Beige Bank case: All transactions of defunct bank properly recorded – State Witness

The Star Prosecution Witness (PW1) in the ongoing Beige Bank trial has told the High Court in Accra that all transactions of the defunct bank were properly recorded.

Julius Ayivor, a Chartered Accountant with KPMG and a team member of the Receiver has for the past weeks been facing scrutiny from the defence lawyers led by Thaddeus Sory after he had earlier given evidence for the prosecution.

Counsel had put to the Witness that his response that there was no free money anywhere, was the reasons the Beige Bank recorded all of its transactions that he the witness had testified about in paragraph 25 of his witness statements and from which the Receiver extracted its records from.

While confirming to the court, the witness explained that “it is very normal for surch transactions to be recorded.”

He said “if they weren’t recorded, the books of the bank wouldn’t have been balanced” and that “recording those transactions gives anyone reviewing the record information about the nature of those transactions” the proper appreciation of what had happened all along.

Michael Nyinaku has been accused of allegedly siphoning customers' funds and has been charged with stealing GH¢2.1 billion of depositors’ money from the bank.

He has pleaded not guilty to 43 charges including stealing, fraudulent breach of trust and money laundering and has been granted bail.

Proper records of all transactions

Under further questioning from Mr. Sory, counsel said the receiver also accessed the interest as extracted from the bank’s record of the bank's outstanding balances.

The witness in his response said, that’s not entirely so, but “what the Receiver stated was that the outstanding balance together with interest as extracted from the bank’s records on one hand or as computed by him using the bank's base rate equaled about GH¢1.2 million.”

“My lady and that is because for some of the balances that are contained on exhibits related to party loans, totalling GH¢501 million had an interest of GH¢356 million that was extracted from the bank's records.

He however said balances related to Directors, shareholders and prepayment project works account totaling in excess of GH¢400m also has an interest component which was computed by the receiver.

The witness also told the court this was “because those moneys were siphoned out to the benefit of the accused.

“There was no board approval in respect of those payments. There was also no agreement between the bank and the beneficiaries of those funds to ensure that the amount to be refunded to the bank is at arms lend.

He also said, “the receiver need to include an interest component as there was no free known from the date when those payments were made to the date when the bank's license was revoked’”

The witness’ theory on no free money provoked a follow-up question from counsel who asked that since there is no free money it was the reason the bank recorded all of these transactions that you testified about in para 25 of your witness statements and from which the receiver extracted, which the witness admitted.

“My Lady that’s so. And it is very normal for such transactions to be recorded. I’d they hadn’t recorded the books of the bank wouldn’t have a balance . Recording those transactions gives anyone reviewing the record information about the nature of those transactions when combined with other supporting documentation,” he confirmed to the court.

Demand for repayment

When counsel put to him that under the same exhibit 6, the Receiver had informed the accused person that by virtue of the exhibit he was formally demanding repayment of all of those funds he mentioned in paragraph 25 of his witness statements from the accused, the witness agreed.

He explained that, it is because the Receiver mandate as prescribed under Act 930 includes recovering debts owed to the bank that could be made about those legitimately advanced by the bank and those illegitimately siphoned out of the bank so this para is just indulgent of those mandate

Asked by counsel if he was aware that under Act 930 is not illegal for a bank to expose itself to a legal third party, the witness said “I’m aware that a bank can be exposed to related parties to some extent.

He however added that, there is a cap that is allowed under the act.

When it was put to him that throughout his witness statement, he had not indicated whether the cap with exceeded, the witness said it was “not explicitly” stated.

While making reference to exhibit 6, counsel said the Receiver expressly told the accused if he failed to pay the funds the Receiver will treat him as a defaulter as per his paragraph 25.

The witness while admitting said, “in default with the contest of the demand being made for a return of those funds.”

Beige Group

A letter dated March 22, 2022, written by the accused to the Receiver was shown to the Witness which he acknowledged was subsequently tendered through him.

Counsel said that the letter was clearly headed demand to issue individual credit letters which the Witness agreed, adding that, “it also said re-exposure of the Beige Group.

Counsel said in addition to his answer, the letter reminded the Receiver of the need “to issue individual demand notice to each of the institutions connected to the Beige groups which have exposures to the bank.

Counsel again said the accused went on to say in that letter that he has alerted most of the institutions and he can confirm that they are awaiting the action from the receiver.

Mr. Sory again said the accused finally told the Receiver that he should kindly do it and write to the individuals concerned so the accused and the Receiver can make progress.

The witness while admitting, explained that, “Exhibit 7 relates to exposures of entities related to Beige Bank in connection with various facilities advanced by the bank to them.

“My lady, you will mostly find the outstanding balance of those facilities in appendix 5 described as Ref5 on page 10 of exhibits 6.”

He added that “there are 12 related parties indicated on that appendix and their balance totaling GH¢501 million” and “these exposures of these related parties to Beige Bank are different from the GHc281m stated in paragraph 25 of my witness statement.

The Witness said, “Indeed the Receiver did make direct demands on the related parties indicated on page 10 of exhibit 6 to repay the amounts advanced to them by Beige Bank which are entirely different from the matter under discussion from paragraph 25 of my witness statement.”

Demand notice

Mr Sory said page 6 of the exhibit was clearly titled exposure to Beige Group, but the witness said “there is demand notice also part of that and the title is demand notice and exposure of Beige Group of companies.”

Counsel said, Exhibit 7 makes it evidently clear that the letter the accused wrote to the Receiver related to the exposure to the Beige group of companies.

The witness in his response agreed and added that, it is clear from the reading of the title that it is the exposure of the Beige Group and my lady the Beige Group is a separate legal entity wholly owned by the accused.

When Counsel put to the witness that in his testimony to the court he confirmed that, “the entities specify in exhibit 6 include all the entities you mention in your paragraph 25 and more, the witness disagreed.

The witness said, “what I stated was that the transactions that is the individual transactions that make up the GH¢281m in paragraph 25 of my witness statements would be contained in the individual transaction that make up about the GH¢1.2 million o exhibit 6.

Willingness to payment debts

The witness added that “in fact, they will just be related to the first four categories stated in exhibit 6 which are directors account, shareholders beige group accounts and payment project works account.

He said, If his memory serves him right, he can confirm to the court that the Receiver wrote letters to the entities to represent 5 of appendix 1 of Exhibit 6.

Asked by counsel if those written to respond, he answered in the affirmative.

Asked again if he was able to tell what some of them said per their responses, he said some of them were willing to pay their debts.

“Some indicated their willingness to pay their debt owned to beige Bank,” he said however the proposals they submitted were very insulting because some proposed to pay monthly amounts of some instances GH¢500 for a debt that is in millions.

He could however not be able to tell the court if the Receiver indicated the less insulting to the Receiver to enable these entities to make better proposals to him, except to say, “I will need to go back and check if there were any formal proposals to these.”

Asked by counsel if he was able to tell the court which of these related parties wrote back to the receiver and made insuring proposal, the witness said “I will need to go and check.”

Justice Afia Serwah Asare-Botwe, a Justice of the Court of Appeal sitting as an additional High Court judge has adjourned the case to March 27.