The Accra Fast Track High Court Thursday adjourned to December 12, 2013 the case in which the Centre for Freedom and Accuracy (CFA) is challenging the sale of Merchant Bank to the Fortis Private Equity Fund.
That was after lawyers for the Social Security and National Insurance Trust (SSNIT) and the Bank of Ghana (BoG) had told the court, presided over by Mr Justice L.L. Mensah, that their clients were served late with the new motion for an interlocutory injunction and, therefore, needed time to study it to enable them to file their affidavit in opposition and their statement of case.
The BoG has approved a deal for Fortis to pay GH¢90 million for a 90-per cent stake in Merchant Bank, but the CFA is asking the court to place an injunction on the deal.
In his application, the CFA is seeking, among other things, an interlocutory injunction to restrain the BoG from issuing any licence to Fortis to operate Merchant Bank as a validly acquired concern.
It is also seeking an order directing that the offer for the sale of Merchant Bank, if justified, be advertised publicly.
The CFA is further seeking an order of the court requesting Parliament to institute an inquiry into the sale of Merchant Bank to Fortis.
In its statement of claim, the CFA said in spite of the palpable silence by SSNIT to explain why it needed to divest itself of its shares, it was publicly alleged that the bank was owed huge sums of money by its creditors, which debts were adversely affecting its operations and, therefore, the decision by the government to sell it off.
Consequently, it said, several well-known international, as well as local, financial and banking institutions made bids to acquire the bank, among which was the First Rand Bank of South Africa, which is reputed to have put up a strong bid.
It said the plaintiff was reliably aware that the First Rand Bank offered to pay GH¢199.3 million to acquire 75 per cent of the shares of Merchant Bank and also undertook to recover its toxic debts which allegedly had bedevilled its operations by entering into negotiations with UT Recoveries, a local debt recovery company, upon the recommendations of the BoG.
It said the deal was reported to be the best offer ever made for Merchant Bank but it was mysteriously rejected in favour of a lesser known entity.
It said while the plaintiff, like any other contributor, had hoped that by rejecting the bid by the First Rand Bank the offer was going to be made public for other potential investors who were going to offer even better than what the First Rand Bank offered, Fortis popped up out of the blue as having acquired Merchant Bank, with the approval of the BoG, at GH¢90 million for 90 per cent of the shares of the bank and undertook to recover only 30 per cent of the toxic debts of the alleged ailing bank.
It said the deal purportedly entered between Fortis and the Government of Ghana, with the tacit approval of the BoG, was not good enough and amounted to short-changing the taxpayer and the contributors whose money SSNIT invested
According to the statement, the deal, if allowed to go on, would amount to short-changing the people of Ghana and same was a flagrant violation of the 1992 Constitution.
It averred that Fortis had no known reputation in banking or finance and to have been chosen over such a reputable financial institution such as the First Rand Bank raised a lot of questions about the transparency in the deal.
It said the deal between SSNIT and Fortis over the sale of Merchant Bank lacked transparency and violated all known banking and financial rules and regulations, especially seeing that the interest of the workers who were minority shareholders had not been taken into consideration.