Don’t collapse companies when you cannot create one - Kofi Asamoah-Siaw to government

Former General Manager of defunct GN Savings and Loans Company, Kofi Asamoah-Siaw, has expressed outrage at the government’s decision to close down the company.

In a piece he wrote three years after the company was closed, he noted that all assets, including vehicles, had been left to rot.

He pointed out that if the government had no intention of creating long-term jobs, it had no business closing down those established by Ghanaians.

Kofi Asamoah-Siaw also claimed that the abandoned motorcycles were assembled in Ghana by Ghanaian workers for GN motors.

He also stated that the depreciation of the cedi is a problem that the private sector could solve.

Read his full statement below;

Tuesday, August 16, 2022, marks the 3rd Anniversary of the reckless decision by the Finance Minister and his able lieutenant, the Governor of the Bank of Ghana, to revoke the license of GN Savings&Loans for purely political considerations.

Apart from the abandoned offices built by GN, these 300+ vehicles and dozens of motorcycles continue to rot away in an abondoned garage somewhere in Tema.

The over 3,000 workers too remain jobless whiles the government ends its NABCO programme.

If you have no idea how to create jobs, do you destroy what others have built or created?

Just tell me if these abondoned vehicles were bought with leaves and the drivers were chinese nationals.

Even the motorcycles were assembled here in Ghana by other Ghanaians working for GN Motors. Now you see how some private sector people know how to make the cedi stronger?

Background

The Bank of Ghana (BoG) revoked the licences of 23 insolvent savings and loans companies and finance house companies in 2019.

Ideal Finance, GN Savings and Loans, First Allied Savings and Loans, ASN Financial Services, Midland Savings and Loans, IFS Financial Services, Unicredit Savings and Loans, and Women’s World Banking Savings and Loans are among the institutions affected.

According to a statement issued by the Bank of Ghana on Friday, August 16, 2019, the revocation of the institutions’ licences became necessary because they were insolvent despite the Bank of Ghana’s engagement with them in the hope that they would be recapitalized by their shareholders to return them to solvency.

Some of these funds were used by the two related parties to pay their customers whose investments with them had matured, while some were also used to fund road and other contractors, who claim to have worked on Government projects. It is important to note that the IPCs claimed by GN are not supported by transactions that were entered into directly by GN and such contractors or Government and its entities.

They reflect transactions entered into by Ghana Growth Fund or Gold Coast Fund Management with these contractors using funds taken from GN under circumstances that violated prudential norms. The failure of the two related parties to pay back these funds to GN affected GN’s capital position, leading eventually to its insolvency and acute liquidity challenges.

Regulatory breaches

In addition to GN’s insolvency and liquidity challenges, the Bank of Ghana has found other key regulatory violations such as the following:

– The institution’s adjusted Net worth of negative GH¢30.70 million as at end May 2019 indicates that its paid-up capital is impaired in violation of Section 28(1) Act 930.

– The institution’s adjusted capital adequacy ratio of negative 61.20% as at end May 2019 is in violation of Section 29(2) of Act 930.

– Contrary to section 64 (2) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), the institution’s exposure to its related party has consistently been above the regulatory limit of 25% of net own funds (NOF). Exposures to other affiliates companies were mainly payments made by the bank on behalf of such affiliates.

– The structure of GN’s balance sheet clearly shows that the bank mobilizes deposits for its related companies. The inability of these related companies to honour their obligation to GN has resulted in serious liquidity challenges and contributed to their insolvency as all related party exposures are non-performing.

High non-performing loans

The institution’s high non-performing loans (NPL) was mainly attributed to these related party exposures, which were never paid, thereby putting the deposits of its customer at risk.

International Business

A recent Bank of Ghana investigation conducted at GN revealed that a significant amount (USD62,255,516.93, GBP718,528.59 and EUR4,200) of depositors’ funds held with GN had been transferred to International Business Solutions (another company owned by Groupe Nduom and which is based in the U.S.A) without any documentation to support such transfers in breach of section 19 of the Foreign Exchange Act 2006, Act 723, Section IV of Bank of Ghana Notice No. BG/GOV/SEC/2007/4 and subsequent Bank of Ghana Notices issued in August 2014 prohibiting such practices.

The company is yet to publish its 2018 audited accounts contrary to section 90 (2) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930). Furthermore, the company did not keep accounting records in a manner that gives an accurate and reliable account of the transactions of the company and did not, therefore, show a true and fair view of its operations.

Seventy branches

GN has suspended operations in seventy (70) of its branches including the Head office branch at Asylum Down and Castle Road branch, and temporarily suspended its entire management team without the approval of the Bank of Ghana contrary to section 25 (2) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), mainly as a result of its insolvency and liquidity challenges.