Central Bank to Decide on New Zemen Directors in Two Weeks

Addis Fortune (Addis Ababa)

Eden Sahle

23 May 2011

National Bank of Ethiopia (NBE) is to decide on the approval of nine new board directors that were elected by shareholders of Zemen Bank on May 14, 2011, in the next two weeks.

The shareholders re-elected Ermyas Amelga who he was temporarily suspended as chairman of the board pending an investigation by NBE on March 16.

The move follows NBE’s rejection of the resolution that was adopted by shareholders on April 9, to wait for the central bank’s decision on Ermyas before electing a new board. The board reconvened a week ago and re-elected Ermyas.

Girma Afework (Eng), Brehanu Gebrearegayi (PhD), Assmama Kelemu, Addis Abeba University (AAU) Employees’ Financial Savings Association (EFSA), Ethiopian Electric Power Corporation (EEPCo) Employees’ Financial Savings Association (EFSA), Tamru Wonedmagegn, Newayi Birahnu, and Tarik Kassa were also elected as board directors.

“The central bank has received the nominees and is still working on both the investigation and the approval process which might take at least two weeks, depending on the situation of the review,” Solomon Desta, director of bank supervision for NBE, told Fortune. “The bank is reviewing whether all the nominees are fit to be board members.”

Ermyas, CEO of Access Capital, was suspended over an ongoing investigation by the central bank into an agreement he had entered into with Zemen Bank on behalf of Access Capital while he was a promoter of Zemen Bank.

NBE also suspended Tekle Alemenh, who had served as vice president of Bank of Abyssinia (BoA), from any engagement with activities of Zemen Bank, which was established in 2008 with a paid-up capital of 150 million Br.

Complaints had been filed by five Zemen Bank shareholders that procedural irregularities had occurred in the election of the board during the bank’s second annual general meeting and second extraordinary meeting, in October 2010.

These prompted NBE to conduct an investigation, suspend the two directors, reject the election results, and freeze the paying of the 38.9pc shares of the bank amounting to 25 million Br in dividends of the 2009/10 fiscal year to the 3,000 shareholders.

This is not the first time that the central bank has intervened in the election of a private bank’s board. In July 2010, NBE forced Lion International Bank (LIB) to re-elect its board of directors, citing procedural irregularities.

Following approval by the central bank, the new board is will sit to elect a chairperson.

“The nomination showed me the trust the shareholders have in me, which strengthens my commitment to work as a director,” Ermyas said in a statement presented in his absence at the meeting by his lawyer, Molla Zegeye. “Although the decision depends on the final outcome of NBE’s investigation, I candidly accept the nomination.”

“Ermyas is a professional who has contributed to the growth of the bank,” Siefu Bahiru (MD) told Fortune. “As a shareholder, I have confidence in him since everyone is innocent until proven guilty in a court of law. However, it is difficult to predict what NBE will decide.”

AllAfrica – All the Time