25.05.2004 Business & Finance

Governor of BOG lauds corporate governance

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Accra, May 25,GNA - The Governor of the Bank of Ghana (BOG), on Tuesday said fraud, dishonesty and conflict of interests leading to losses tended to undermine the comprehensive framework designed to ensure corporate governance in the Banking Industry.

Dr Paul Acquah, the Governor, whose keynote address was read on his behalf by Mr Emmanuel Asiedu-Mantey, First Deputy Governor, at a workshop on "Governance in Financial Institutions", in Accra cited insider dealings and conflicts between directors; shareholders and customers as some of the factors undermining the legal and institutional mechanisms established to facilitate good governance.

Dr Acquah said: "Some of these situations result in liquidity crisis, which sometimes lead to insolvency of banks and loss of banking services in the communities where they are located."

The workshop was organised by the BOG, Commonwealth Association of Corporate Governance and Ghana Institute of Management and Public Administration for over 65 participants from the financial institutions, according to a document made available to the Ghana News Agency.

Dr Acquah said persons whose acts and inaction created problems for the institutions were not necessarily the key corporate directors and managers.

" Employers at all levels of the banking set up, either acting alone or in collaboration with outsiders are the real or potential perpetrators of corporate governance abuses.

"To arrest the situation, all banks are urged to keep eagle eyes on every aspects of their operations."

He said the BOG Act and the Banking Law contained the basic requirements for good corporate governance in the banking system, which required the appointment of Board of Directors and Senior Management Staff.

Dr Acquah said the most essential tool for governance in any financial institution was the Board of Directors, who had the collective responsibility for promoting the success of the institution by developing policies and strategies that addressed the risks and activities of the business.

He said innovations in the BOG Act included the introduction of a Monetary Policy Committee and an Audit Committee. Dr Acquah said: "Apart from these two specialised Committees, Section

15 of the Act empowers the Board to set up other Committees. "The Committee system has over the years provided invaluable input into the governance process of the Bank."

He said the diverse stakeholder interests in the banking business required that the governance process must be transparent in order to remove unnecessary doubts and suspicions among stakeholders. It is also a bulwark against corporate bribery and corruption and other financial malpractices.

"For once, all banks in Ghana this year disclosed their non-performing loans when they published their financial statements for 2003.

"This additional information helps the stakeholders to assess the performance of their banks.

The workshop treated topics like: "Corporate Governance- Its Importance and Activities of the Board of Directors"; "Corporate Governance and National Development" and "The role of Corporate Governance in promoting Economic Development and Competitiveness - What the Banks can do". 25 May 04

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