Sale of Merchant Bank is a scam! -Minority
The Minority in Parliament yesterday described as a scam the approval granted by the Bank of Ghana (BoG) for the sale of Merchant Bank Ghana Limited to Fortis Equity Fund Limited and called for proper due diligence before the sale.
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“Even though no agreement has been signed between Fortis and other shareholders, the BoG has gone ahead to give approval for the sale.
This is a scam; a fraud being perpetuated on the Ghanaian people. How can you give your daughter for marriage before the marriage rites are performed?” it cried out.
Addressing a press conference in Parliament yesterday, the MP for New Juaben South, Dr Mark Assibey-Yeboah, who is also a member of the Finance Committee of Parliament, stated that due diligence had not been done in the present circumstance and challenged the Governor of the BoG to tell Ghanaians whether the assertion was right or not.
Background
Dr Assibey-Yeboah explained that on July 12, 2013, the BoG put out a press release to update Ghanaians on the proposed acquisition of Merchant Bank by First Rand Bank (FRB) of South Africa in which it was indicated that the BoG was unable to proceed with the proposal, since the majority shareholder in the bank, the Social Security and National Insurance Trust (SSNIT), and the FRB had been unable to reach an agreement on the proposed acquisition.
The press release had stated further that adequate measures were in place to safeguard the operations of the bank and protect all stakeholders.
Dr Assibey-Yeboah said the two parties, SSNIT and FRB, had, earlier in a joint press release, stated that the transaction could not take place because “despite all reasonable endeavours, the parties were unable to reach agreement on the commercial principles underlying the transaction and could not procure the fulfilment of all the conditions precedent”.
He said the offer from FRB would have seen it investing $91 million (GH¢199 million) in exchange for 75 per cent shareholding in Merchant Bank, while SSNIT and the State Insurance Company (SIC) would have held 23 per cent and two per cent shares, respectively, in the new structure of the bank.
Dr Assibey-Yeboah said one of the reasons the SSNIT/FRB proposal was not approved was the issue of outstanding loans on the bank’s books, adding that efforts by the board to go after huge unpaid loan portfolios had been scuttled by “powerful forces”.
Fortis Equity Fund Limited
The MP explained that Fortis Equity Fund Limited, the new buyer, entered the race, but not before Mrs Mirian Barnor, the Chairperson of the Board of Directors of Merchant Bank, who was a thorn in the flesh of the “powerful forces”, had been forced out in late September this year,
Fortis seeks to acquire 90 per cent share for GH¢90 million, leaving SSNIT and SIC with eight per cent and two per cent, respectively.
“This is the most bizarre and fraudulent deal we have witnessed in Ghana ever since Alfred Woyome hoodwinked Betty Mould-Iddrisu and swindled the Ghanaian taxpayer of GH¢51.2 million for no work done,” he said.
Dr Assibey-Yeboah explained that Fortis, which was an unknown entity, was registered and incorporated in June 2013, soon after the FRB deal had failed to go through.
According to the MP, the initial capital put out by Fortis, as per the Registrar-General, was GH¢5 million, adding that Fortis had no experience as far as banking was concerned, while, by its capitalisation it did not even qualify for a non-bank financial licence.
“Whereas the sticking point in the rejection of the FRB deal was how to deal with the bad books, we are quick to accept this bogus offer that only seeks to collect a paltry 30 per cent of the bad books and hand over 70 per cent to SSNIT, including the GH¢58 million owed by Ibrahim Mahama’s Engineers and Planners,” he said.
Dr Assibey-Yeboah questioned how it could be better for the country to hold eight per cent of GH¢90 million offered by Fortis and not 23 per cent of GH¢199 million by FRB, adding, “Why would you want to approve of a transaction that short-changes the Ghanaian people?”
The Minority Spokesman on Finance, Dr Anthony Akoto Osei, asked Ghanaians to leave politics aside and judge whether the sale of Merchant Bank to Fortis was in the interest of the country.
He said although there was the need to encourage Ghanaian investors, the present circumstance was a fraudulent deal, rather than encouraging a Ghanaian company to buy Merchant Bank.