7 January 2014

Ghana: Investment Bank Sale Prompts Corruption Allegations

Ghana's 275 lawmakers cut short their holidays to urgently debate the sale of an investment bank, Merchant Bank Ghana Limited (MBG) in which the government had a 90 percent stake.

Ghanainan investment bank MBG has been sold off for an undisclosed sum to Fortiz Private Equity Fund Limited, a local equity firm based in the capital, Accra. Ghana's opposition members of parliament object to the deal, claiming it is linked to the brother of President John Mahama, Ibrahim Mahama. The sale is still subject to court approval.

MBG released a statement stating difficulties in its operations were the main reason for the decision to sell all its shares.

A financial service provider in South Africa, FirstRand, made a bid which MBG rejected. Ghana's Fortiz Private Equity Fund Limited, owned by Ibrahim Mahama, also put in a bid and eventually clinched the deal. Opposition deputies argue that "the House retains the right to debate the bank takeover" and vented their disapproval, stating the deal "has not been transparent."

"Order 20 of our rules provide that there shall be freedom of speech, debate and proceedings in parliament," said minority leader in parliament, Osei Kyei Mensah Bonsu. "Freedom shall not be impeached or questioned in any court or place out of parliament."

Majority leader Dr. Benjamin Kumbuor disagrees. He said the issue is currently under a court proceeding and parliament does not need to debate it until a decision is reached in court.

"There is no doubt that the matter on the Fortiz bank acquisition sale or otherwise disposal of shares is a matter that is pending before a competent court of jurisdiction," said Kumbuor. "I will ask that, let's be guided and find out whether it is not possible to defer this inquiry till after the determination of the court case."

While some Ghanaians have heavily criticized the deal, others expressed concerns about the role of Ghana's justice system. Kofi Manu, 26, said MBG had claimed that "nothing can prevent them from selling off the bank. It's a sad thing that we don't have power to prevent the sale."

Samuel Adu, 30, said that MBG had been one of the most successful investment banks in Ghana. But he claimed that people took huge loans and could not afford to pay the interest, which could be a possible reason for the bank's difficulties. He said he and others were not interested in the case because "there is no justice in this country."

Ghana's banking community is closely monitoring the case as the debate in parliament on the legality of the trade deal continues.

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