Addis Fortune (Addis Ababa)
Issayas Mekuria
6 January 2008
The National Bank of Ethiopia (NBE), regulator of the country's financial sector, has put one hold the re-election of Hambissa Wakweya as Awash International Bank's chairman of the board along with the election of four other directors.
NBE has, however, shown the embattled pioneer financial institution a green light to continue business approving seven of the 12 board of directors how has been elected on the banks shareholders extra ordinary meeting healed at the Sheraton Addis on December 15, 2007. NBE was announces its approval by the latter had sent for the Awash Bank managements.
According to a letter Getahun Nana, head of Banking Supervision at NBE, wrote to Awash on December 28, the appointment of the Bank President Leykun Berhanu, Bekele Nedi, Negassa Tumsa, Wolle Gurmu, Meteku Abeshu, Terefe Mengesha and Awash Insurance SC to the Bank's board has been approved.
NBE says further investigation is needed for the approval of Hambissa, Kebede Borena, Emiru Amente, Wondimu Umeta and Amsalu Bezuneh to the board.
Four of the five unapproved board elects - Hambissa, Kebede, Wondimu and Amsalu - were members of the previous board, which was in a row with shareholders. NBE had declined to give the go ahead to the previous board.
"We have extended the decision to carry out further investigations as the unendorsed members were accused of illegitimately using the previous controversial election to gain support this time around," a senior official at NBE told Fortune.
Although it is not the first time for the Bank to enter into controversy in an election, the disagreements on April 26, 2007 were bitter. The board and the external auditor A.A Bromhead & Co. had to go to court after disputes over the election where, including the four put on hold now, Berhane Abate, Antonio Karnavale, Abebe Hate'u, Kibret Shuma, Bekele Nedi, Tsegaye Kumsa and Debela Gutema claimed to have been elected to the board with the chairmanship of Hambissa.
However, the Ethiopian Evangelical Church Mekane Yesus, which claimed that its representative elected itself to become a board member instead of voting for the Church's recommendation, together with shareholders that hold 20pc of the total shares, requested the external auditor call a general assembly for re-election. They also had claimed there are flaws in counting the votes.
The External Auditor, which felt that it had a legal obligation to call a general assembly, called the meeting on July 3, 2007. However, the board elects took the case to the court and suspended the assembly.
The board led by Hambissa requested the Federal First Instance Court to suspend the assembly and penalise the auditor for trying to call a meeting to change the decision of the general assembly. They also argued that the auditor could not set the agenda of the assembly.
The court ruled that the auditor has the right to call a meeting but cannot set the agenda of the meeting. Discontented with the ruling, the external auditor appealed to the Federal High Court. To the favour of the auditor, the Court reversed the earlier ruling and decided that the external auditor has a legal responsibility to set the agenda. In the meantime, NBE also had not approved the election.
After winning the court battle, the external auditor called a general assembly on December 15, at which four of the former members were re-elected. Leykun subsequently sent the names of the board to NBE for approval.
NBE told the seven board members to immediately hold their seats. Appointing Bekele, who at one point was also against the auditor before he changed his mind, as the board chairman, and Negassa as his deputy, the directors have officially reported to their respective duties.
"I do not have any comment because I do not know why NBE has not accepted my election," Hambissa told Fortune.
Awash is the first private bank established after the financial sector was liberalised in 1994 with a capital of 24.4 million Br and 486 shareholders. The Bank's capital has now reached 282 million Br and its shareholders currently are 2,440. Awash has 46 branches.
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