An Accra High Court has dismissed an application for a judicial review filed by George Smith-Graham, a former director of UMB Bank, against the Bank of Ghana (BoG).

Presided over by Justice Nana Brew on July 10, 2024, the court ruled that the Central Bank acted within the law when it disapproved George Smith-Graham’s appointment as Board Chair of Universal Merchant Bank in 2022.

On July 22, 2022, the BoG, pursuant to its powers under the Banks and Specialised Deposit-Taking Institutions Act, Act 930, and the Corporate Governance Directive 2018, issued a directive regarding the appointment and redesignation of directors and key management personnel.

This directive required all commercial banks, including Universal Merchant Bank Ltd (UMB), to obtain prior written “No Objection” from the BoG before redesignating an existing non-executive director to any other position.

Decision of the High Court

Giving judgment in favor of BoG, the Court stated that the purpose of Act 930 was to enhance the supervisory powers of the BoG to ensure stability in the banking sector.

The Court considered Section 102 of Act 930 and believed that the section granted broad powers to the BoG to address any violations of its laws and regulations by banks and specialized deposit-taking institutions. The BoG was deemed entitled to exercise this power upon receiving information about a breach.

Therefore, the Court held that the Applicant's argument that the BoG could not revoke the appointment of a director of a bank that had violated its laws without providing a hearing was not valid. The Court also noted that Section 102 (3) of Act 930 allowed the BoG to take remedial action, including the removal of a director.

Furthermore, the Court found that the correspondence exchanged between the parties indicated that the BoG had given the Applicant and UMB a hearing. The Court believed that the Applicant, who served as both a director and the Chairperson of UMB, could not claim ignorance of the communication between the parties.

The Court concluded that the Companies Act, 2019 (Act 992) did not restrict the extensive powers granted to the BoG under Act 930 to address violations of its directives. The Court emphasized that Act 930, which specifically regulates the conduct of banks, took precedence over the general provisions of Act 992 regarding the removal of directors by the BoG.

Therefore, the Court dismissed the application on the grounds that it lacked merit and that the Applicant failed to prove that the BoG had acted corruptly or with malicious intent in an irrational, arbitrary, and unreasonable manner.

Background

On July 5, 2023, UMB purported to appoint Mr. Smith-Graham (a non-executive director) as its board chair at an emergency meeting of its Board without obtaining the required “No Objection” from the BoG.

BoG subsequently informed UMB of its breach of the directive and directed UMB to apply for the “No Objection” for the appointment of Mr. Smith-Graham as its Board Chair.

In response, UMB claimed it had been advised by its lawyers that it did not require BoG’s “No Objection” and would not apply for it.

Due to UMB’s refusal to comply, BoG revoked its approval of Mr. Smith-Graham's appointment as a director.

Dissatisfied with BoG's decision, Mr. Smith-Graham filed an application for judicial review of the revocation of his appointment.

The Applicant argued that BoG did not have the power to revoke his appointment and, even if it did, he should have been given a hearing.

However, BoG maintained that it had the power to revoke the appointment under section 102 of Act 930 based on its own investigations.

The main issue before the Court was whether BoG could revoke the appointment based on information it discovered independently.



MA/NOQ

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