A Human Rights Court in Accra has ruled in favour of the Bank of Ghana (BoG) in a case brought by Dr Papa Kwesi Nduom, GN Savings and Loans, and another, challenging the revocation of their license by the central bank.
The court dismissed the application filed by the plaintiffs, who claimed that the BoG had violated their human rights by revoking their license without due process, and without considering their financial circumstances and the debt owed to them by the government.
The court said that the BoG was acting within its lawful mandate, as stipulated by the Bank of Ghana Act, 2002 (Act 612), to ensure the safety and soundness of the banking sector, and to protect the interests of the depositors and the public.
The court also said that the BoG had followed the proper procedures and given the plaintiffs enough notice and opportunity to rectify their situation, before taking the final decision to revoke their license.
The court further said that the plaintiffs had failed to prove that they were solvent and met the minimum capital adequacy ratio, as required by the BoG, at the time of the revocation. The court said that the debt owed to them by the government was not a valid excuse, as it was not confirmed by the Ministry of Finance, and it did not address their capital deficit.
The court also said that the plaintiffs had failed to prove that they were discriminated against by the BoG, as other entities had suffered the same fate as them, and that the BoG had applied the same criteria and standards to all the institutions under its supervision.
The court concluded that the plaintiffs’ complaints were unfounded and without merit, and that the BoG had taken a reasonable decision to protect the public interest.
The BoG revoked the license of GN Savings and Loans, formerly GN Bank, on August 16, 2019, along with 22 other savings and loans companies and finance houses, for being insolvent and unable to meet their obligations to their customers.
The BoG said that GN Savings and Loans had a negative capital adequacy ratio of -61%, and a negative net worth of GH¢683.66 million, as of May 31, 2019.
The BoG also said that GN Savings and Loans had engaged in transactions that violated prudential norms, such as extending overdraft and other facilities to its related parties, who were other companies in the Groupe Ndoum network of businesses.
GN Savings and Loans, which was originally incorporated as First National Savings and Loans in 2006, and later became GN Bank in 2014, was reclassified as a savings and loans company in January 2019, after it failed to meet the new minimum capital requirement of GH¢400 million for universal banks.
Dr Papa Kwesi Nduom, the founder and president of Groupe Ndoum, and a former presidential candidate of the Progressive People’s Party, had challenged the revocation of the license of GN Savings and Loans, and accused the BoG of being unfair and unreasonable.
He had also claimed that the government owed him GH¢942.98 million, of which GH¢102.73 million represented Interim Payment Certificates (IPCs), for various projects that his companies had executed for the government.
However, the BoG had disputed his claims, and said that only GH¢30.33 million of the IPCs had been confirmed by the Ministry of Finance, and that even if the amount was paid, it would not address the capital deficit of GN Savings and Loans.
The BoG had also appointed the Ghana Deposit Protection Corporation (GDPC) as the receiver for GN Savings and Loans, and assured the customers that their deposits were safe and would be paid to them through the receiver.