Court Hears Applications Against Sale Of Merchant Bank

The country’s laws will once again be put to test today when the Accra Fast Track High Court hears two applications on the sale of Merchant Bank.

The first application, by Mr Andrew Awuni, the Executive Director of the Centre for Freedom and Accuracy (CFA), is challenging the sale of Merchant Bank to the Fortiz Private Equity Fund.

The second one, by Mr Tony Lithur, counsel for Fortiz, is praying for the action by Mr Awuni to be dismissed for lack of capacity.

Both parties have filed their affidavits in opposition to the applications, setting the ground for the showdown to begin.

In his application, Mr Awuni is seeking, among other things, an interlocutory injunction to restrain the Bank of Ghana (BoG) from issuing any licence to Fortis to operate Merchant Bank as a validly acquired concern.

He is also seeking an order directing that the offer for sale of Merchant Bank, if justified, be advertised publicly.

Parliamentary probe

Mr Awuni is further seeking an order of the court requesting Parliament to institute an inquiry into the sale of Merchant Bank to Fortis.

In his statement of claim, Mr Awuni said in spite of the palpable silence by the Social Security and National Insurance Trust (SSNIT) to explain why it needed to divest itself of its shares, it was publicly alleged that the bank was owed huge sums of money by its creditors, which debts were adversely affecting its operations and, therefore, the decision by the government to sell it off.

It said several well-known international, as well as local, financial and banking institutions made bids to acquire the bank, among which was the First Rand Bank of South Africa, which is reputed to have put up a strong bid.

The statement said the plaintiff was reliably aware that the First Rand Bank offered to pay GH¢199.3 million to acquire 75 per cent of the shares of Merchant Bank and also undertook to recover its toxic debts which allegedly had bedevilled its operation by entering into negotiations with UT Recoveries, a local debt recovery company, upon the recommendations of the BoG.

It said while the plaintiff, like any other contributor, had hoped that by rejecting the bid by the First Rand Bank the offer was going to be made public for other potential investors who were going to offer even better than what the First Rand Bank offered, Fortis popped up as having acquired Merchant Bank, with the approval of the BoG, at GH¢90 million for 90 per cent of the shares of the bank and undertook to recover only 30 per cent of the toxic debts of the alleged ailing bank.

Short-changing people

The statement said the deal purportedly entered between Fortis and the government of Ghana, with the tacit approval of the BoG, was not good enough and amounted to short-changing the taxpayer and contributors whose money SSNIT invested.

It said the deal, if allowed to go on, would also be a flagrant violation of the 1992 Constitution.

Mr Lithur, on the other hand, is praying the court to dismiss Mr Awuni’s suit, which he describes as too weak and does not have enough grounds to halt further transactions on the deal.

His application stated that Mr Awuni did not have the capacity to challenge the sale in court, though he was a contributor to SSNIT.

It further stated that Mr Awuni was not a party to the deal and, therefore, did not have the right to challenge it.

Source: Daily Graphic