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Struggling NIB now a cash cow for government cronies- Isaac Adongo

A Member of Parliament’s Finance Committee, Isaac Adongo has asserted that there is a running grand scheme by the Nana Addo led administration to collapse the state-owned National Investment Bank (NIB) under the pretence of recapitalizing the bank.

According to Adongo, NIB has become a cash cow for all manner of advisors all in a bid by the government through its cronies to milk it dry to be able to collapse and share the spoils.

Finance Minister Ken Ofori-Atta in his 2020 budget statement to parliament said the National Investment Bank “took steps to engage new auditors, and make current their financial statements. Additionally, to address severe liquidity challenges, Government in October 2019, entered into a swap arrangement with NIB with respect to its Nestle Shares, giving NIB GH¢500 million of new liquidity for the Nestle Shares.

The final assessment of the bank, however, showed a much wider capital shortfall of GHS2.2b as at the end of 2018, which it will need to raise to enable it to meet the new Bank of Ghana minimum capital requirement. NIB, under the GAT initiative, has also developed a new strategy that will transform it into a specialised bank.

Going forward, NIB shall focus on promoting industrialization by deploying the right products and services to the finance industry across the country and in line with national development priorities.

In this regard, Parliament is requested to approve a GHS2.2 billion Put Call Option Agreement (PCOA) from Government to GAT to enable it to raise the required funding for NIB via preference shares. This will replace the Government Guarantee to GAT that was previously approved”.

In a reaction to the Finance Minister’s pronouncement and request on NIB, the Bolgatanga Central Member of Parliament at a public forum organised by the National Democratic Congress on the 2020 budget described the decision to enter into a swap arrangement with NIB with respect to its Nestle shares and give it GH¢500 million liquidity as bizarre and a deliberate ploy.

While asserting that valuing the Nestle shares of NIB at GH¢500 was understated, Isaac Adongo said “Why will the government issue ‘paper’ to a bank that is bleeding from lack of recapitalisation and liquidity? In any case, who valued the shares to be worth GH¢500 million? I am aware that those shares are worth more than GH¢700 million. Thus, to think that the government will seek to deprive its own bank the true value of its assets baffles my mind”.

Despite the current status of NIB, Isaac Adongo stated that the bank was forced to pay more than GH¢7 million as brokerage fees to Axcero Advisors, a firm owned by a man and his wife and also paid a whopping GH¢400,000 as legal fees to Betsi-Enchill, Letsa and Ankoma covering the transaction.

While strongly opposing to a proposal for Government to guarantee for GAT a GH¢3 billion financial instruments called the Put and Call Option to invest Ghc2.2 billion Preference shares, Mr Adongo recommended a Conversion of the GH¢500 million liquidity support into equity and paid-up capital. This he stated will mean that the 24% NIB shares should be returned to NIB while the board of NIB be allowed to sell those Nestle shares which will accrue about GH¢700 million.

Source: mynewsgh.com

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