IBRAHIM MAHAMA’S HUGE DEBT MADE UT BANK’S COLLAPSE WORSE, PWC REPORT REVEALS Featured

By RICHARD KOFI BOAHEN October 01, 2019 841 1 comment

The myriad issues which culminated in the collapse of UT Bank point to the fact that former President Mahama’s brother Ibrahim played a lead role in bringing the bank to its knees before its final closure by the Bank of Ghana (BoG) last year.

 

Investigations conducted by PricewaterhouseCoopers (pwc) into suspicious transactions relating to UT Bank and Capital Bank have shown that Ibrahim Mahama’s total indebtedness to UT Bank was approximately GHC309 million as at August 14 2017.

The companies at the centre of the indebtedness are Dzata Cement, MBG, Engineers & Planners and Holmann Brothers, all owned by the former President’s younger brother.

Unqualified collateral

According to pwc’s investigative report, some assets that were used as collateral to secure loans were even not registered, while the registration of others had expired at the time they were used to secure the loans.

“We also noted that collateral registration for some of the assets pledged in support of the Dzata Cement loan expired on 9th October, 2015. Not all the assets used as collaterals for the Dzata Cement loan are registered,” the report by PricewaterhouseCoopers to the BoG says.

The report adds that the collateral used by MBG, Engineers & Planners and Holmann Brothers in obtaining loan facilities from UT Bank had also been used to obtain another facility from another bank.

Meeting with Mahama

“Our review of the Board minutes of UT between October 2015 and July 2017 indicated that the Board on several occasions initiated unsuccessful moves to reduce the exposure of Ibrahim Mahama to the bank,” the report says.

“At the Board meeting on 20 May 2016, the Board agreed to initiate legal process to call-in collaterals which were used by the four (4) Ibrahim Mahama-related companies.
“The Board further agreed for a meeting to be set up between the Board Chairman (Mr Joseph Nsonamoah), Prince Kofi Amoabeng, Mrs Mona Quartey (former Deputy Finance Minister) and Mr John Mahama (former President of the Republic of Ghana),” the report declares.

It further notes that the “perfection of some of the collateral used by Ibrahim Mahama for the loans is defective, eg, collateral registration for some of the assets pledged in support of the Dzata Cement loan expired on 9 October 2015 and collaterals for MBG, Engineers & Planners and Holmann Brothers have not been registered”.

According to the report, “There is an exposure, being that: There will be difficulty in enforcing the collateral; and there is the probability that Ibrahim Mahama may have pledged as security in favour of other lenders. The assets may also be impaired.

“As a result, the recoverability of loans amounting to approximately GHC310 million to Ibrahim Mahama-related companies may be doubtful. The EFO (Externally Financed Output) of UT would be significantly affected by these loans.”

Capital Bank

On the defunct Capital Bank, it came to light that the shareholders/directors had taken personal loans amounting to GHC12.6m. According to the report, that was in contravention of Section 70 (4) of the Specialised Deposit-Taking Institutions Act 2016 (Act 930).

Capital Bank started as a savings and loans company which was incorporated in Ghana and licensed by the Bank of Ghana in July 2009 as First Capital Plus Savings and Loans Ltd (FCPSL).

FCPSL was born out of First Capital Plus Foundation, a microfinance company.

Misrepresentations

FCPSL applied for a class 1 licence from the BoG on December 22 2011 and was issued with a provisional licence on July 19 2012. This was communicated to FCPSL on July 23 2012. On 30 August 2013, the BoG granted FCPSL final approval under the Banking Act 2004 (Act 673), as amended on August 30 2013.

The minimum regulatory capital requirement that was required to be met to enable FCPSL obtain a class 1 licence was GHC60m. These investments, according to pwc, were later classified as non-existent at their dates of maturity by Capital Bank and converted into loans for shareholders.

“The paid-up capital and distributable income surplus of FCPSL as at 30 March 2012 was GHC10 million and GHC4.3 million respectively. The promoters of CB therefore may have obtained the licence by false pretence or misrepresentations,” the report states.

“We are currently investigating the ownership of IFS Financial Services and All-time Capital to identify any relationship between the directors of CB and these companies,” it adds.

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Last modified on Tuesday, 08 October 2019 13:34

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