Minister of Justice and Attorney General, Godfred Yeboah Dame has said a deeper examination of the banking crisis that hit the country, leading to the cleanup exercise by the Bank of Ghana (BoG), showed poor corporate governance, non-performing loans, breach of directors’ obligations, credit risks, and regulatory lapses were responsible for the vulnerabilities.
Five indigenous banks were consolidated to form the Consolidated Bank Ghana Limited after the exercise.
Speaking on the financial sector at Cambridge University on Monday September 5 Mr Dame said “Between August 2017 and January 2020, Ghana was hit by a severe banking crisis that affected several institutions, and several indigenous banks, as a result of which the central bank ordered a take-over of some of the banks by the Ghana Commercial Bank.
“The Central bank cited the insolvency of the banks as a significant reason for revoking their license.”
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He added “Five indigenous banks were consolidated to form the Consolidated Bank Ghana Limited. A deeper examination of the banking crisis showed poor corporate governance, non-performing loans, breach of directors’ obligations, credit risks, and regulatory lapses were responsible for the vulnerabilities the banks were exposed to.
“Internal auditors who were required to superintend proper accounting practices were complacent and covered up Executive Directors. The recent banking crisis held ramifications for the entire economy. It was the most severe economic crisis to affect Ghana since independence.”
After “painstaking investigations, dockets of the financial crime are almost ready for the prosecution to commence in earnest.”
“The Office of Attorney General is prosecuting other cases including stealing, willfully causing financial loss to the state, and money laundering,” he added.
It is recalled that the Finance Minister Ken Ofori-Atta gave the approach adopted by the BoG a clean bill of health.
He said the approach was apt because there was a huge problem in the financial sector that needed to be solved. The BoG between 2017 and 2019 combed through the financial sector of the economy.
The central bank revised the minimum paid-up capital for existing banks and new entrants from GHS120 million to GHS400 million. According to the regulator, this was to test the viability of the banks.
Speaking in an interview with TV3 on Monday October 26, 2020, Mr Ofori-Atta said the approach adopted by the BoG was perfect.
He said “There was a problem and we had to solve that problem. Fundamentally, was the approach necessary? No question about that, the approach was okay.”
By Laud Nartey|3neews.com|Ghana