ADB Board's response makes 'complete mockery of corporate governance' - UNICOF
Workers of the Agricultural Development Bank (ADB) say they are standing by allegations of misappropriation of funds they leveled against the Board and the Managing Director of the Bank.
In a statement copied to Joy News, the workers dismissed claims by the board that their allegations were baseless and false.
According to them the Board’s response “makes a complete mockery of corporate governance and defeats the reason for which the Board was expected to be acting as a check against excesses of management of the Bank.”
Workers of the state-owned bank on one hand and the board and MD on the other have been haggling over the future of the bank. The workers are opposed to the sale of the bank's head office and listing on the Ghana Stock Exchange.
They say the position of the Board with respect to the sale of ADB House contradicts that of the MD.
“While the Board claimed that the sale was halted because their chosen local bidder could not raise the money, the MD, Mr. Stephen Kpordzih at his press briefing told the entire world that the sale was halted also because of the recent agitations and that the issue would be revisited.
“We thought that by his position as MD, Mr. Kpordzih is a member of the Board and, therefore, find it odd that the Board and the MD should be stating different positions on this critical matter,” they stated.
Workers of ADB expressed displeasure at the sale of the bank’s head office in Accra for $10 million and the subsequent renting of another office space at the Accra Financial Centre (AFC) at a cost of È»1 million a month.
The staff of the bank questioned the board’s decision to make such outrageous expenditure.
They also kicked against the planned sale of shares of the bank through an Initial Public Offering (IPO) and called for an audit into the operations of the bank before it goes public.
The matter of the IPO and sale of the bank’s former head office have been suspended following government’s intervention.
An emergency meeting involving Employment and Labour Relations Minister, management and staff of the Agricultural Development Bank, ADB, yesterday ended in a deadlock.
The workers want the Board and the MD to step aside whilst investigations into the operations of the bank continue.
In spite their agitations, both the Board and the MD have no shown no sign leaving and the main shareholders - the state and the Bank of Ghana - appear to have no desire in seeing them go.
Below is a copy of the full statement
RE: HAPPENINGS AT THE AGRICULTURAL DEVELOPMENT BANK LIMITED
Our attention has been drawn to a press release issued by the Board of Directors of ADB Limited dated, May 15, 2015 and copied to many media house and we wish to respond as follows. First of all, the entire response of the Board of Directors to concerns of agitating staff of the Bank makes a complete mockery of corporate governance and defeats the reason for which the Board was expected to be acting as a check against excesses of management of the Bank. Now to the core issues raised by the Board:
SALE OF ADB HOUSE
The position of the Board clearly contradicted the Managing Director's position. While the Board claimed that the sale was halted because their chosen local bidder could not raise the money, the MD, Mr. Stephen Kpordzih at his press briefing told the entire world that the sale was halted also because of the recent agitations and that the issue would be revisited. We thought that by his position as MD, Mr. Kpordzih is a member of the Board and therefore find it odd that the Board and the MD should be stating different position son this critical matter. Again, what the Board failed to do was to tell the whole world who the two highest bidders were. Since according to the Board, the local bidder was willing to pay far in excess of the original valuation amount of GHC17 million, this is another manifestation of the incompetence of the management and board. On this score we are further convinced that the property was undervalued because of other considerations. Independent architects we have spoken to claim that the ADB House in its present shape and form can be extended to as many as twelve floors with very minor structural modifications. We are therefore maintaining our position that the sale of a freehold property on the Independent Avenue is unethical and doesn't support the business case being made by the proponents of the sale.
NEW HEAD OFFICE (AFC):
It is frustrating to again read from the Board that the new management incorporated a joint venture company with Accra One ( Agridev Real Estate Limited) with the sole objective of developing the land adjacent the Cedi House into a building complex. That the Bank has a 10 percent shares in the said joint venture company with the possibility of increasing it to 15 percent after construction. The question is, has that shareholding now been increased to 15
percent? Again, if the Bank's shareholding in Agridev is only 10 percent, who are the other share holders of Agridev and Accra One?
Also, the claim by the Board of having been satisfied that the Bank as anchor tenants paying a monthly rent of USD37.00 per square metre makes business sense since they were converting a non-income earning asset into an income earning one is clearly flawed. Because the Board failed to say or conveniently ignored the fact that the Bank has committed to pay a monthly rent of USD268, 250 (currently GHC1 million) which would be increasing with the depreciation of the cedi. The Board also failed to report in their statement or conveniently ignored the fact that the Bank has paid a lease deposit of GHC7,518,640.83 to Agridev , which will not generate any income but would rather depreciate with time. There is also no indication on when this deposit would be returned to the Bank. It is also mind boggling why a so-called anchor tenant and a shareholder in the AFC facility would be made to pay that huge rent deposit, which would not give the Bank any net interest income. On this AFC matter, we were also expecting the Board to expatiate on the statement by the former board chair, Mr. Ibrahim Adam on Adom FM that the AFC was originally supposed to be built on a built operate and transfer (BOT) arrangement. What changed?
Again, the board conveniently avoided the cost in respect of procuring the furniture for the new head office. The MD specifically said at his press conference that the rent included the cost of furniture and fittings. Although he later contradicted himself in another statement to staff that the Bank pre-financed the cost of the furniture and that Agridev will reimburse the Bank. Was the cost of the furniture a loan the MD and Board granted to Agridev and at what interest rate and what is the tenor of if it is a loan? Indeed, what are the terms?
CONFLICT OF INTEREST OF DIRECTORS
On the Mercedes Benz being sold to the Board Chair, the issue is not how much the car was valued or sold, but how much the Chair paid for it at the time of disclosure. How come the Board claim that they authorised a valuation by SIC, which was strangely done US dollars, but when the auction was done, the Board Chair won the bid? Can that only not be so because the Board Chair used his insider position and privilege to unduly influence the sale and purchase therefore of the car.
On the loan to another board member, Mr. Maurice Tanko Abisa Seidu was granted a loan of GHC400, 000 with a 12-month moratorium, even though Section 4.7 (II) of the Bank's credit policy generally disallows such practise of granting interest waivers on loans. How many other long standing customers are granted such waivers? Did the Board member not get this favour because of his privileged position?
Another question bothering our minds is that who owns the MD's residence situate at Roman Ridge Accra? Is it the Chair?
CONFIDENTIAL INFORMATION IN THE PUBLIC DOMAIN
The claim that the Board is very much concerned that confidential information and documents particularly customer information have been leaked to the press by a section of the employees without any justification contrary to and in breach of the oath of secrecy they have ascribed to and that at the appropriate time these matters will be investigated is nothing but a veiled intimidation. The Board should look no further than the MD and his surrogates, who are rather leaking information with the view to divide the unions and the staff. We shall not be cowered by any threats and any form of intimidation shall be resisted with the people's power.
LATEST BANK RANKINGS BY THE BUSINESS AND FINANCIALTIMES
While we are at this, the Business & Financial Times in its Monday, May 18, 2015 edition published a banking industry performance and contrary to the MD and Board's positions, the Bank has scored the last in almost every index. For share of industry loans, ADB stands at 9th position, pre-tax profit 21st position. Cost to income ratio, 20th position, return on assets 18th position, return on equity 19th, and strangely, the Bank is at 8th position relative to share of industry assets. How can a bank like this be deemed to be doing well?
Chairman – PMSUADB
John Esiape GS- UNICOF