Expert Calls for Stricter Enforcement of Corporate Governance Directives

Banking Consultant and Analyst, Dr. Richmond Atuahene, has called on the regulator of the banking sector to strengthen and enforce the corporate governance directives, passed in 2018.

Dr. Atuahene says recent developments in the banking sector give a clear indication that corporate governance is not fully adhered to by management and board members of many financial institutions.

He cited the recent development at CAL Bank leading to the dismissal of top executives of the Bank. According to The High Street Journal’s sources, the dismissal and subsequent restructuring are linked to a huge loan facility that went bad.

He further cited the recent happening at the Agricultural Development Bank (ADB) where the board chairman is alleged to have used his position to influence loan decisions and extort money from clients.

The banking consultant, who was speaking in an interview with The High Street Journal, maintained that these developments are a whole indictment of the corporate governance directives meant to prevent some of these infractions.

“It is a whole indictment on our cooperate governance directives,” Dr. Atuahene indicated.

The happenings Dr. Atuahene believes are a call for the strengthening of the Bank of Ghana’s corporate governance structures. The developments, he says are a clear indication that monitoring and supervision of the directives by the regulator has experienced a shortfall.

He narrated that “the directives have well been passed but as to the implementation and monitoring are what have brought concerns to industry observers. It is not long ago we heard about what happened in Cal bank so when you hear another one from ADB, then you begin to wonder what type governing practices are we putting in place and how are we monitoring it.”

The analyst says the regulator must enhance the supervision of banking activities to ensure that due diligence and transparency, as required by corporate governance, are observed by all board members and top executives.

“Do we just put the directives as it is but monitoring is non-existent? For a board chairman to have done what he is alleged to have done, the first question to ask ourselves is did this person pass the “fit and proper test”? and what due diligence was done. But unfortunately, when people are appointed to places as board members, as to what they have been doing, nobody goes in,” he added.

As part of monitoring mechanisms to ensure that banks adhere to the tenets of good corporate governance, the banking consultant is recommending that the Bank of Ghana inculcates what he describes as unannounced visits in their Board Evaluation.

This, he believes, will enable the regulator to obtain first-hand information and on a timely basis the activities of board members and top executives. He said the inspection officer must not only read minutes of the board as currently done but must be allowed to sit in meetings and observe the activities and behavior of all participants.

Through this, Dr. Atuahene is convinced that anomalies such as recent developments would be detected early enough and corrected.

“That is why the Bank of Ghana just introduced the Board Evaluation. Board Evaluation expects a corporate governance practitioner or someone who has been licensed to come and evaluate what you do. The shortfall is that the minutes are what you just read, but human behavior is not written down. I think that in the interest of the industry, something more should be done about it. There must be unannounced visits. The Bank of Ghana should be sending people anytime to check on people,” he suggested.

Source:thehighstreetjournal.com