The then-Board Chair of the now-defunct Capital Bank, Dr. Mensa Otabil is suspected to have been party to the misapplication of liquidity support given the bank by the Bank of Ghana (BoG), according to an investigative report.
The report cites an emergency board and Executive Committee meeting on October 13, 2015, which notes concern with the manner in which the GH₵610 million liquidity support to the struggling bank was being used.
Instead of using the money the central bank gave the Capital Bank as liquidity support for the bank’s business, the management with the approval of the Board Chair, diverted the money for other uses, leading to the eventual collapse of the Capital Bank in August 2017.
The monies were moved by a member of the Board, Ato Essien into companies believed to be owned by him and others on the money. Some of that money was reportedly presented as capital to secure a license for another collapsed bank, Sovereign Bank.
Among the flagged transactions were GH₵27.5 million used for business promotion and handled by a board member; transfers to IFS amounting to GH₵23.9 million, transfers to Nordea Capital amounting to GH₵65 million, and transfers to Alltime Capital amounting to GH₵130 million.
Concerning Alltime Capital, the report noted that “Mr. Ato Essien stated that the placement of GH₵130m with Alltime Capital was strategic and funds would be paid back by March 2016.”
Dr. Otabil also assured management that he would ensure the funds were returned by March 2016.
Alltime Capital provided evidence that it was acting as an arranger for two separate commercial papers purchased by Capital Bank and issued by MC Management services limited.
The commercial papers are seen to be signed for Capital Bank by both its CEO, Rev. Fitzgerald Odonkor, and Chief Business Officer, Horace Tettey, according to the report.
Nordea Capital was also reported to have received GHc 65 million from Capital Bank, but it denied receiving the money.
“[Nordea Capital] indicated in two letters to the transaction advisors dated 13th and 28th December 2017 that it had acted as arranger for the issuance of commercial paper to the bank from MC Management services (GHs30m) and Breitling Services (GHs35m) on the instructions of the CEO, Rev. Fitzgerald Odonkor.”
But Rev. Fitzgerald Odonkor “denied having signed or authorized any of the commercial paper transaction arranged by either Alltime Capital or Nordea Capital. He subsequently sent a copy to the transaction advisors of an email dated December 14, 2017, to the Board Chairman, Dr. Otabil and majority shareholder, Mr. Ato Essien,” the report said.
The report added that “the situation requires further investigations if the signature on the commercial paper proves not to belong to Rev. Fitzgerald Odonkor.”
“Please, my attention has been drawn to document purported to have been signed by in respect of commercial paper for GH₵100 million issued to MC Management Services through Alltime Capital. Please, I haven’t signed for any such commercial paper issue and do not know the said company so will be grateful if you could help resolve this issue,” a section of the email from Rev Odonkor stated.
Nordea Capital failed to provide actual documentation of the commercial paper agreement but provided bank statements which reflected disbursements to MC management Services Limited and Breitling Services.
Ahead of the suspected misuse of funds, the BoG was supposed to appoint an advisor to monitor the liquidity support but did not.
The report also noted that “the placement of GH₵130m to Alltime Capital and GH₵65m with Nordea Capital were a round-tripping of the liquidity support of the Bank of Ghana to set up Sovereign Bank [which also collapsed ].”