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GH¢70m liquidity support not with me -Ato Essien

October 16, 2020 By 0 Comments

Founder of now-defunct Capital Bank, William Ato Essien has told an Accra High Court that a sum of 70 Million that was transferred into a Cal Bank account of Kata Quartey-Papafio, Managing Director of Reroy Cable, is not with him.
According to him, there is a proof that that Capital Bank as a corporate institution, voluntarily transferred the money to Mrs Quartey-Papafio (4th Accused person) Cal Bank account.
Speaking through his defence counsel, Thaddeus Sory (Esq), indicated to the court presided over by court of Appeal Judge, Justice Eric Kyei Baffour yesterday that the amount after it being transferred into Mrs Quartey-Papafio’ Cal Bank account, it was reversed back.
Thaddeus Sory while cross-examining the first prosecution witness (PW1), Vish Ashigbor, one of the directors of Price Waterhouse Coopers (PWC) and a receiver of the collapse banks, said the receiver has control over the money.
But Mr Ashigbor responded that “so the money came back to Capital Bank, and once Capital Bank went into receivership, as part of the arrangements that the Joint Receivers made at that time with GCB Bank, to assume parts of the business of Capital Bank, any cash that was available was assumed by GCB Bank.”
The witness stated that the 70 Million was assumed by GCB Bank, hence it is not with any of the Accused persons – William Ato Essien, (A1), Tetteh Nettey (A2), Fitzgerald Odonkor (A3) and of Kata Quartey-Papafio (A4).
GH¢70m liquidity support not with me -Ato Essien
By Bernice Bessey
The Founder of now-defunct Capital Bank, William Ato Essien, has told an Accra High Court that a sum of GH¢70 million that was transferred into a Cal Bank account of Kata Quartey-Papafio, Managing Director of Reroy Cable, is not with him.
According to him, there is proof that that Capital Bank, as a corporate institution, voluntarily transferred the money to Mrs Quartey-Papafio’s (4th Accused person) Cal Bank account.
Speaking through his defence counsel, Thaddeus Sory (Esq), he indicated to the court, presided over by a court of Appeal Judge, Justice Eric Kyei Baffour, yesterday, that the amount, after it being transferred into Mrs Quartey-Papafio’ Cal Bank account, was reversed.
Thaddeus Sory, while cross-examining the first prosecution witness (PW1), Vish Ashigbor, one of the directors of Price Waterhouse Coopers (PWC) and a receiver of the collapsed banks, said the receiver has control over the money.
But Mr Ashigbor responded that “so the money came back to Capital Bank, and once Capital Bank went into receivership, as part of the arrangements that the Joint Receivers made at that time with GCB Bank to assume parts of the business of Capital Bank, any cash that was available was assumed by GCB Bank.”
The witness stated that the GH¢70 million was assumed by GCB Bank, hence it is not with any of the accused persons – William Ato Essien, (A1), Tetteh Nettey (A2), Fitzgerald Odonkor (A3) and of Kata Quartey-Papafio (A4).
The following is how questions (Q) and answers (A) were exchanged between the lawyer and the witness:
Q: On the last adjourned date, Mr. Ashiagbor, in answer to a question that I asked you, regarding whether or not the Bank of Ghana had responded to a request made by you to appoint your own institution to carry out functions relating to your receivership, you would recall that you answered yes?
A: Yes, my Lord.
Q: And, you would recall also that you also confirmed to the court that you could share that letter with the court?
A: Yes, my Lord.
Q: Now this morning I received a copy of a letter dated July 4, 2017 from the Prosecution, pursuant to your confirmation that you could share that information with the court. Take a look at it and confirm whether that is the document.
A: My Lord, that is the correct document.
Q: And just by way of a background, the document is signed by Eric Nana Nipa, not so?
A: Yes, my Lord.
Q: But the same document binds you, is that not so?
A: Yes, my Lord.
Counsel for 1st Accused: My Lord, I want to tender the document.
Prosecution: We have no objection.
Counsel for 2nd Accused: No objection.
Counsel for 3rd Accused: No objection.
Counsel for 4th Accused: We have no objection.
Court: The document will be put record and marked Exhibit 1.
Q: If you look at the last page of Exhibit 1, there is page 7 of 7, which is the last page of Exhibit 1. That is where the signature of somebody called the Deputy Governor appears?
A: Yes, my Lord.
Q: His name is not indicated there?
A: No, my Lord.
Q: But he indicates that the Bank of Ghana accepts the terms of your engagement?
A: Yes.
Q: Now, if you look at page 2, under the heading “Scope of Work”, and which describes the pre-appointment services that you would render to the Bank of Ghana, it includes engaging other professionals, is that correct?
A: Yes.
Q: Now, in page 3, you also have the post-appointment services that the joint receivers are required to execute under the terms of engagement?
A: Yes.
Q: Now, the report which you have attached to your witness statement, can you tell the court, whether it was executed pre-appointment or post-appointment?
A: It was executed post-appointment.
Q: So, in other words, it was a post-appointment task executed by PWC, and not the Joint Receivers?
A: My Lord, the work was done post-appointment by PWC for the use of the Joint Receivers.
Q: Now, if you look at the pre-appointment services to be rendered, particularly those specified in clauses 2(a) V, VI and VII, those are the ones which contemplate the possibility of engaging other professionals, is that correct?
A: Yes, that is correct.
Q: Now, the effect of this is that all persons engaged by the Joint Receivers to provide services must also be paid under clauses 2(a) V, VI and VII?
A: Yes.
Q: If you take a look at clause 2(a) VII specifically, it states that the Joint Receivers may require the recruitment of associate personnel to assist in the receivership process?
A: Yes, my Lord.
Q: So, this being a pre-appointment service, PWC was definitely not appointed under clause 2(a) VII, is that correct?
A: My Lord, this is a letter of engagement between PWC and the Bank of Ghana. The appointment of the Joint Receivers came under separate provisions under the Act, Act 930. So, this letter is giving PWC the mandate, at least, in terms of this specific clause the one we are speaking about now, the authority to recruit associate personnel to assist in the receivership exercise.
Q: So, in other words, what you are telling this court is that this letter confirms a direct engagement of PWC by the Bank of Ghana, separate from the appointment of the Joint Receivers, is that correct?
A: My Lord, this letter confirms that the Bank of Ghana has engaged PWC to support the Joint Receivers in the conduct of the receivership.
Q: And, in the execution of your responsibilities as Joint Receivers, you also get paid separately from PWC?
A: My Lord, no.
Q: So are you telling this court that for the distinct services, in respect of which you have confirmed to the court, that PWC as a corporate entity gets paid, as distinguished from the separate services rendered by the Joint Receivers, you all get paid under this contract tendered in evidence as Exhibit 1?
A: My Lord, that is correct, as far as the services that PWC provides, yes.
Q: You will agree with me that the services which PWC renders to the Bank of Ghana, and to other members of the public, are services that can be rendered by some other institutions, is that correct?
A: Yes, other institutions can render the same services.
Q: And I am putting it to you that if some other institution other than the PWC had rendered the same services to the Joint Receivers, the Joint Receivers and that entity could never have been paid with the same cheque?
A: That is correct. The last time I was here, I made mention of the fact that our appointment as Joint Receivers also made reference to the fact that we are both Directors of PWC. Because we are Directors of PWC, whatever earnings, fees we make, is channelled through PWC, partly to avoid the situation I understand you are concerned about, which is a potential conflict of interest. Payments had to go through PWC.
Q: And you will also recall in your last testimony to this court that the reference to PWC in the personal appointment of Eric Nana Nipa and yourself was only a way of describing who you are. PWC was never appointed, that was your last testimony to this court.
A: Yes, my Lord.
Q: And you will recall also that in your last testimony to this court, you confirmed to the court that the appointment of Eric Nana Nipa and yourself by the Bank of Ghana was personal to you and Eric Nana Nipa as distinguished from PWC as a corporate institution?
A: Yes, my Lord.
Q: And I am putting it to you that your testimony in this court confirms that the appointment of Eric Nana Nipa and yourself by the Bank of Ghana on the one hand, and PWC as a corporate institution on the other hand, as evidenced by Exhibit 1, are two separate and distinct engagements?
A: Yes my Lord.
Q: I am, therefore, putting it to you that your testimony this morning, that for separate and distinct services rendered by Eric Nana Nipa and yourself on the one hand, and services rendered by PWC as a corporate institution on the other hand, are paid for as if they are one and the same service is incorrect?
A: My Lord, I don’t agree with that.
Q: I am also putting it to you that the signing of Exhibit 1 by Eric Nana Nipa in his capacity as Director of PWC, when he was appointed Joint Receiver by the Bank of Ghana, is a clear case of conflict of interest?
A: I disagree with that.
Q: Can you confirm to this court, what process was undertaken by the Joint Receivers for purposes of settling on their own institution, PWC, to carry out services that other institutions could have rendered to the Joint Receivers?
A: So my Lord, pre-appointment of PWC, and, in fact, pre-appointment of the Joint Receivers, there was an engagement with the Bank of Ghana prior to the actual receivership of the bank. In the course of those discussions, which included what needed to be done, how it was to be done and who was going to do it, the role of the Joint Receivers and the role of PWC were all clarified and agreed upon, and that is what resulted in the appointment of the Joint Receivers and the engagement of PWC.
Q: I am still putting it to you that whatever the engagements were between the Bank of Ghana and the Joint Receivers, in respect of services to be rendered to the Joint Receivers, the Joint Receivers, as evidenced by Exhibit 1, took a position to ensure that their own institution, PWC, would be engaged?
A: We, as Joint Receivers, did propose to work with PWC and the Bank of Ghana accepted that.
Q: By virtue of the answer that you have just given to the court, the Joint Receivers made that proposal to ensure that whatever payment a third party institution would have gained from rendering services to the Joint Receivers, would still go to the very institution in which they are Directors, and which they would benefit from?
A: My Lord, no, that wasn’t the basis, because, as you highlighted yourself a few minutes ago, we, as Joint Receivers, would have been paid anyway.
Q: So you would agree with me that upon appointment as Joint Receivers, the services you render to the Bank of Ghana are of a public nature?
A: I don’t know, because I don’t know what you mean by ‘public nature’.
Q: Specifically, what I mean is that your payment as Joint Receivers would come from public purse?
A: My Lord, I don’t know that for a fact. The payment comes from Bank of Ghana, as to how Bank of Ghana funds those payments, I don’t know.
Q: In your wide experience, the reason for which Bank of Ghana would engage you as a Joint Receiver; are you aware of any fund from which the Bank of Ghana can make payment other than the Consolidated Fund?
A: In my experience, the Bank of Ghana may have funding, for example, grants available for different purposes. That was why I responded the way I did previously.
Q: And, I am putting it to you that payment also to PWC as a corporate institution by the Bank of Ghana is made from public funds.
A: My Lord, as I said before, I cannot immediately agree to that, because I don’t know for sure where Bank of Ghana is accessing those funds.
Q: Apart from the engagements and discussions with the Bank of Ghana that resulted in the engagement of PWC, did the Bank of Ghana or yourselves go through any procurement process for purposes of engaging PWC?
A: Yes, we did.
Q: Can you share with the court what the process was?
A: So from our perspective, we provided proposals to Bank of Ghana; we were invited to the Bank of Ghana to give presentations around those proposals, and to enable them to clarify aspects of our proposal. And, to the best of my knowledge, that proposal was then evaluated, and then things evolved from there.
Q: So, when you say ‘we’, my understanding is that, it is Eric Nana Nipa and yourself in your capacity as Joint Receivers, and also now wearing the that of Directors of PWC who presented that proposal to the Bank of Ghana, is that correct?
A: That is correct. We were invited there to discuss the potential receivership as potential Joint Receivers, and then in the course of the discussions and the proposals we submitted, we also addressed the other receivership activities that needed to be conducted and how they might be conducted.
Q: In those your proposals did you draw the Bank of Ghana’s attention to the fact that other institutions could provide the same services?
A: We did not do that in our proposal.
Q: In addition to being Directors of PWC, are you partners?
A: No my Lord. PWC is a company, so we are Directors of the company, but loosely speaking.
Q: People sometimes refer to us as partners, but we are Directors. If you take a look at the report attached to your witness statement (Exhibit ‘VV V’ series), you would agree with me that it focuses, to a very large extent, on the liquidity support given to Capital Bank by the Bank of Ghana?
A; Yes my Lord.
Q: Now, the liquidity support which the Bank of Ghana gives banks is usually applied for by these banks, is that correct?
A: Yes.
Q: And the Bank of Ghana evaluates the application and decides whether or not to provide this liquidity support? Yes, that is my understanding of what actually happens. Among the matters that the Bank of Ghana would be considering, for purposes of deciding whether or not to provide this liquidity support is, whether the bank which applied for that support has security that the Bank of Ghana can fall upon in the event of default?
A: Yes my Lord. My understanding is that, that is one of the considerations.
Q: So if the case of Capital Bank, the Bank of Ghana definitely requested security for the liquidity support the bank asked for, is that correct?
A: Yes, that is my understanding.
Q: And your understanding also must be that the Bank of Ghana was satisfied, and that was why it gave the bank liquidity support?
A: Yes, my Lord.
Q: And so from your testimony so far, liquidity support given by the Bank of Ghana to a bank, in this case Capital Bank, is in the form of a loan given to the bank?
A: That is right.
Q: So this, therefore, constitutes a creditor-debtor relationship between the Bank of Ghana and the bank?
A: That is right.
Q: I am, therefore, putting it to you that insofar as Capital Bank is concerned, the monies described as liquidity support to Capital Bank only meant that Capital Bank borrowed the money from the Bank of Ghana?
A: No my Lord. The money was borrowed from Bank of Ghana, but the essence of it being described as liquidity support is that it was for a specific purpose.
Q: I am putting it to you that whatever its purpose, Capital Bank remained borrower of that money?
A: That is correct.
Q: So in the event, therefore, that Capital Bank is unable to pay this liquidity support, the Bank of Ghana’s recourse is to recover the money, including realising the security?
A: That is correct.
Q: Now, among your responsibilities as Joint Receiver, you have stepped into the shoes of the Bank of Ghana and have the responsibility of recovering some of the liquidity support, is that so?
A: Yes, that is correct.
Q: I am sure so far in about one year or more, you have at least made a list of some of the avenues from which the Joint Receivers can recover some of this liquidity support?
A: That is correct.
Q: In your witness statement, you have identified three main transactions which you describe as ‘suspicious’, is that correct?
A: Yes.
Q: There is an amount of GH¢70,000,000 which falls among one of these suspicious transactions, is that correct?
A: Yes, my Lord.
Q: This 70 Million Ghana Cedis resulted from the discounting by Capital Bank of certificates belonging to three companies?
A: Yes, my Lord.
Q: Now, you testified on the last adjourned date that discounting certificates was a normal practice engaged in, is that correct?
A: Yes, my Lord.
Q: If you look at appendix 1 of your report, it is a letter written by Capital Bank to the Director of Urban Roads, is that correct?
A: Yes.
Q: And this letter seeks to confirm the authenticity, not existence, of certificates listed in the letter for payment to one of the companies which is the subject matter of a discounting transaction with Capital Bank?
A: Yes, my Lord.
Q: If you take a critical look at the letter, it is detailed regarding who the contractor is, what the contract is about, the contract number, the contract sum, and the interim payment certificates. All of those details are contained in the letter, not so?
A: Yes, my Lord. The basis of us identifying the certificate discounting transaction as suspicious had nothing to do with the contents of this letter.
Q: Are those details in the letter or not?
A: I said yes.
Q: And, there is also appendix 18, which is a facility letter which confirms the transaction between Capital Bank and the company?
A: Yes, my Lord.
Q: So appendices 16 to 19, if you look at it, contain the documentation relating to the discounted certificates?
A: Yes, my Lord. Now, it is pursuant to this transaction that you say in paragraph 7 of your witness statement that the sum of 70 million was transferred into the account of 4th Accused at Cal Bank?
A: Yes, my Lord.
Q: So, the documentation confirms the process by which the payment of 70 million was made to the 4th accused?
A: Yes, my Lord.
Q: So I am putting it to you that the documentation also confirms that, Capital Bank, as a corporate institution, voluntarily transferred the money to the 4th accused?
A: Yes, my Lord, that is right.
Q: Now, since the money was transferred to the 4th accused, the money belonged to the 4th accused? I am putting that to you.
A: No, my Lord.
Q: In your witness statement, you confirm that the 4th accused transferred the money back from her Cal Bank account to Capital Bank?
A: Yes.
Q: You then confirm also in your witness statement that the 4th accused requested the Joint Receivers to pay the money to her, is that correct?
A: Yes my Lord. After our appointment as Joint Receivers, that was what happened.
Q: And you refused to pay the money?
A: That is correct.
Q: So as you speak, you have control over the money?
A: No, my Lord. In simple terms my Lord, the money, as you narrated; the money came from Capital Bank, it was transferred to Cal Bank, and from there it was transferred back to Capital Bank. So it was a circular transaction.
Q: So where is the money?
A: So the money came back to Capital Bank, and once Capital Bank went into receivership, as part of the arrangements that the Joint Receivers made at that time with GCB Bank, to assume parts of the business of Capital Bank, any cash that was available was assumed by GCB Bank.
Q: And so this cash that was assumed by GCB Bank, in this particular case, the 70 million, is not with any of the accused persons?
A: That is correct.
Q: Now, there is another aspect of your paragraph 5 which deals with business promotion of 27.5 million?
A: That is correct.
Q: This 27.5 million is part of the liquidity support which the Bank of Ghana gave to Capital Bank, is that correct?
A: Yes.
Q: And so, as borrower of this liquidity support, the money belonged to Capital Bank, is that correct?
A: Yes my Lord, except to say that the liquidity support had specific uses as spelt out in the approval letter.
Q: I am putting it to you that regardless of the purpose for which the loan was advanced to Capital Bank, the money belonged to Capital Bank?
A: Yes my Lord. And what I am saying is that the loan had conditions attached.
Q: I am further putting it to you that if this loan were applied in a manner contrary to those terms, it is just a breach of contract?
A: Yes my Lord. All I am saying is that there were conditions attached, but I cannot determine whether it constituted a breach of contract.
Q: If you look at your appendices 11 to 13, these are several memos written by the management of Capital Bank indicating the payments described as business promotion?
A: Yes, my Lord.
Q: Appendices 11 to 13 confirm the corporate processes that were followed, leading to the payment of these sums, which total 27.5 million?
A: Yes, my Lord.
Q: And so, the appendices 11 to 13 further confirm that this amount was voluntarily paid by Capital Bank as an institution?
A: No my Lord, I don’t believe the memo indicates that they were voluntarily paid.
Q: The 27.5 million was disbursed in tranches?
A: Yes, my Lord.
Q: Let us look at appendix 11, there is this internal memo dated 26th June, 2015, is that correct?
A: Yes.
Q: It is from the Head of Finance?
A: Yes.
Q: It requests an approval of the sum of 2 million Ghana Cedis as business promotion expense?
A: Yes.
Q: It is written to the General Manager, Finance and Strategy (emphasis on strategy)?
A: Yes, my Lord.
Q: You can see “Branch Manager” written in the body of that memo that you are looking at?
A: Yes.
Q: It says “kindly pay 2 million as per the approval?”
A: Yes.
Q: A certain Vincent writes below that the 2 million should be paid in two tranches?
A: Yes, my Lord.
Q: And if you look at the memo it is signed by the author and its addressees?
A: Yes.
Q: Now, I am saying that if you look at the rest of the appendices, the same type of minutes appear on the memos relating to the business promotion payments?
A: Yes my Lord.
Q: Now, if you look at all of those memos, none of them records the name of the 1st Accused?
A: No, they don’t.
Q: If you look at paragraph 5(b) of your witness statement, you testified as to how the sum of 120 million out of the liquidity support given to Capital Bank by the Bank of Ghana was utilised?
A: Yes.
Q: You testified that upon receipt of this money, this 120 million was transferred to All Time Capital Limited, who were arrangers for the purchase of a commercial paper?
A: Yes, my Lord.
Q: Now, let us go to page 19 of your report (Exhibit ‘VVV’). You have given a breakdown of some amounts that were paid, is that correct?
A: Yes my Lord, except that page 19 is referring to the NORDEA Capital Transaction.
Q: Page 19 records an amount of 67.03 million paid to NORDEA Capital, is that correct?
A: Yes.
Q: Is this sum part of the 120 million that you are talking about in paragraph 5(b) of your witness statement?
A: No my Lord, it is a different transaction.
Q: The 120 million is on page 18 of the same report. Of this 67 million that you said is paid to NORDBA Capital, did you find what happened to that money later?
A: Yes my Lord. Our understanding is that NORDBA purchased commercial paper from two companies, MC Management Services Limited and Brietling Services Limited.
A: So if you go to page 12 of the report, you will find under the description “NORDBA Capital”, that you write that this amount was approved by the Bank of Ghana to be treated as a shareholder’s loan?
A: Yes, my Lord.
Q: If you also take a look at the appendices attached to Exhibit ‘VVV’, they contain documentation evidencing the transactions by virtue of which the 120 million was transferred to All Time Capital, is that correct?
A: Yes.
Q: And this documentation shows that the money was transferred to All Time Capital in accordance with the procedures set out by Capital Bank as a corporate institution?
A: Yes, my Lord. But, again, that is not the basis of we classifying this transaction as a suspicious transaction.
Q: If you take a further look at the minutes of the meetings held by Capital Bank attached to the report (appendix 3), if you read those minutes in their totality, you will find serious engagements between and among the key management of Capital Bank, regarding the money transferred to All Time Capital?
A: Yes, my Lord.
Q: That document, therefore, confirms deliberations engaged in by the key management of Capital Bank in relation to this transfer of funds to All Time Capital which you call suspicious?
A: Yes my Lord, the same document indicates a significant amount of concern by management of the bank relating to this transaction.
Q: And I am, therefore, putting it to you that from this your answer, it is continued that the transaction with All Time Capital was, to all intents and purposes, a serious business transaction?
A: No, my Lord. In fact, the minutes indicate that management was concerned about the business validity of that transaction.
Q: I am further putting it to you that that concern arises from the fact that it was intended to be a good business transaction, regardless of the validity of the transaction?
A: My Lord, I will disagree with that. To the extent that senior management of the bank had significant concerns over the validity of that transaction, then that transaction, I believe, should be questionable.
Court: We will end here and continue the cross-examination of PW1 by Counsel for
1st Accused on the 22nd of October, 2020 at 10:30 am. The witness is discharged for today.



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