Pressure is mounting on the Managing Director of ADB Bank, Dr John Kofi Mensah, to step down voluntarily or be removed from office in view of the legal suit brought against him by the Receivers of Capital Bank.
Three experts in corporate governance have observed that recent allegation of financial impropriety against him renders him unfit to continue in his present role.
They have, therefore, asked him to either step down or be directed by the ADB Board or the Bank of Ghana (BoG) to do so.
Dr Richmond Atuahene who specialises in corporate governance in banking; Mr Justice Awuku Sao, a retired Chief Executive Officer of the Institute of Directors (IoDs) and private consultant on corporate governance, and an international investment expert, Dr Samuel Ankrah, concurred that Dr Mensah’s removal was needed to “urgently” preserve public confidence in ADB.
They were speaking to the GRAPHIC BUSINESS in separate interviews on a lawsuit filed against the ADB MD and 13 other persons and institutions associated with the now defunct Capital Bank.
The suit was brought by the Receivers of the erstwhile banks, Messrs Vish Ashiagbor and Eric Nana Nipah, to recoup some GH¢837 million of unpaid loans.
Dr Atuahene and Mr Sao referenced the BoG’s Fit and Proper Directive and the Banks and Specialised Deposit-Taking Institutions Act (2016) Act 930 and Financial Holding Companies.
The directive was issued in July this year, virtually a year into the collapse of the UT and Capital banks in August 2017.
Mr Sao said, “Section 58 of Act 930 prohibits a person from being appointed or elected or from accepting appointment or election as a director, chief executive officer or key management personnel of a regulated financial institution if that person: had defaulted in the repayment of financial exposure; or has been a director, key management personnel associated with the management of an institution, which is being or had been wound up by a competent court of jurisdiction on account of bankruptcy or an offence committed under an enactment.”
He, thus, wondered why Dr Mensah would be appointed after a bank he headed had been wound down by the central bank.
Under the current circumstances, he said, the law allowed the individual to step aside or the board directs him to step aside.
Should either of the two options fail, Mr Sao said the “BoG can step in and ask the director to step aside until legal issues are over”.
Fit and Proper
For his part, Dr Atuahene said the conditions for appointing an executive member of a bank in the BoG’s own ‘Fit and Proper’ directives barred Dr Mensah from managing a bank.
He, therefore, wondered how the ADB MD passed the test, considering that he played a leading role – MD and board member – in the now defunct Capital Bank.
“He came from an institution which had collapsed and was under investigation. So at a time when the auditors were still doing their work, he should not have been given the green light to be MD of ADB,” he explained.
An international investment expert, Dr Samuel Ankrah, wondered how Dr Mensah got into that office in the first place when he had issues hanging over his neck, reports Charles Benoni Okine.
He did not pronounce the ADB boss guilty but asked: “Did he officially tell the BoG or the shareholders of the bank about the case and the fact that he was a subject of investigations?”
Dr Ankrah said the allegations levelled against him were serious and would definitely engage him, for which reason he might not be able to fully discharge his duties as the MD of a big bank such as ADB.
Other experts have also argued that as long as he remains in office, the bank he heads will be directly or indirectly compelled to spend some money belonging to the bank and its shareholders on his legal case, and that would be unacceptable.
They also insisted on his removal or for him to do the honourable thing by voluntarily stepping aside.
The BoG’s Fit and Proper Directive for Banks, Specialised Deposit-Taking Institutions and Financial Holding Companies is a set of guidelines that prescribes the modalities for appointing executives of banks.
Among other things, it states that pending – as well as concluded – criminal or administrative proceedings may have an impact on the reputation of the appointee and the regulated financial institution.
It goes on to say that “while there is a presumption of innocence, the very fact that an individual is being prosecuted is relevant to propriety”.
It further adds that even concluded proceedings will have an impact if the finding goes against the nominee.
“Even if the conclusion is in favour of the nominee, the Bank of Ghana may question the underlying circumstances of the proceedings to determine whether there is any impact on reputation. Therefore, the Bank of Ghana must always be informed about legal proceedings.”
Section 32(ii) of the directives also states that a person may be declared unfit if he has been the subject of a judgement debt which is unsatisfied, either in whole or in part, whether in Ghana or elsewhere.
It also states that the person is unfit when he has been the subject of any proceedings of a disciplinary or criminal nature, or has been notified of any impending proceedings or of any investigations, which might lead to such proceedings; also whether the person has held a position of responsibility in the management of a business that has gone into receivership, insolvency or involuntary liquidation while the person was connected with that business.
Referencing portions of the above statements, Dr Atuahene said the appointment of Dr Mensah as the MD of ADB “was not proper because his previous bank was under receivership.
“He had something to do with it so he should not have been allowed to be the MD,” Dr Atuahene noted.