It appears the ex-board of the Heritage Bank Limited wants to attract public sympathy due to the revocation of the bank’s licence by the Bank of Ghana (BoG).

The ex-board, chaired by Prof Kwesi Botchwey, is seeking to court the attention of the public by playing smart with a sympathetic reaction instead of addressing the issues raised by the Bank of Ghana regarding how Seidu Agongo, the then biggest shareholder of the bank, ‘faked’ an agreement with Ghana Cocoa Board (Cocobod) to earn him a banking licence.

In a release issued yesterday, the ex-board said “Heritage Bank was by the Bank of Ghana’s own admission a solvent bank. It never received liquidity support from the Bank of Ghana.”

The Central Bank, on Friday, 4th January 2019 announced the revocation of the banking licence of Heritage Bank Limited on certain grounds.

These included suspicions relating to the source of the bank’s capital and matters related therewith, including the claim that funding was derived from contracts with Cocobod, which were the subject matter of an ongoing criminal prosecution; issues surrounding the shareholding of the bank and alleged non-disclosure of ultimate beneficial shareholders; several related-party transactions, which were not above board and also a conclusion that the significant shareholder was not ‘fit and proper.”

But commenting on the suspicious source of capital and related matters, the ex-board averred: “We find it puzzling that the Bank of Ghana should now be disputing the existence of a contract between HBL’s main shareholder and COCOBOD when the bank, as part of its due diligence ahead of the granting of HBL’s provisional banking licence, had requested and received confirmation from COCOBOD of the existence of the contractual arrangements between COCOBOD and the said shareholder.

Court case

“We also want to state on record that Heritage Bank never received nor is the board aware of any order from the High Court (or any other court for that matter) for disclosures relating to any contract involving Mr Seidu Agongo. Indeed, we are hearing of this matter for the very first time through the Governor’s news conference. In any case, we are unable to fathom why the High Court would order Heritage Bank to make disclosures in respect of a contract that it is not a party to or a custodian of.”



BoG’s findings

The Bank of Ghana Governor, Dr Ernest Addison, described how the then biggest shareholder used an ‘unsubstantiated’ contract with Cocobod as a bait to get the then Governor of the Bank of Ghana to issue a banking licence to the bank.

Dr Addison commented: “The Bank of Ghana is not satisfied that the original sources of the bank’s capital are acceptable in terms of section 9 (d) of the Banks and SDI Act, 2016 (Act 930) and section 1 of the Anti-Money Laundering Act of 2008 (Act 749), which requires acceptable capital to be obtained from lawful and transparent sources.

He said the promoters of Heritage provided evidence to Bank of Ghana at the time of the application for a banking licence to the effect that an amount totaling GH¢120.6 million was lodged with a local bank.

The amount of GH¢120 million was transferred to the bank from Agricult, a company wholly owned by Seidu Agongo, a promoter of Heritage, which funds appear to have been derived from contracts awarded to Mr. Agongo by COCOBOD and were currently the basis of criminal prosecution in the High Court of Ghana.

Transfer

On the issue of the transfer of an amount of GH¢15.8 million and the acquisition of some properties owned by the main shareholder which were stated in the bank’s Financial Statements of 2017, the board said it was misleading on the part of Bank of Ghana to claim that the bank and its shareholders, directors and management had failed to clarify matters.



On the claim that the bank had approved several related-party transactions in loans and facilities to Sassh Alliance, Moor Company Limited and Kedge Company Limited, it said “all the transactions were handled in a transparent manner and at arm’s length” adding that apart from the credit facility to Sassh Alliance, Heritage Bank had no exposure to any of the companies mentioned.

Cocobod is expected to clear the air on the issue to avoid being dragged into the matter.