Fortiz Fortified Part 2

I am compelled to return to this subject earlier than I had hoped to do because of the unending and willful display of ignorance on the disposal by SSNIT of its interest in Merchant Bank to Fortiz Equity.

It has become clear to me that the opponents of this decision by SSNIT have invested heavily in the alleged gullibility of the people of this country to sell their product.

That product is the unseemly calls on the Bank of Ghana to cancel the sale, and for Ghanaians to agree that the sale is fraught with irregularities. I am unaware of any occasion in the existence of the Bank of Ghana that it has reversed itself in a major decision. This sale, made to appear controversial by its opponents, would certainly not be the first.

In my first foray into this subject, I made oblique references to the sale of the then Ghana Telecom by the Kufuor Administration in 2008 to alert all of us that our governments do have responsibilities and duties towards us, and seeking to perform them may land them in awkward political and ideological positions. It seems from the continuing complaints from some of us that the lesson was not grasped at all. 

I shall proceed on a different and stronger tack today to drive home forcefully the point of view that the opposition to the sale is driven by spite, envy and extremely painful but willful ignorance.

Let me take an obvious example of the spite driving the opposition against the disposal. Who made minutes of Merban board meetings available to the public through the media?

How are these minutes expected to assist us the public to grasp the issues at stake? The board of Merchant Bank, irrespective of the stellar backgrounds of individual members, is a creature of the owners of the bank, in this case, SSNIT, and can only offer advice to the owners who have absolute rights to determine the ultimate questions regarding the disposal of their asset. Do you need to go to school at any level to appreciate that the contrary views of employees of the owners are of no moment in this matter?

The better approach would be to examine why SSNIT wants to dispose of their asset, performing or non-performing. Some of us, straddling the fence as usual when it comes to criticising public institutions and officials, have sought to lay the blame on the current board of SSNIT to make it appear as though it was the actions of this board which have led to the decision to offload this asset of the Trust. Nothing can be farther from the truth than this, further confirming that we are deliberately being taken for a ride by these charter members of the chattering classes who believe that everything they say must be accepted.

The answer to this question is fundamental. The current parlous state of the finances of Merban was facilitated by the board in place during the tenure of President Kufuor when unpayable credit lines, far above the bank’s ceiling, were extended to many powerful and prominent businessmen in Ghana.

The bank’s board which okayed these fantastic sums obviously had the blessing of the parent SSNIT board put in place by President Kufuor. One of the members of the board of Merchant Bank at the time was the then Minister of State for Finance, Dr Anthony Akoto-Osei, now opposition NPP spokesperson on finance in Parliament.

I must add quickly that he was not attending board meetings very much, but he must have been aware that the facilities were unsustainable and would lead to the current situation if any of the bank’s debtors defaulted.

I guess these facilities were put through to prepare the ground for the eventual divestiture of the bank to politically suitable entities. Unfortunately, the success of the NDC at the polls in 2008 destroyed the plan of these seemingly clever schemers, but still left the bank in a parlous state for both SSNIT’s new board and the Bank of Ghana to grapple with. The truth is that we are putting together different SSNIT and Merban boards appointed by different Presidents at different times and condemning them all. 

We all should remember that way back when the sale of the bank to Rand Bank was mooted during the election period in 2012, the same people who are now enthusiastically supporting the Rand Bank were vehemently opposed to the sale to the same bank. Their reason?

President Mahama was seeking a way to bail out his brother’s company which owed Merchant Bank using a foreign bank. My friend Buabeng Asamoah waxed lyrical at press conferences and media appearances, dead set against any sale to a foreign entity which would jeopardize workers’ contributions to SSNIT. When self-acclaimed capitalists oppose the offloading of a non-performing asset in this contradictory manner, there must be something in the soup.

Nobody opposing the sale is talking about the massive shock to the economy if Merchant Bank collapses under the weight of its obligations to depositors and staff. The projected loss would be in the region of one billion cedis. If they did, they would immediately realise that Fortiz Equity is a godsend to all of us at this time when we are complaining about budget deficits and the rest. It was only Fortiz that had a semblance of a sustainable debt recovery plan. Their decision to buy is a massive risk to the partners, and they need our encouragement, not condemnation.

Or just maybe, our friends have willfully left out of their calculated cleverness, and deliberately forgotten what an equity fund is, and are treating it as some sinister force out to fleece all of us? Any person who buys bank shares at the stock exchange needs no qualifications to do so. Equity funds do this better because they mobilise funds from a deeper mine of wealth creators.

Their qualifications to run a bank are completely irrelevant because that is a management issue, and they can obviously hire what they need. They want to own a bank, in the same way all of us own Ghana Commercial Bank, without an iota of knowledge and experience in what running a bank entails.

It is instructive that whilst President Kufuor is being accused at the moment of being a debt-collector for a French bank, his spokesperson, whilst in office, is also busy backing a South African bid for Merchant Bank. For my part, I would prefer a local, homemade Ghanaian solution to this problem.