Lawyer questions eligibility of defunct banks to sue

General News of Tuesday, 6 November 2018

Source: Myjoyonline.com

2018-11-06

Yaw Oppong is a Lecturer at Central University

A legal practitioner has pointed out what he believes are “emerging questions” about a suit against persons and groups allegedly culpable in regulatory breaches that led to the collapse of two banks last year.

Yaw Oppong is not convinced that a defunct entity like Capital Bank or UT Bank, has the locus as a legal person to sue.

The critical question, according to the law lecturer at the Central University, is whether or not after the Bank of Ghana (BoG) revoked the licence of Capital Bank it ceases to exist and if so whether it can commence legal actions.

The comment by Mr Oppong Monday on Joy FM’s Top Story was in response to a series of lawsuits filed against persons and groups following the collapse of the two banks last year.

The banking sector has been hit with challenges that began with the collapse of Capital Bank and UT Bank in August 2017. The two banks were subsequently absorbed by the state-owned GCB Bank.

In 2018, the regulator again took sweeping measures that shook the industry; it took over five more banks and created the Consolidated Bank Ghana to take over their assets and liabilities.

The Central Bank has said indicators will soon point to stronger banks as a result of its sweeping reforms.

Speaking at the Joy Business Financial Services Forum on the theme ‘The Changing Tide of Ghana’s Financial Services Sector: The Cause, the Cost, and the Clean-up’, Deputy Governor of the BoG, Elsie Addo Awadzi, revealed Thursday that the regulator is still monitoring the sector to ensure that banks meet the minimum capitalisation requirement by the end of the year.

Suits

Messrs Vish Ashiagbor and Eric Nana Nipah from PricewaterhouseCoopers, acting as joint Receivers for the defunct banks have filed a series of suits at the High Court to seek justice over alleged infractions in the collapse of the two banks.

They have sued Board Chairman of defunct Capital Bank, Pastor Mensa Otabil, his church, the International Central Gospel Church and shareholders and directors over the collapse of the bank.

They claim that bank’s collapse was as a direct result of misgovernance and willful breaches of banking regulations.

They have also sued the parent company of UT Bank for allegedly refusing to pay a GH¢51 million loan it took from its subsidiary.

The joint Receivers of the failed banks said the suit became necessary after the Defendant said until court orders so, the money will not be paid.

They did not end there. They have also sued the CDH Financial Holdings and CDH Savings and Loans, praying the High Court to order the two financial institutions to pay a total of ¢109, 390,634.70 plus accrued interest.

They also want the Court to order the BoG to withdraw the licenses of CDH Financial Holding and CDH Savings and Loans for their inability to pay back investment on maturity dates.

Commendation

Commenting on the suits, a Banking Consultant, Richmond Atuahene, said the suits by the Receivers are a step in the right direction.

He further urged them to focus on the criminal aspects of the events that led to the collapse of the two banks.

“The Receivers have done very well and all those who are found culpable must be able to return all the monies to where they belong,” he stressed on Top Story.

He, however, wants the Central Bank to bring its officials culpable in the collapse of the banks to book.

“I believe all these things happened [under the supervision] of certain people in responsible position at the Bank of Ghana and they must be dealt with…they must be brought to book and where they are found culpable they must be dealt with ruthlessly,” he said.

“They should have known better. They should have even known better than the shareholders and the directors,” he added.

‘Emerging questions’

Meanwhile, Yaw Oppong says after studying the writ of summons filed by the joint Receivers of the defunct banks, he is certain they raise interesting questions.

Speaking generally about how a company comes into being and how it ceases to exist, he predicts that the issue about the legal identity of the defunct banks and their ability to sue will emerge.

“When the Bank of Ghana revoked the licence of that company that has become a bank or that has commenced the engagement in a banking business will become defunct, in the sense of insolvent, and if it becomes so, does it cease to exist?

“That is…in the capacity as a legal person, does it lose that persona when the licence to engage in banking business is revoked? I think that is an emerging question and I will leave that to the lawyers who may be employed by the Defendants themselves; except to say that we know how a company becomes liquidated and cease to exist and therefore when it ceases to exist, it may not be able to perform the functions of a living company,” he said.

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