In a notable development in Ghana’s financial sector, George Smith-Graham, a former Director of Universal Merchant Bank (UMB), has announced his intention to appeal a High Court ruling that upheld the Bank of Ghana’s (BoG) decision to revoke his appointment as UMB’s Board Chair.

The case centers around the BoG’s regulatory authority under the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) and its Corporate Governance Directive 2018, highlighting the tensions between regulatory oversight and corporate governance within the banking sector.

The controversy began on July 5, 2023, when UMB’s Board of Directors, during an emergency meeting, appointed Smith-Graham, previously a non-executive director, as its Board Chair.

This appointment was made without obtaining the required “No Objection” from the BoG, a mandate established under the Banks and Specialised Deposit-Taking Institutions Act, Act 930, and further reinforced by the Corporate Governance Directive 2018. According to these regulations, banks must receive written approval from the BoG before redesignating any non-executive director to another position.

Upon learning of the appointment, the BoG promptly notified UMB of its non-compliance with the directive. However, UMB, advised by its legal counsel, argued that the bank was not obligated to seek the BoG’s “No Objection” for Smith-Graham’s appointment as Board Chair. This refusal led the BoG to exercise its regulatory powers under Act 930, ultimately revoking its approval of Smith-Graham’s directorship at UMB.

Dissatisfied with the BoG’s decision, Smith-Graham sought judicial review, arguing that the BoG overstepped its authority under section 102 of Act 930. He contended that even if the BoG had such powers, it was legally bound to provide him with a hearing before revoking his appointment.

On July 10, 2024, the High Court, presided over by Justice Nana Brew, dismissed Smith-Graham’s application for judicial review. The court affirmed the BoG’s authority to enforce compliance with its directives, citing section 102 of Act 930, which grants the BoG broad powers to address violations by banks and specialized deposit-taking institutions. The court held that these powers include the removal of a director if necessary to remedy any breach of the law or regulations.

The court further noted that the exchange of correspondence between the BoG, UMB, and Smith-Graham demonstrated that all parties had been given a fair hearing. Additionally, the Companies Act, 2019 (Act 992) did not limit the BoG’s powers under Act 930. Therefore, the BoG’s actions were deemed lawful and within the scope of its regulatory authority.

Smith-Graham’s Response and Appeal

In response to the court’s ruling, Smith-Graham issued a statement titled “Setting the Record Straight,” in which he expressed his disappointment with the decision. He argued that the BoG had abused its powers by imposing additional requirements through administrative letters, which he claimed were not explicitly stated in Act 930 or the Corporate Governance Directive 2018.

Smith-Graham emphasized that regulatory bodies like the BoG should not use administrative communications to modify or override statutory provisions. He warned that accepting such practices could undermine the operational integrity and governance frameworks within the banking industry.

Citing these concerns, Smith-Graham vowed to appeal the ruling, underscoring his commitment to upholding principles of good governance, transparency, and accountability in the banking sector.

The outcome of Smith-Graham’s appeal will have significant implications for the regulatory landscape of Ghana’s banking sector. It raises critical questions about the balance between regulatory oversight and corporate governance autonomy.

As the industry awaits further developments, stakeholders continue to emphasize the importance of a fair and transparent regulatory framework that supports the sector’s stability and growth.