Chairman of Groupe Nduom, Dr. Paa Kwesi Nduom has slammed claims suggesting that his outfit, defunct GN Bank operated as a Ponzi scheme before it was declared as insolvent by the Bank of Ghana (BoG).
The rebuttal from Dr. Nduom comes after learning from the Finance Minister, Ken Ofori-Atta, while he spoke in an interview on an Accra-based radio station, stating that:
“When we got into office in January 2017, one of the documents that were called the Assets Quality Review of the banks showed most of these banks were literally bankrupt and therefore they were ‘Ponzi schemes’ taking people’s money, loaning them to people and just regenerating them.”
But a statement issued by the management of GN Bank which is currently in court over the revocation of GN Savings and Loans license noted that:
“For the avoidance of doubt, GN Bank can never be said to be one of those banks referred to by the Minister.”
According to another aspect of the statement, it also stated that:
“GN Bank did not achieve 300 retail outlets and over one million customers by being a Ponzi scheme. It did not sprout up overnight. It did not benefit from government contracts or fund-raising schemes. Its license was not gifted to the shareholders or directors. The Bank was developed from hard work and sacrifice.”
It further explained that the crisis that hit the financial sector in the country in August 2018 rather created a liquidity challenge.
“Prior to that, we were a very, highly liquid bank with a low non-performing loan portfolio. Our customers were happy with GN Bank,” it added.
What led to the Bank’s revocation?
Tracing back to August 16, 2019, the Bank of Ghana (BoG) revoked the specialised deposit-taking licences of over 20 savings and loans companies. The revocation exercise included the GN Savings and Loans Company Limited.
According to the Central Bank, the revocation of the licences of these institutions had become necessary because they were insolvent even after they were given a reasonable period to recapitalize.
This was after the Bank of Ghana (BoG), reduced the bank’s right to be called a bank to a Savings and Loans company in January 2019.
However, on August 30, 2019, the shareholders of GN Savings filed a case at the High Court to challenge the BoG’s decision. The defendants to the case comprised the BoG, the Minister of Finance, the Attorney-General and the Receiver of GN Savings.
However, on April 17, 2020, the shareholders of GN Savings and Loans prayed the High Court to order the Bank of Ghana (BoG) to restore their specialized deposit-taking licence.
GN Bank’s defence to resisting the BoG’s action
In Dr. Nduom’s case, the government infrastructure project portfolio was more than GH¢2.2 billion, a figure more than the company’s liabilities. He added that most of the company’s funds had been invested in government projects as loans and advances to contractors who government through its ministries and agencies had hired to execute various projects. Also, he said government and state agencies, as of August 14, 2018, owed the company over GH¢600 million.
