The co-founder of defunct UT Bank, Prince Kofi Amoabeng, says he once bailed out Finance Minister, Ken Ofori-Atta when his business run into some financial difficulties.
In Kofi Amoabeng’s book, “the UT story: Humble Beginnings” he recounted how Ken Ofori-Atta came to him to borrow ¢5 million to keep his business afloat.
“Ken and his partner, Keli Gadzekpo, came to me bearing their shares in Enterprise Insurance as collateral for a loan of about ¢5 million.
“At the time, the cedi had undergone redenomination and had been rebranded as ‘new Ghana cedi’. The ¢5 million he requested, therefore, was equivalent to about $5 million,” he said.
He disclosed in his book, that he felt obliged to give the money to Ken despite it being above the Single Obligor Limit then, due to their friendship.
At the time, UT was a non-bank financial service company causing a disruption in Ghana’s financial sector with their superfast loans and debt recovery strategy.
“We were very good friends so I felt obliged, albeit not without conducting the necessary due diligence. It was curious though that they did not prefer the banks where they would have secured the loan at a much lower annual interest rate as compared to our significantly higher monthly compounded interest rates.
“Be that as it may after I perused their documents. I felt it was acceptable to grant the loan. The only snag, and a significant one at that, was that the amount exceeded the Single Obligor Limit. Ideally, I should have declined their request there and then. Instead, I decided to bail them out,” he said.
Kofi Amoabeng then sought permission from his board members who opposed the granting of the loan vehemently.
In his book, Kofi Amoabeng stated that considering the stiff opposition he faced from his board members, he “literally stood surety for their application” and the board reluctantly granted the application.
However, things did not pan out like he had hoped they would.
“Unfortunately, Ken failed to honour his end of the bargain. He defaulted badly on the repayment schedule. The situation was so bad that they could only service the interest on the loan,” he revealed.
“I became concerned because I had assured the board I knew Ken very well and I was convinced beyond doubt that he would honour his word. Thus I had egg on my face, especially as my partner had expressly stated his disapproval of the request,” he said.
Prince Amoabeng, even despite the difficult situation he found himself in after Ofori-Atta defaulted continued to defend him.
“I called a meeting with Ken and Keli and admonished them to do their best to pay up. I made it clear to them that I did not want my men to hassle them. Sefa Asante was the Credit Officer in charge of that portfolio. Because of my relationship with Ken and the respect I had for him, I prohibited Sefa and his team from applying our usual, rigid recovery methods.
“In fact, I gave him express instructions not to ever hassle Ken and his team. They could check on them every now and then, but they had to be discreet about it. If they felt they were being stonewalled, they should not push back or react. Rather, they should revert to me handle the situation,” he said.
“Furthermore, to be double sure that ken and Keli were not hassled, I devised a clever plan and informed them about it. Anytime the board exerted pressure on me, I invited them to a meeting, documented the meeting, and formally informed the board about it. It was all a ruse to hold the board at bay and buy Ken and Keli more time to pay up,” he added.
However, even after the grace extended to Ofori-Atta, it took him over four years to pay up his debt to UT.
“When the issue lingered, I reduced the interest rate to about 3% a month, just so they could settle their debt. Unfortunately, it took them over four years to pay up. Even then, they serviced it in bits and pieces until they were able to eventually to pay up,” he revealed.
Source: myjoyonline.com
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Okay Lynux and Benito I get your point and agree he should not have gone over the board to favour his friend then. Principles are indeed principles. But to be clear I was not saying they should necessarily bend the rules for him but bail him out especially when he owed only 800 million and had an investor who came with 400 million to half his debt to the central bank. It means it will have taken just 400 million to bail the bank out than using 2.2billion to shut it down. The cost of wrapping up the operations of the bank as compared to bailing it out is too much. Banks like RBS, HBOS and co were all bailed out when they got into trouble. We must go a bit extra to save our private indigenous enterprises. The so called western countries always do that to protect their own. The area of private enterprise as we all agree is the engine of growth and the biggest employer of people. I think overtaking operations with 2.2billion compared to bailing it out with 400 million was not the best decision. I think a little help and enforcement of regulations by the central bank would have saved the situation and maintain the vast number of people employed then. I cant blame him alone but also the central bank itself whose monitoring was not the best. A little help from a friend you once saved is also not asking for too much. After all some big businesses are also done on trust not only on principle. Or what do you think Lynux and Benito.
It is unfortunate this whole narration seeks to paint a picture of Hon Ken as not being grateful. For me, it rather gives me an impression of a principled Minister who would not let personal relations override his public duty, if indeed he was in a position to do anything about the bank's collapse. Granted that Mr. Amoabeng was helpful in granting the loan (don't mind it was against UT internal and BoG rules), eventually repayment was made and UT earned income on the transaction. Mr. Amoabeng's action was from the position of a private business person. On the other hand, Hon. Ken is a public officer. I can say, without equivocation, that if after the BoG had reported on the banks to undergo the process, Hon Ken had stepped in to exclude UT, serious charges would have been levelled against him including cronyism. I honestly doubt that such a high-rated person as Mr. Amoabeng is, expected Hon Ken to have side-stepped proper practice and favoured him unduly due to the loan he previously granted him. Hon Ken's position is that of public official with responsibility to do justice to all persons. If this was in his former position as head of Databank, a private entity, where he did not offer him some assistance, one could understand what appears to be the pain of Mr. Amoabeng. Whilst I can understand the difficulty of the loss of his business, I believe that Mr. Amoabeng should look within, rather than without, in finding answers to what happened with his former business. For Hon Ken Ofori-Attah, I say well done for exhibiting professionalism in all of this.
I beg to differ. Your handling of the matter was most unprofessional and you have yourself to blame. You don’t put friendship above principle, never ever! You could have simply told them that you had single obligor limits to observe and Ken would have understood. That is called DISCIPLINE. That my friend is the problem we have in Africa. The courage to be disciplined and to tell the truth about what we can and cannot do. Flip the coin, I might even say that you were greedy and impatient to enjoy the handsome returns on a $5m loan which seemed like a low hanging fruit. Again, you broke BoG rules and bent your own corporate governance rules to favour a friend who might one day be in a position to return the favour. At the same time, you unleashed your ‘attack dogs’ on helpless ‘small’ borrowers who defaulted, mercilessly denuding them of their life-savings and properties in the process. Even in your current situation, you unrepentantly claimed you would do worse if given the chance again. WHAT DO YOU THINK THOSE PEOPLE ARE SAYING RIGHT NOW? And so you felt that having engaged in such gross misconduct, Ken should have used his influence to save your Bank after running it down with such reckless behavior? Please note the difference. Ken and Kelli repaid their loans, with interest, however long it took. Maybe if you had been more principled, you’d have been less exposed and gotten it repaid quicker. Frankly if this is the kind of stuff your books contain, I’d rather not buy any. Pretty ***barred word***.
My friend what are you talking about this is complete conflict of interest; he Mr. Amoako shouldn't have done that. UT-Bank had a board and he was using his influence over the company to favour his friend. If were somewhere in the West he would have been in jail for saying this. So therefore Ken should use the state resources to favour him too is that it? Anyway I dont think close all those banks were necessary.. But what this man is saying is never done from the business point of view..
If all what you are saying is very true, then I must say Ken and his team have been ungrateful. If they were bailed by you when they were in distress then He should have reciprocated the same gesture to you when His government was shutting down your Bank. But hey that is AFRICA for you. Those who you help always turn to spit in your face as if you have done nothing for them. This is teaching us a very important lesson, that it is not everybody who is in distress that needs to be helped. We need discernment on who to help. A hungry lion in distress once helped can turn back and devour you. A classic case of what has happened to you Sir. But I pray the God of Justice to one day restore you fully to where at least you once was if you will believe in him.