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Auditors Of Collapsed Banks Should Be Punished

By Ghanaian Chronicle
General News Inusah Fuseini
AUG 6, 2018 LISTEN
Inusah Fuseini

Tamale Central Legislator, Inusah Fuseini, has said auditors who misled the Bank of Ghana (BoG) with false information that led to the central bank granting licences to some banks must be punished for their actions.

According to him, the BoG relies on reports from auditors to take decisions, therefore, if those reports turn out to be false then the auditors must be questioned. The Bank of Ghana has revealed that shareholders of defunct uniBank admitted to using the bank's funds, which they took under “questionable circumstances” to acquire real estates in their names.

Announcing the consolidation of uniBank and four other struggling local banks, namely Sovereign, Beige, Construction and The Royal banks, into the newly-created Consolidated Bank Ghana Limited, the Central Bank's Governor, Dr Ernest Addison said that: “uniBank's shareholders and related parties have admitted to acquiring several real estate properties in their own names using the funds they took from the bank under questionable circumstances”.

Daniel Wilson Addo, a Chartered banker with 12 years experience in management positions, is the Chief Executive of the Consolidated Bank Ghana. “Promises by these shareholders and related parties to refund monies by mid-July 2018 and legally transfer title to assets acquired back to uniBank have failed to materialise”, Dr Addison said.

According to him, “Based on the Bank of Ghana's review of KPMG's assessment of the financial condition of uniBank, the Bank of Ghana has concluded that uniBank is insolvent and has no reasonable prospect of rehabilitation, or a reasonably credible path to viability.

“In arriving at this conclusion, the Bank of Ghana has carefully considered the options provided under Act 930 to rehabilitate a bank under official administration.

“The Bank of Ghana finds that in the interest of promoting financial stability, protecting the interests of depositors and lenders, minimising the costs to the tax payer, and restoring integrity in the financial sector, the only reasonable option is to fully resolve the bank by revoking its banking licence and winding down its affairs through a receiver appointed by the Bank of Ghana”.

Speaking in a television discussion over the weekend, Mr. Fuseini said: “Most regulatory institutions take reactive steps and I think they need to take proactive steps instaed, they need to go to the banks and see what is happening and also hold auditors responsible because auditors ought to indemnify the Bank of Ghana.

“If they produce an audit report that does not reflect the true and accurate status of the bank and get the Bank of Ghana to rely on that, they should be held responsible.”

Meanwhile, a financial analyst, Emmanuel Akrong has argued that the Bank of Ghana (BoG) should have exercised patience in the consolidation of the five defunct banks. Mr. Akrong said the Central Bank was right to have revoked the license of UniBank, Beige bank and Royal bank due to their insolvency.

“The law says if a bank becomes insolvent, the Bank of Ghana shall move in to close it down, so they did well to do that,” he said. Mr Akrong was, however, in disagreement with the liquidation of Construction Bank and Sovereign Bank.

Speaking on Joy TV, Mr Akrong said there were other options available to the regulator, instead of just closing down Construction and Sovereign banks, explaining that since they weren't insolvent like the other three, they [BoG] could have bailed them out instead of just winding them up as well.

“Looking at the business module of the banks, in my opinion, they should have been kept alive, and given another shareholder…” he said

“Luckily the Finance Ministry said if you're a solvent and well-run bank you could come to me for ¢400million so I don't understand why they didn't give them that option to access ¢400 million and kick out the shareholders,” he added.

In a related development, the Trade Union Congress (TUC) is calling for proper investigation into what necessitated the biggest bailout of five banks in the country. The TUC in a statement said after the investigation, those found culpable must be punished in accordance with the laws of the land to avoid further collapse of other banks.

A statement signed by the Secretary General of the TUC, Dr. Yaw Baah, applauded the Bank of Ghana for the steps so far taken to restore confidence in the banking sector. The statement welcomed the establishment of the Consolidated bank and said it will give confidence that depositors funds are safe.

The TUC also wants the new bank created to safeguard the jobs of people working in those five banks which were consolidated. The Bank of Ghana (BOG) on Wednesday, August 1, 2018, announced it was creating a Consolidated bank to take over five struggling banks in the country.

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