of the bank without the Board's authorization or regulatory approval.
“The MD guaranteed the promissory notes without authorization from the Board, and permission from the regulator in disregard of banking rules and procedures”, the report noted.
In view of this, the report recommended the MD to step aside in order to pave way for a turnaround Manager, to steer the activities of the bank and for in-depth regulatory review and resolution of its liquidity and capitalization requirements.
The report, which was dated February 10, 2009, gave account on how the NIB has been struggling to be on its feet in the financial market, during the last quarter of the previous year and early days of this year.
“Subsequent to the last examination of the National Investment Bank, concluded in October 2008, the bank again experienced some serious liquidity challenges in December 2008 and January 2009, leading to its reliance on heavy borrowing from the interbank market”, the report revealed.
From the report, between December 2008 and January 2009, borrowings from the interbank market and the BoG, on average, on a daily basis amounted to between GH¢34-35 million, a liquidity situation it said has not improved to date.
The MD, according to the report, was the principal official behind a transaction the bank undertook on January 29, 2009, to an undisclosed contingent liability amounting to US$60million, crystallized on account of a number of promissory notes that the bank had ostensibly issued sometime in 2007.
Mr. Daniel Gyimah was reported to have promised submitting a detailed report, subsequent to queries from the BoG, but never turned up after his initial denial of having any knowledge about the said transaction, to date.
“In response to our queries regarding details of the transaction on 6/2/09, however, he was very evasive with answers such as 'I do not remember' or 'I cannot tell'. He promised to submit a detailed report subsequently, but to date no such report has been furnished”, the report noted.
According to the report, there was no proof of the said transaction in the board's minutes or in the books of the bank.
Senior management of the bank, including the Deputy-Managing Director have all indicated their lack of knowledge of the transaction.
The immediate past Chairman of the Board of the bank has also denied any knowledge of the said transaction involving the US$60 million promissory note.
Staff of the bank were also said to have denied having any knowledge about the transaction, but the report found the Head of International Banking having a hand in the said transaction, after receiving orders from her boss.
“When quizzed, the Head of International Banking claimed she saw only two of such messages and once the MD directed her, she acted on instructions. As to why she will confirm a transaction which is not in the bank's books, she again said she was acting on her MD's instructions”, the report said.
The report, however, cited ELAND Ghana Limited to be the principal beneficiary of the said funds that accrued from the promissory notes based on available documents at the disposal of the central bank.
It said ELAND Ghana Limited issued promissory notes valued at US$2million each, and totalling US$60 million which were then guaranteed by NIB with maturity date of January 29, 2009.
The report, however, noted that the contingent liability of US$60 million was not captured in any records of the bank, apart from the two swift messages cited, thus placing the transaction beyond the scrutiny of the board, supervisors and the bank's external auditors.
The report called for further investigations into the matter to unravel the truth surrounding the transaction.
It again called on the MD and the Head of the International Banking to provide full details of the said transaction after the latter have been identified as having knowledge about the said transaction.
The report observed that NIB is unable to recover a substantial part of its credit portfolio. The Chronicle gathered that the Transition Team has in custody the report but further investigation is still ongoing by BoG officials.
When The Chronicle contacted Captain Nkrabeah Effah- Darteh the counsel for the NIB boss, he stated that he was not aware of the existence of the BoG report.
The Chronicle's investigations continue.