Legal expert Andrew Appiah-Danquah has highlighted how the then former President John Dramani Mahama took strategic steps to strengthen now-defunct Capital Bank, while the immediate past President Nana Akufo-Addo’s administration pursued policies that ultimately led to its collapse.
According to Appiah-Danquah, Mahama’s government approved a GH¢620 million commercial loan to Capital Bank secured by a GH¢380 million prudential fund injection.
In an analysis sighted by GhanaWeb Business, Appiah-Danquah mentioned that this move was part of a broader strategy to stabilize indigenous financial institutions rather than dismantling them.
Additionally, he pointed out that a structured repayment plan was introduced, allowing the bank to make monthly payments of GH¢14 million over two years – an approach that enabled Capital Bank to repay over GH¢336 million before the change in government.
“However, when Akufo-Addo assumed office in 2017, his administration abandoned this structured recovery approach. Instead, finance minister Ken Ofori-Atta and BoG Governor Dr. Ernest Addison demanded immediate repayment of the entire loan, a move that was a deliberate effort to engineer the bank’s failure,” Appiah-Danquah stated.
The legal expert also noted that all attempts by Capital Bank to renegotiate the terms, including reducing interest rates, waiving monthly interest payments, or converting the debt into equity were rejected without justification.
“The Akufo-Addo government’s financial sector clean-up resulted in the forced liquidation of Capital Bank, with its assets transferred to Ghana Commercial Bank (GCB). This decision led to job losses, business disruptions, and the loss of a thriving Ghanaian enterprise. Instead of supporting these financial institutions, the government used regulation as a weapon to eliminate them, spending GH¢26 billion on the clean-up, an amount far greater than what was needed to support struggling banks,” he wrote.
Based on his analysis of the banking sector clean-up, Appiah-Danquah argued that the John Mahama administration prioritized economic stability and the survival of local enterprises, while Akufo-Addo’s policies were punitive and destructive.
William Ato Essien, the founder of Capital Bank is said to have built the institution from a microfinance company into a full-fledged bank that played a crucial role in supporting Ghana’s Micro, Small, and Medium Enterprises (MSMEs).
However, following the clean-up exercise conducted by the Bank of Ghana between 2017 and 2019, William Ato Essien was convicted for his role in the collapse of Capital Bank.
He was found guilty of financial crimes related to the mismanagement of funds, including the embezzlement of GH¢620 million in liquidity support provided by the Bank of Ghana to Capital Bank.
After years of legal battles, Ato Essien was sentenced in December 2023 to serve a 15-year prison term after failing to comply with the repayment terms of an agreement he reached with the state.
MA
Watch the latest edition of BizTech below:
Click here to follow the GhanaWeb Business WhatsApp channel