A former Chief Executive Director of the now-defunct Capital Bank, Rev. Fitzgerald Odonkor, has been detained by the Economic and Organized Crime Office (EOCO) over the collapse of the bank.
Rev. Odonkor was detained after he was invited by the financial crime investigation outfit, Accra-based Citi FM reported.
Rev. Odonkor and two other directors of the bank, Pastor Mensa Otabil, Founder of the International Central Gospel Church, ICGC, and William Ato Essien, were all invited to answer questions for their roles in the bank’s collapse.
It is however unclear why EOCO detained only Rev. Odonkor.
In August 2017, Capital Bank and UT Bank collapsed because of their inability to turn around their negative capital adequacy position, and they were subsequently taken over by GCB Bank.
The liabilities of the two banks, according to the Bank of Ghana (BoG), overwhelmed their assets, leaving the central bank with no option but to undertake a purchase and assumption transaction, as the least costly method of dealing with a collapse.
Probe into top management
At the end of March 2018, the former Directors of Capital Bank and UT Bank were invited by EOCO to answer for their roles in the collapse of the banks.
This followed the findings of an investigative report on the collapse which was submitted to the BoG.
Prior to the summons by EOCO, the Second-Deputy Governor of the BoG, Elsie Awadzie, had assured that the activities of the top officials of the two banks were under scrutiny.
This was in response to a question on the Citi Breakfast Show, that the probe into the two collapsed banks’ management had stalled.
According to her, once the takeover of the two banks was confirmed, the BoG focused on securing the assets of the banks.
The BoG said it would sanction shareholders, directors, and key management personnel who are found to be culpable, and whose activities led to the collapse of both banks.
It is unclear if the former directors of the defunct UT Bank have also appeared before EOCO after the summons.
Former Capital Bank CEO’s warning
When the news of the collapse of Capital Bank broke in August 2017, a memo sighted and published by the Insight Newspaper in January 2015, which went under the radar at the time, noted that the bank was on the verge of collapse.
In the memo, the bank’s CEO at the time, John Kofi Mensah, warned that Capital Bank had capitalization issues and was a ticking “time bomb.”
“I regret to mention that unless we act ourselves and so with all the promptitude that it deserves, things may go out of hand, including the possibility that the Bank of Ghana may step in, by which time it will be too late for us to make excuses, with all of us risking sanctions,” the memo stated.
He also noted increased interest expenses and general costs of doing business as a major problem.
“This has been the bane of the bank for some time now, that while management is embarking on a desperate and aggressive deposit mobilization to shore up liquidity to cover holes in the balance sheet, it is resulting in increased interest expense and general costs to us. This is detrimental to our profitability drive and the same is unsustainable.”