By Diana M. Kodie .
The Founder of the International Central Gospel Church (ICGC) and 15 other executives of the defunct Capital Bank have been dragged before an Accra High Court as the plaintiff demands compensation.
Among the 15 others who have been sued are shareholders and directors over the collapse of the bank in 2017.
According the two plaintiffs, Vish Ashiagbor and Eric Nana Nipah, who sued in their capacity as joint receivers of the bank in a statement of claim, said the directors embarked on certain transactions which were in breach of company laws in Ghana.
“The plaintiffs says that over a period of several years, William Ato Essien, 1st, Mensa Otabil 2nd, Stephen Enchill 4th, Fitzgerald Odonkor 12th, Amadu Montia 13th, Kofi Kwakwa 14th and Frances Adu-Mante15th, defendants in their capacity as directors approved several loans and credit facilities to other companies and made placements of funds to other companies.”
“Directors approved loans and placement of funds to themselves and related parties without the requisite collateral so and in clear breach of the company’s internal policies and relevant banking regulations and Ghanaian company law.”
The plaintiffs have proceeded to court to compel the defunct bank’s directors to pay compensatory damages to the receivers.
They are also praying the court to order the former founder, William Ato Essien, to pay back over GH¢468 million in shareholder loans and some GH¢108 million granted to him and his other companies.
In the statement of claim, the plaintiffs said to obtain it’s universal banking licence the defendants submitted an investment certificate detailing investments in defined financial institutions totalling GH¢52,300,000, which they indicated was to be used as top-up capital to obtain a class 1 banking license from the Bank of Ghana, but the alleged investments submitted in fulfilment of requirements were subsequently classified as non-existent at their dates of maturity.
“The plaintiffs says that these alleged investments, which were submitted in fulfilment of requirements for the grant of a class one banking licence, were later classified as non-existent at their dates of maturity, and the said investments were never paid to plaintiffs, even though it was indicted to the Bank of Ghana, as included in the equity contribution towards obtaining the said class 1 banking license.”
According to the suit, the plaintiffs are unable to recover several matured investments from third parties because the funds were blocked by Ato Essien, who is the first defendant in the case, through funds he had accessed from these institutions.
The plaintiffs aver: “As a direct result of the mismanagement and the breaches of banking laws, the bank was in a dire straits and it was granted banking liquidity support facility in the total sum of six hundred and twenty million Ghana Cedis (GH¢620,000,000) in three tranches, between June and November 2015, by the Bank of Ghana.”
Instead of using the money the central bank gave 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 subsequent collapse of 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, where some of the money was reportedly presented as capital to secure a license for another collapsed bank, Sovereign Bank.
The suit cites a board meeting on October 13, 2015, which expressed displeasure about the utilisation of the liquidity support to the struggling bank being used, particularly a request by Ato Essien for the transfer of one hundred and thirty million cedis (GH¢130, 00,000) to All-Time Capital Limited.
Dr. Otabil assured management that he would ensure the funds were returned by March 2016.
The suit gave a breakdown of the transactions as GH¢27.5 million used for business promotion or “protocol payments” and handled by a board member; transfers to Nordea Capital amounting to GH¢65 million, and transfers to Alltime Capital amounting to GH¢130 million.
The plaintiffs say that defendants supervised the disbursement of the banking support to related companies and other entities in breach of banking regulations, and without regard to Bank of Ghana guidelines.
William Ato Essien, Mensa Anamua Otabil, Oheneba Osei-Akoto, Stephen Enchill, Kingsley Atta Ghansah, Otabil & Associates, International Central Gospel Church, Kwadwo Ayisi-Ahwireng, Isaac Osah Thompson-Mensah, John Kofi Mensah, Edwin Obeng Donkor, Fitzgerald Odonkor, Amadu Montia, Kofi Kwakwa, Frances Adu-Mante, and Isaac Osah Thompson-Mensah.