Dear BoG,

When the banking collapse started, you started giving “liquidity assistance” out to the then failing, and now failed, banks. Literally, you gave out BILLIONS of taxpayer money to the banks, primarily to meet the demands of depositors. You and the banks entered into agreements to that effect.

When in 2016 contagion was full blown, you got Parliament to specifically amend the Bank of Ghana Act, 2002 (Act 612) to specifically empower you to provide this assistance to banks that become “illiquid but solvent.” The law explained that this was “a loan to a solvent bank… that is facing temporary liquidity challenges.” It was not to apply to an already insolvent (ie bankrupt) bank!

The law added that you were to provide the assistance under mandatory terms and conditions which were to include “adequate collateral,” tenure and interest chargeable. We now know that you also specifically provided in the relevant agreements with the affected banks that you would appoint Advisors whose job was to supervise the use of the liquidity assistance. In other words, the banks could not use the money you provided ‘by-heart,’ but only with the approval of the appointed Advisor.

And so let’s ask you some questions:

1. Did you, before providing the assistance, ascertain that the banks were still solvent but were only encountering temporary liquidity challenges?

2. Did you, in accordance with your Act, demand collateral from the banks before providing them with the money?

3. Did you appoint any Advisors, and if so who were they, and how were the banks able to abuse the assistance? Did the Advisors approve of the abuse?

And Ace ate a humble pie

I have been arguing with Gabby Asare Otchere-Darko that the BOG only got the powers to deal with the banks under Act 930 of 2016 and that the previous administration didn’t get the chance to implement those powers before the 2016 political changes occurred.

Today, I confess that I was wrong. Koraa.

Yes, Act 930 gave a whole slew of unprecedented powers to the BOG. BUT Act 673 of 2004 (which Act 930 repealed and replaces) also contained vast powers that could have been exercised from 2014 when the banks contagion and meltdown began. It is instructive that the BOG as then constituted did NOTHING.

In fact, the facts show or suggest complicity. Officials of BOG ignored EVERY sign of trouble including their own 2014 and 2015 investigation and examination reports on the banks!! How??!!

So, granted that Act 930 of 2016 gave more powers, it still beggars belief that not a single relevant and applicable provision of Act 673 of 2004 was ever implemented!!

Absolutely unpardonable.

I was wrong. Gabby was right.