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Sale of Merchant Bank court case adjourned

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law-and-justiceThe Accra Fast Track High Court yesterday adjourned to December 5, 2013 the case in which Mr Andrew Awuni, the Executive Director of the Centre for Freedom and Accuracy (CFA), is challenging the sale of Merchant Bank to the Fortis Private Equity Fund.

That was after Mr Peter Hayibor, counsel for the Social Security and National Insurance Trust (SSNIT), had told the court, presided over by Mr Justice L.L. Mensah, that his client was served late and, therefore, needed time to study the suit to enable it to enter appearance.

There was, however, no representation from the Bank of Ghana (BoG) or Fortis.

The BoG has approved a deal for Fortis to pay GH¢90 million for a 90-per cent stake in Merchant Bank, but the CFA is asking the court to place an injunction on the deal.

In his application, Mr Awuni is seeking, among other things, an interlocutory injunction to restrain the BoG from issuing any licence to Fortis to operate Merchant Bank as a validly acquired concern.

He is also seeking an order directing that the offer for the sale of Merchant Bank, if justified, be advertised publicly.

Mr Awuni is further seeking an order of the court requesting Parliament to institute an inquiry into the sale of Merchant Bank to Fortis.

In his statement of claim, Mr Awuni said in spite of the palpable silence by SSNIT to explain why it needed to divest itself of its shares, it was publicly alleged that the bank was owed huge sums of money by its creditors, which debts were adversely affecting its operations, hence the decision by the government to sell it off.

Consequently, it said, several well known international, as well as local, financial and banking institutions made bids to acquire the bank, among which was the First Rand Bank of South Africa, which is reputed to have put up a strong bid.

The statement said the plaintiff was reliably aware that the First Rand Bank offered to pay GH¢199.3 million to acquire 75 per cent of the shares of Merchant Bank and also undertook to recover its toxic debts which allegedly had bedevilled its operation by entering into negotiations with UT Recoveries, a local debt recovery company, upon the recommendations of the BoG.

It said the deal was reported to be the best offer ever made for Merchant Bank but the offer was mysteriously rejected in favour of a less known entity.

It said while the plaintiff, like any other contributor, was hoping that by rejecting the bid by the First Rand Bank the offer was going to be made public for other potential investors who were going to offer even better than what the First Rand Bank offered, the Fortis Private Equity Fund Limited popped up out of the blue as having acquired Merchant Bank with the approval of the BoG at GH¢90 million for 90 per cent of the shares of the bank and undertook to recover only 30 per cent of the toxic debts of the alleged ailing bank.

It said the deal purportedly entered between Fortis and the government of Ghana, with the tacit approval by the BoG, was not good enough and amounted to short-changing the taxpayer and the contributors whose money SSNIT invested.

According to the statement, the deal, if allowed to go on, would amount to short-changing the people of Ghana and same was a flagrant violation of the 1992 Constitution.

It averred that Fortis had no known reputation in banking or finance and to have been chosen over a reputable financial institution such as the First Rand Bank raised a lot of questions about the transparency in the deal.

It said the deal between SSNIT and Fortis over the sale of Merchant Bank lacked transparency and violated all known banking and financial rules and regulations, especially seeing that the interests of the workers who were minority shareholders had not been taken into consideration.

The statement said the purported acquisition of Merchant Bank by Fortis could not be said to be transparent in view of its experience and low capital base but also due to the absolute.

Source: Daily Graphic

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