Legal action is the only channel available to GN Savings and Loans in seeking redress over the revocation of its licence by the Bank of Ghana (BoG), the parent company Groupe Nduom (GN) has said.

GN observed in a press statement signed by its Corporate Affairs Manager, Mr Frank Owusu-Ofori, on Wednesday, 21 August 2019, that: “It appears that our only option is to pursue this case in the court of law – negotiating with the Bank of Ghana in good faith has yielded less than desirable results”.

A few months ago, the central bank approved a request to downgrade GN Bank from a universal bank to a Savings and Loans company following its inability to meet the new minimum capital of GH¢ 400 million by 31st December 2018.

Explaining the reasons for cancelling the licence of GN Savings and Loans, BoG said: “GN’s shareholders have failed to restore the bank to the required regulatory capital and liquidity levels in spite of long-standing promises that new capital was expected from foreign investors”.

It added that: “While GN has indicated that government owes it a total amount of GH¢942.98 million of which GH¢102.73 million represented Interim Payment Certificates (IPCs), the Bank of Ghana’s assessment is that IPCs totalling GH¢30.33 million only have been confirmed by the Ministry of Finance as at 6th August 2019 as owed to contractors that may be indebted to affiliates of GN. The Bank of Ghana’s supervisory assessment showed that even when the total outstanding IPCs amount of GH¢30.33 million was considered, it still did not address GN’s capital deficit of -GH¢683.66 million.

“It must be noted that GN’s insolvency problems are largely attributable to overdraft and other facilities it extended to its related parties who are other companies in the Groupe Ndoum network of businesses, under circumstances that violated relevant prudential norms. Of particular interest are the funds totalling GH¢761.55 million that GN Bank as it then was, placed with its sister companies Ghana Growth Fund (Gold Coast Advisors) and Gold Coast Fund Management Limited (now Blackshield Capital Management), both licensed by the Securities and Exchange Commission.

“Some of these funds were used by the two related parties to pay their customers whose investments with them had matured, while some were also used to fund road and other contractors, who claim to have worked on Government projects. It is important to note that the IPCs claimed by GN are not supported by transactions that were entered into directly by GN and such contractors or Government and its entities. They reflect transactions entered into by Ghana Growth Fund or Gold Coast Fund “Management with these contractors using funds taken from GN under circumstances that violated prudential norms”.

However, GN says it finds the assertions of the apex bank erroneous. It said: “The allegations found on page 19 of the BoG’s Public Notice are the most concerning, as the statements made regarding funds transferred abroad are completely false. We have not transferred customer funds abroad in the manner alleged in the Public Notice. International Business Solutions (IBS) has provided a variety of services, including procurement and management consulting. IBS purchased vehicles, generators, stationery, manufacturing raw materials, computers, and a variety of other products for sister companies such as GN Savings, Coconut Grove Hotels, EPPL, and Freshpak.”

“These goods and services were provided over the course of 12 years. These products purchased by IBS (including the Ford, Dodge, and Fiat vehicles driven by company managers and the hundreds of bright yellow AKSA generators) are all here in Ghana in plain sight. These transactions saved the Groupe Nduom companies money by not going through intermediaries who would have charged huge margins on those products. They were all imported and all required foreign currency. That foreign currency was purchased using the funds of the depositors that required them and NOT from the deposits of the hundreds of thousands of other GN Savings customers.

“Similar, the raw materials used to produce polystyrene-based products by Freshpak Company Limited and EPPL were all procured by IBS, after which those products were imported into Ghana and turned into finished products. Extensive documentation exist and have been provided to the BOG regarding every single transfer that pertained to Groupe Nduom. This documentation was made available both physically (thousands of pages of documents) and electronically. The documents have been with the BoG since 2018, and we received no response from the team. Therefore, the statement that such a huge amount of “customer funds” was transferred abroad with “no documentation” is false and cannot be used to withdraw the SDI license”.

Read the full statement below:

Additional Comments on the BOG Notice on GN Savings

We have taken note of the statement issued on August 16, 2019, by the Bank of Ghana. The notice, unfortunately, contains a number of factual inaccuracies and misrepresentations. The statement creates a false impression of the chain of events that resulted in the liquidity challenges faced by the bank and we intend to take any and all necessary steps to ensure that the record is set straight.

1.00. Closing the operations of GN Savings will be inimical to the development aspirations of the country. It will go against the strides made to bring the unbanked into the formal sector. Indeed, with its 300 offices spread throughout all the regions, GN Savings is often the only licensed financial institution in many towns.

2.00. GN Savings is not only solvent but would be highly liquid if the Ministry of Finance simply ordered itself and other government agencies to quickly pay amounts owed to GN Savings and Gold Coast and the contractors whose projects they financed.

Groupe Nduom, through GN Bank, Gold Coast Fund Management, Gold Coast Advisors, and the Ghana Growth Fund Company, has pre-financed infrastructure development in Ghana to the tune of approximately GHS 14 Billion over the past several years. Over 600 roads, bridges, schools, and other critical additions to Ghana’s infrastructure have been made possible by funds mobilized and invested by these companies. The financing of these projects structured as loans (when from the bank) and commercial paper (when from Ghana Growth Fund Company) represented a significant proportion of the placements.

The letter written by the Ministry of Finance on August 6th, 2019 confirmed less than 10% of the amounts immediately owed to Groupe Nduom companies, both directly and indirectly. However, the Ministry of Finance itself confirmed a figure in excess of GHS 600 million in a letter to the BOG last year. We expect this government infrastructure portfolio liability and the obvious inconsistencies to be resolved in due course. When this is done, the financial picture will be clearer.

3.00. We have worked hard to bring new investments into the company. Shareholders, non-shareholder stakeholders, and related companies have liquidated and were still in the process of liquidating assets to bring cash to the bank to sustain operations. A number of third parties had reached out to explore investing in the bank.

We informed the BOG’s BSD on August 16th of a meeting to be held in London on Monday next week with a prospective investor interested in investing $100 million in GN Savings.

4.00. The allegations found on page 19 of the BOG’s Public Notice are the most concerning, as the statements made regarding funds transferred abroad are completely false. We have not transferred customer funds abroad in the manner alleged in the Public Notice. International Business Solutions (IBS) has provided a variety of services, including procurement and management consulting. IBS purchased vehicles, generators, stationery, manufacturing raw materials, computers, and a variety of other products for sister companies such as GN Savings, Coconut Grove Hotels, EPPL, and Freshpak. These goods and services were provided over the course of 12 years. These products purchased by IBS (including the Ford, Dodge, and Fiat vehicles driven by company managers and the hundreds of bright yellow AKSA generators) are all here in Ghana in plain sight. These transactions saved the Groupe Nduom companies money by not going through intermediaries who would have charged huge margins on those products. They were all imported and all required foreign currency. That foreign currency was purchased using the funds of the depositors that required them and NOT from the deposits of the hundreds of thousands of other GN Savings customers.

Similar, the raw materials used to produce polystyrene-based products by Freshpak Company Limited and EPPL were all procured by IBS, after which those products were imported into Ghana and turned into finished products. Extensive documentation exist and have been provided to the BOG regarding every single transfer that pertained to Groupe Nduom. This documentation was made available both physically (thousands of pages of documents) and electronically. The documents have been with the BoG since 2018, and we received no response from the team.

Therefore, the statement that such a huge amount of “customer funds” was transferred abroad with “no documentation” is false and cannot be used to withdraw the SDI license.

5.0. It is also important to note that companies Groupe Nduom has built in Ghana are owed GHS 313,480,618.67 in unpaid IPCs and delayed interest, both on paid and unpaid IPCs, as of June 2019. The fact that the name “GN Bank” or “GN Savings” does not appear on an IPC does not mean that the bank is not the ultimate beneficiary. There is also a loan portfolio of GHS 2,143,031,818.38 (nearly $400 Million) for funds that were disbursed to Ghanaian contractors working on various government projects. This portfolio is several times larger than the total amount of foreign transactions facilitated by GN Bank on behalf of Groupe Nduom. Therefore, it is difficult to understand what relevance this regulatory issue that we addressed with the BoG in 2018 has to do with anything, particularly our longstanding request for IPC payment.

Anyone who says at this time that all that the Government of Ghana’s agencies owe our companies is GHS 30 million, is being mischievous. In addition, private sector organisations owe us commercial paper/placement debts of over GHS 400 million. Our companies have millions of Ghana cedis locked up in other institutions that have been collapsed during this “clean-up” exercise and have not been able to retrieve them. Clearly, if the Government of Ghana’s agencies had paid what is due a year ago, the Bank of Ghana would not have impaired the infrastructure portfolio, we would have been able to raise the additional capital required and GN Bank would still be a universal bank. At our peak in 2018, Groupe Nduom employed over 7,000 people, 2,000 from GN Savings (now down to 1400 ). This number has dropped to about 3,500. Not only are the jobs of 1,400 GN Savings employees at risk, but there are over 1,200

employees of GN companies who provide security and property services to the bank whose jobs are now at risk. The consequences of this action will, therefore, affect over 2,500 employees and their families

6.0. We have had to resort to the law courts in desperation and under siege. After over a year of providing documentation to agencies and regulators, our customers’ patience has been worn thin. The liquidity that payments under this portfolio would provide would surely turn our fortunes around, and the benefits will accrue not just to our employees and customers, but to the country as a whole. So why would a government and its regulators deny us payments due for legitimate work done by contractors then turn around to impair those receivables and use that fact to revoke a license to operate as an SDI.

7.0. GN Savings has not sacked its top management staff. As of Friday afternoon, that team was still at post. The BOG as a regulator must not make important decisions based on hearsay. We challenge BOG to produce the said termination letters. The Chairman of the Board of Directors in a letter written to BSD promised to deliver a new organization structure befitting the status of a Savings and loans company.

8.00. GN Savings has not closed 70 offices. Rather, the company wrote several weeks ago to BSD for approval to temporarily suspend operations in a number of offices to reduce cost during the business revival period. BSD has till today not responded to this request.

9.00. It’s important to note that GN Savings came up with new ideas that have caused its business to begin a sustained revival. Thousands of customers had started making new deposits and enjoying unrestricted withdrawals. Why would the Bank of Ghana revoke the license of such a company?

10.00. It appears that our only option is to pursue this case in the court of law – negotiating with the Bank of Ghana in good faith has yielded less than desirable results.

Signed,

Frank Owusu-Ofori

GN Corporate Affairs