The 15 shareholders of defunct Capital Bank including Pastor Mensa Otabil and his church, the International Central Gospel Church (ICGC) have been sued over the collapse of Capital Bank in 2017.
According to a Joy News report, the two plaintiffs in the case, Messrs Vish Ashiagbor and Eric Nana Nipah, are employees of international consulting firm, PriceWaterhouseCoopers, elected by the Bank of Ghana receivers for the now defunct Capital and UT Bank. They believe the bank collapsed as a result of “misgovernance” and “willful” breaches of Ghana’s banking regulations.
In a religious fashion, the writ of summons, according to Joy News, names specific actions or series of actions by each of the shareholders that eventually culminated in the collapse of an otherwise iconic Ghanaian success story. William Ato Essien is alleged to have used depositors funds as a “personal piggy bank” where he withdrew without respect for laid down procedure at will.
In one such transaction, he requested for 130 million cedis to be given to another company he had founded, Capital & More Ltd. Senior Management of Capital Bank declined the request but gave in when Dr Mensa Otabil (Board Chairman of then Capital Bank) stepped in and personally guaranteed that the funds will be repaid. According to investigators the funds have not been returned till date.
What will probably qualify as the biggest misstep of the bank was when the board and shareholders kept 482 million cedis in “non-existent investments” on their books. When the whole episode unfolded, the shareholders requested that the “ghost investments” be converted into actual loans for them to pay. The central bank granted their request but till date, several of the shareholders have been unable to pay their share of the loans.
The Capital Bank Collapse
Capital Bank was founded in 2009 by embattled entrepreneur William Ato Essien as First Capital Plus, a microfinance company. The company quickly grew to become a savings and loans company within a few years in operation. The company grew its base deposit and assets from its inception till it applied and was awarded a provisional universal banking license in July, 2012. In 2013 First Capital Plus became a Bank with a deposit base of 211.11 million cedis and total assets of 286.80 million cedis.The Bank of Ghana stated that FCP had a market share of 16% of the advances of savings and loans companies and 19% of the sector total assets. The Bank employed 355 and had 15 branches covering five regions.
First Capital Plus Bank later re-branded in a much publicized campaign to become Capital Bank in 2015.
The Bank of Ghana issued a press release on August 14, 2017 announcing the revocation of the license of Capital Bank (another bank, UT Bank also had its license revoked). The statement further mentioned that control of Capital Bank had been approved for another bank, the Ghana Commercial Bank.