It has now emerged that if the Bank of Ghana (BoG) had acted swiftly and applied sanction regimes to Board of Directors, Shareholders and Senior Management Staff of Capital Bank, the Bank would have been saved from total collapse.
The BoG, according to available documents sighted by Kasapafmonline.com, was complicit in the collapse of Capital Bank.
The strictly confidential documents emanating from the central bank itself, and detailing how the collapsed banks in part mismanaged funds at their disposal and also played smart on customers’ deposits accused the BoG of sleeping on its supervisory role.
For instance, the documents revealed that the major shareholder of Capital Bank, Mr. W. A. Essien, flouted all banking and risk management rules treating depositors’ funds as his personal “piggy bank”.
According to the documents, Mr. Essien used depositors’ funds totaling GH₵80million to invest in business ventures such as:
- Ocean Spring Mineral Water, Brietling Services, Gye Nyame Realty Limited, Capital and More Co. Limited, Accent Financial Services Limited, ESICH Life Assurance Limited and Capital Africa Group. All these business are in Ghana.
- First Capital Plus LLC, Gye Nyame Resources LLC, and Bill Minerals LLC all in Zimbabwe.
- Essien Swiss International Capital Holdings (ESICH) in South Africa and
- Connected entities such Nordea Capital, Commerz Savings and Loans and Sovereign Bank Limited.
The report further revealed that there were some initial transactions which imply willful deceit at the conversion stage from a savings and loan to a full tier 1 banking license.
At that stage, the report indicated, the shareholders appeared to ‘re-engineer capital’ amounting to GH₵56million through suspect placements to local financial institutions.
“On 30th March, 2016, the CEO of the Capital Bank wrote to the Head of Banking Supervision requesting that a non-existent investment of GH₵482.4million, which included the GH₵56million, should be converted into a five (5) year debt. The Banking Supervision Department (BSD) in a letter dated 3rd June, 2016 referenced BSD/52/2016 to the Managing Director of Capital Bank that the BoG granted approval in principle for the non-existent investment of GH₵482.4million to be structured in a loan facility to be paid by the following shareholders over a period not to exceed five (5) years: Ato Essien, Oheneba Osei Akoto, Stephen Enchill and Kingsley Atta Ghansah”, the documents in part read.
But the report said the action granted by the BoG could have been avoided in 2015 when the Risk Assessment report indicated that no capital had been introduced into the bank for the Class 1Licence.
The report further stated that the BoG’s reports on its annual examination, 2014 and 2015, also revealed chronic instances of poor credit risk management, poor corporate governance practices, terminal decline of financial performance and insolvency but the regulator failed to act and apply the necessary sanctions.
“It is clear from all the information provided to the transaction team, that had the Banking Supervision Department acted upon the information it received or enforced the recommendations it made, most of the issues would not have occurred. A review of the issuance of a banking license to Capital Bank reveals complacency or complicity on the part of the BoG”, the report in part stated.
It added “During the application stage, the Capital Bank shareholders produced evidence of only GH₵23.3million liquid investments and GH₵51.5million illiquid investments. A provisional license was issued on condition of a “submission of evidence of lodgment of additional capital funds needed to make up the required GH₵60million. The said funds should be lodged in an escrow account which would be verified by the Bank of Ghana”, amongst others. During the final approval, the shareholders instead produced placement certificates from financial institutions in their individual names but not an escrow account. This has now been confirmed to be the genesis of the capital adequacy issues of the Capital Bank. The new funds were never transferred to the Capital Bank.”