Banking and Finance

BoG, A-G fail to file defence in GN Savings’ licence revocation case

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The Bank of Ghana and the Attorney-General have failed to file a defence in the case brought against them by Dr Papa Kwesi Nduom.

In the suit, which is still pending in the High Court in Accra, Dr Nduom accused the Bank of Ghana (BoG) and the Minister of Finance of “deliberately and maliciously suppressing” the amount of money that the government owes GN Savings and Groupe Nduom.

It would be recalled that on August 9, 2019, the Ministry of Finance informed the BoG that the government’s total indebtedness to Groupe Nduom was just GH¢ 30,329,483.84.

This was far below the GH¢629,091,335.00, which Groupe Nduom says that government owes it.

Dr Nduom led his group of companies, to challenge the revocation of GN Savings and Loans’ licence by the Bank of Ghana.

Counsel for the applicant, Justice Srem-Sai of Archbridge Solicitors argued that the reason for suppressing the government’s indebtedness to GN Savings was to enable BoG to reach the false conclusion that GN Savings was insolvent.

In an affidavit which was sworn to by Dr Nduom, it was stated that “while disputing the very existence of the IPCs debt-claims in the eyes of the public, the Bank of Ghana has at all times material nicodemously demanded that GN Savings assign the said IPCs to it.”

In respect of this allegation, the trial judge, Ms Justice Gifty Addo-Adjei, ordered all the three defendants (the Bank of Ghana, the Attorney-General and the Receiver, Mr Eric Nana Nipah), to file their defences by January 17, 2020. As at the end of March, however, it was only the Receiver who had filed a defence.

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Dr. Nduom is asking the Court to quash BoG’s revocation notice and rather restore the licence of GN Savings.

They are also asking the court for “an order of injunction, restraining the other Respondents, their agents, assigns, privies and workmen howsoever called or described from interfering with the possession, management or control of the assets, operations and other activities of GN Savings and Loans Company Limited.”

Written address

In a 39-paged written address in support of the originating motion on notice for various orders for the enforcement of the fundamental human rights of the applicants, counsel argued that all evidence pointed to the fact that GN Savings was, as at the time of BoG’s decision, truly solvent; and BoG did not take into account all the relevant factors before concluding that GN Savings was insolvent.

“In this regard, the applicants contend that not only did BoG fail to take into account all GN Savings’ assets before concluding on its solvency, but also that there was a malicious design by the respondents between and among themselves to supress the value of GN assets so as to enable them to come to the pre-determined conclusion that GN Savings was insolvent,” counsel submitted.

What follows from here, therefore, is a summary of some of the key factors that BoG and the Minister of Finance should have taken (but have, either by neglect or refusal, failed to take) into account before coming to a decision on GN Savings’ solvency.

According to the applicants, independent assessment of their books showed they were solvent adding that “all this notwithstanding, BoG, which has not conducted any known independent, fair or truthful assessment or evaluation of the GN Savings’ books – assets and liabilities – was able, quite bizarrely, to come to a conclusion that GN Savings was insolvent and, consequently, revoked GN Savings’ licence on August 16, 2019.”

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“The Applicants’ argument, therefore, is that BoG has failed to conduct a true, fair and independent assessment of GN Savings’ books – matching the value of its total assets against the value of its total liabilities. And, indeed, if BoG had conducted a proper, true, fair and independent audit into the books of GN Savings, it would have known or come to the obvious conclusion that GN Savings was solvent and, therefore, capable of meeting its debt obligations as at the time that BoG revoked its operational licence,” the address pointed out.

Counsel further submitted that by revoking the licence of GN Savings and going ahead to appoint a Receiver to liquidate or wind it up without complying with the tenets of administrative justice, and failing to take into account matters of fact which had been acknowledged by the BoG and the Minister of Finance themselves in correspondence captured on the record, the respondents have, are or are likely to deprive the applicants their right to the property in the GN Savings.

According to the applicants, the BoG’s conclusion that GN Savings was insolvent has no basis at law or in fact. “Rather, we have demonstrated that the decision was, at best, reckless, fraught with stark malice and in self-evident violation of basic public law rules. We have showed in the affidavit and the exhibits attached (refer to the schedule below) that GN Savings was not only solvent, but also that it has assets far more than its total liabilities,” counsel added.

Citing authorities to buttress its argument, counsel is accordingly praying the court to grant its reliefs because the applicants had amply demonstrated the respondents, who were mandated by law to ensure businesses thrived; acted unfairly and capriciously leading to the loss of 2,840 jobs.

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