The Bank of Ghana (BoG) has defended the sale of struggling Merchant Bank Ghana (MBG) to new majority shareholders, Fortiz Equity Fund.

According to the central bank, it did ?due diligence? before giving its approval to the deal.

The sale of MBG to Fortiz, a wholly-owned Ghanaian firm, has raised many eyebrows among the general public especially the opposition New Patriotic Party (NPP) and a civil society organization ? the Centre for Freedom and Accuracy led by Mr Andrew Awuni, a former Presidential Spokesman in the erstwhile Kufuor administration.

The Minority last week described the deal as ?fraudulent sale? that shortchanged the people of Ghana. They demanded an immediate revocation of the purchase of MBG by the Fortiz Bank

The Minority insisted that due diligence was not undertaken by the Social Security and National Insurance Trust (SSNIT) and the Bank of Ghana before the transaction was carried out, characterizing the deal as a ?scam, a fraud which is being perpetuated on the Ghanaian people?. SSNIT is the state pension organization and the majority shareholder alongside State Insurance Company (SIC) in MBG.

The Centre for Freedom and Accuracy who described the sale agreement as shrouded in secrecy, has initiated legal action seeking a declaration of the sale as illegal.

But at a press conference in Accra November 27, 2013, Governor of the central bank, Dr Kofi Wampah insisted that due diligence was done in approving the deal,  adding that the BoG is ready to face anybody in court relating to the MBG sale.

?Am not sure those who say we did not do due diligence know the processes? the Bank of Ghana has no say on who an investor decides to sell its shares to,? Dr Wampah stated.

SSNIT early this month announced it has off loaded majority of its shares in MBG to Fortiz.

?This decision is taken by the investors. After they decide to select a particular investor, they send an application to us (BoG) then we do our due diligence and decide whether to approve or not,? Dr Wampah explained.

?Our approval is mainly regulatory. It doesn?t depend on whether the transaction is profitable or not,? the Governor added.

According to the BoG, its role is to make sure that all the regulatory processes are followed.

The central bank boss indicated of a legal action against it over the transaction. ?I hear they are in court?we are ready to defend ourselves,? Dr Wampah said.

South African banking group, FirstRand in August 2012 announced it wanted to purchase 75% stake in MBG for 746.2 million rand ($91 million)

The FirstRand proposal according to officials had been approved by shareholders of MBG and it entails a subscription of new shares worth 154 million. The transaction excluded some loans on MBG?s balance sheet, which existing shareholders will acquire and continue to collect outstanding balances.

But there were some public concerns over the sale of the Ghanaian bank to FirstRand.

The BoG on May 10, 2013 issued a statement that it wanted all public concerns surrounding the sale of 75% stake in MBG to FirstRand be resolved before approving the deal even though it is not opposed to the transaction.

The central bank indicated that there are some public concerns that need to be resolved by SSNIT who then owns majority shares in Merchant Bank.

?The Bank of Ghana in principle has no objection to the proposal. However, there have been some ?public interest? concerns which are currently being resolved by SSNIT, Merchant Bank and FirstRand Bank,? the BoG said in a statement published on its website May 10, 2013.

The statement added ?We believe these concerns would be addressed very soon to enable Bank of Ghana to give its final approval for the transaction.?

The BoG indicated it has received and reviewed the South African bank?s application for the stake.

However, in July 2013, SSNIT publicly announced that FirstRand?s offer to acquire MBG could not be completed as announced in August 2012.

A statement issued by the Corporate Affairs Manager, Miss Evangeline Amegashie in Accra said the parties were unable to reach agreement on the commercial principles underlying the transaction and could not procure the fulfilment of all the precedent conditions.

According to SSNIT?s statement, though FirstRand Limited in 2012 disclosed its intention to acquire MBG, it could not succeed because the original legal and regulatory time frame agreed had officially elapsed.

FirstRand Limited said it was disappointed not to have concluded the transaction, adding however that, Ghana remained a priority country for expansion and the Group would continue to engage SSNIT on its new process.

Based on the uncompleted deal between SSNIT and FirstRand, the BoG couldn?t approve the transaction.

?If the two cannot agree, we cannot approve,? Dr Wampah told reporters.

SSNIT then re-opened bids to sell MBG and according to Dr Wampah, he was informed that three institutions put in their offer. ?Out of the three bids, one withdrew and the other one couldn?t meet the deadline,? he said adding that all these processes according to information he had, were through KPMG who did the evaluation.

?KPMG advised that the deal should be given to Fortiz,? the Governor stated indicating that the purchase agreement was signed by both the Chairman and the Managing Director of MBG alongside Principals of both SSNIT and Fortiz.

The central bank has given what it calls an approval in principal to the Fortiz-MBG deal subject to final due diligence.

By Ekow Quandzie/GBN

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