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The Executive Director of the Danquah Institute, Richard Ahiagbah, has debunked claims that the institution schemed to collapse some banks in the country.

According to the Executive Director, the claims contained in a circulated video are a complete fabrication and distortion of facts. 

He accused the opposition National Democratic Congress (NDC) of being behind what he terms as a “wicked act” to deliberately spread false information about the institution.

In a video circulating on social media, a male voice is heard detailing how some of the indigenous Ghanaian banks collapsed, alleging it was a well-orchestrated plan by the Akufo-Addo government before officially assuming office.

The video claimed President Akufo-Addo together with the Finance Minister, Ken Ofori-Atta and the Governor of the Bank of Ghana, Dr. Ernest Addison executed the plan to collapse the financial institutions in accordance with an article by the Danquah Institute that showed some banks belonging to members of opposition parties must be crippled to prevent them from financing their political parties.

The unidentified voice further claimed a document specifically mentioned Dr. Kwabena Duffuor, a member of the National Democratic Congress (NDC) who founded uniBank and Papa Kwesi Nduom of the Progressive People’s Party (PPP) who founded GN Bank.

Addressing journalists on the matter in Accra, Mr. Ahiagbah stated that though the institution has no concrete evidence to prove the opposition NDC is truly behind the claims, it is however convinced the claims are “consistent with the opposition NDC’s propaganda narrative”.

He revealed a total of 9 universal banks, 23 specialized depositing taking institutions and 386 microfinance and credit institutions, were barely hanging in 2017 when the government assumed power. 

“The banking sector problems, what this government inherited, and what measures it has put in place to restore sanity are no secrets. 

“Ghana risked a total collapse if nothing was done decidedly different from the NDC-John Mahama approach to resolve the challenges. Caught in the balance were 4.6 million depositors, thousands of retail, corporate and institutional investors. Ghana needed a bold and decisive leadership that was willing to prioritize the interests of depositors, investors, and the economy above all other considerations. Unless you are a mischief-preneur, you know that a willful collapse of banks or financial institutions, as claimed in the video, is not the disposition of a center-right policy institute or government whose policy bias is the growth and wellness of private enterprise, property and property rights, economic freedom and the rule of law among others. 

The government chose, arguably, the most challenging approach but one that is realistic and consistent with its compassionate liberal-conservative values to protect the interest of depositors, employees, and the economy. Its approach has saved the solvent but struggling banks through the Ghana Amalgamated Trust (GAT) and cleanup of the insolvent banks to promote long-term growth and confidence in the sector,” he said.

“The video makes wild and objectionable claims that appear to implicate the Institute in a ploy to wilfully collapse some banks…We wish to state unequivocally that the claims contained in the video are false, a complete fabrication and distortion of the fact. Though we do not know the source or the people behind the video, its content is consistent with the opposition NDC’s propaganda narrative and so we respond to it as such”, he added.

Read the full statement below:


DANQUAH INSTITUTE PRESS BRIEFING ON BANKING SECTOR MISINFORMATION

Good Afternoon and welcome to the Danquah Institute.

We have called you ladies and gentlemen this Afternoon to respond to a despicable video that is circulating about the Danquah Institute, the government, and personalities associated with the institute. The video makes wild and objectionable claims that appears to implicate the institute in a ploy to willfully collapse some banks.

First, let us watch the video.

We wish to state unequivocally that the claims contained in the video are false, a complete fabrication and distortion of the facts. 

Though we do not know the source or the people behind the video, its content is consistent with the NDC's propaganda position.

The banking sector problems, what this government inherited, and what measures it has put in place to restore sanity are no secrets. A total of 9 universal banks, 23 specialized depositing taking institutions and 386 microfinance and credit institutions, were barely hanging in 2017 when the government assumed power. Ghana risked a total collapse if nothing was done decidedly different from the NDC-John Mahama approach, to resolve the challenges. 

Caught in the balance were 4.6 million depositors, thousands of retail, corporate and institutional investors. Ghana needed a bold and decisive leadership that was willing to prioritize the interests of depositors, investors, and the economy above all other considerations. 

Unless you are a mischief-preneur, you know that a willful collapse of banks or financial institutions, as claimed in the video, is not the disposition of a center-right policy institute or government whose policy bias is the growth and wellness of private enterprise, property and property rights, economic freedom and the rule of law among others. 

The government chose, arguably, the most challenging approach but one that is realistic and consistent with its compassionate liberal conservative values to protect the interest of depositors, employees, and the economy. Its approach has saved the solvent but struggling banks through the Ghana Amalgamated Trust (GAT) and a cleanup of the insolvent banks to promote long-term growth and confidence in the sector. 

Ladies and gentlemen, the decision was a choice between a comprehensive cleanup or the failed liquidity support approach of the John Mahama administration. Recall in 2015 and 2016, the IMF supported the Bank of Ghana to undertake an asset quality review. The exercise revealed severe challenges with solvency, asset quality, and liquidity; in fact, some banks were significantly under-provisioned and suffered capital shortfalls.

To respond to the report, the John Mahama administration opted to use liquidity support without a plan to address the underlying regulatory deficits and corporate governance malpractices. As it turned out, much of the liquidity support given to its friends were diverted to fund unrelated investments. Poor corporate governance practices ruled the day paving the way for related interests deals to the detriment of employees, depositors and investors. 

Owners and directors of some financial institutions appeared to be in lockstep with regulators which may have caused them to look away as depositors' funds are funnel into personal investments. These owners and directors were emboldened and threw all caution to the wind. 

For instance, under the NDC-Mahama government, shareholders and directors of a bank advanced personal loans to themselves contrary to Section 70 (4) of Act 930. Again, four owners and directors of one of the collapsed banks owed the bank a sum of 494.6 million cedis. 

Further, the receiver of the insolvent financial institutions, Mr. Eric Nana Nipah, on Friday, July 17th, revealed that some of the owners of the defunct financial institutions bought houses outside Ghana with depositors' money. These are peoples’ lifetime savings and investments that are being diced up and shared to acquire foreign property by owners and directors of financial institutions. 

Recall in the video; the narrator talks about peoples' "bojaboja," it is clear now that the owners of the financial institutions are the ones using depositors bojaboja under the NDC to acquire foreign homes. 

Please think through this illustration with me—if depositors save their monies with a financial institution called AB Bank, and the owners and directors of AB Bank siphon the savings to buy homes abroad, divert them into personal enterprises or make personal loans to themselves against the banking laws. What do you think will happen to AB Bank? This was what happened in the case of the collapsed banks. 

Unlike the NDC-Mahama administration, this administration took a comprehensive and inclusive view of the problem it inherited—primarily to save depositors funds, jobs, and to build an enduring financial services sector. It was either this bold and decisive way or no way because the alternative has been tried, it has failed and should never be an option. 

Thankfully, the results are beginning to show. Liquidity and capital adequacy, which in 2017 were 25% and 14.6% respectively, have improved as of May 2020, to 39% and 21%, respectively. Good corporate governance and prudence have led to a drastic reduction in non-performing loans from 21% to 14.3% or in cedi terms about 1.46 billion cedis. This is building the banking sector, not collapsing it.

While this government is working to fix the problems in the financial sector, it is disingenuous for those who created the problem to hide behind cameras to mischaracterize its labor. Since the Danquah Institute has been mentioned, I would like to take a minute to illustrate how like our imaginary AB Bank—owners and directors stifled and eventually collapsed the banks. 

The collapse of UT and Capital Bank and the rest that were consolidated resulted vastly from mismanagement and diversion of depositors' funds by owners and directors for personal benefits. Their loss positions equaled 11.65 billion cedis. That is how much depositors funds they have diverted, and was not available when needed to keep the banks solvent and save them from collapse. 

So, the claim that government owed UniBank, that is why it collapsed is entirely false and without merit. Granted that government owed UniBank 1 billion cedis as claimed in the video. That 1 billion cedis will not have been enough to save UniBank, because the gap in its balance sheet is far more significant than 1 billion cedis. 

The NDC knew about the impending collapse and vulnerabilities of the Ghanaian banks, including UniBank, from the updated 2016 asset quality review report. It is against this background that the IMF worked with the NDC to pass the Banks and Specialized Deposit-Taking Institutions Act, 2016, to resolve the challenges in the sector. But somehow, the NDC failed to attend to the crisis faithfully.

Ladies and gentlemen of the media, these are the facts. I submit to you that the video circulating on social media, which claims the Danquah Institute has conspired with the government to collapse UniBank and others, is nothing but a callous plot to besmirch the our reputation and mischaracterize the government's honest effort to see through a painful but necessary clean up exercise.

But, expect more of these fabricated videos to be circulated as part of a grand strategy to poison the atmosphere, create enmity, and distorts the issues.

It is my hope that you will set the record straight anytime you come across these fabrications about the Danquah Institute or the government.  Ghanaian falls for them. 

Thank you.