Press Release

NPP

December 02, 2013

Presidency intervened in attempts by Merchant Bank to recover huge debts from Engineers and Planners

Joy News has documents suggesting the Presidency intervened in attempts by Merchant Bank to recover huge debts from Engineers and Planners, a company owned by his brother, Ibrahim Mahama

As the controversy over the sale of Merchant Bank to Fortiz continues, it is emerging that the presidency was petitioned to intervene in the matters surrounding the recovery of huge debts from Engineers and Planners, a company owned by Ibrahim Mahama, brother of the president. Joy News has documents that suggest lawyer for Engineers and Planners, Tony Lithur, petitioned the President to intervene on the company’s behalf. The Bank had attempted to recover a debt of 38 million dollars from Engineers and Planners. The Bank’s board described the debt in a letter to the President, in response to Mr. Lithur’s petition as constituting 30 per cent of its 50 per cent non-performing loan portfolio. In that same letter the board also refers to various meetings its chairperson had with President John Mahama and his predecessor, the late President John Mills where they were asked on one occasion to explain to President Mahama why they refused to release funds to Engineers and Planners to meet their operational cost.

After months of defaulting on its loan, Merchant Bank wrote a final letter to Ibrahim Mahama on 18th June 2012 calling up the loan and threatening legal action. This triggered a petition to the President through the National Security Advisor by Mr. Lithur dated 4th July 2012 and was received at the office of the President on 13 of July, 2012. In the petition Mr Lithur admits the difficulties the company is facing in servicing the loan. He blames it on a revision of the repayment period from five to three years. He accuses the chairperson of Merchant Bank Board, Marian Barnor of QUOTE “bent on destroying the E & P”. The bank had refused to guarantee a 60 million dollar loan facility from the Africa Export Import Bank, part of which would have been used by Engineers and Planners to pay off its debt to Merchant Bank. Mr. Lithur asked the President to intervene to QUOTE “maintain the status quo ante” and to “enable Engineers and Planners take a structured approach to solving its problems with Merchant Bank”. In a letter dated 3rd September 2012, the then Secretary to the President J.K Bebaako-Mensah wrote to the Managing Director of merchant Bank asking the bank to respond to Tony Lithur’s petition. The Bank’s board responded in a ten-page letter dated 24th September, 2012. It referred to various meetings the board chairperson had at the Presidency following earlier reports to the seat of government about the bank’s handling of the Engineers and Planners debt. According to the board, the first of such meetings was with President John Mahama, who was vice president at the time. The board chairperson was asked by the Chief of Staff to meet Mr. Mahama to explain why the bank at the time had decided not to release monies to Engineers and Planners to meet operational expenses. The board also referred to another meeting called by the late President Mills where John Mahama was again present to hear Merchant Bank’s Position on the Africa Export Import Bank loan facility to Engineers and Planners. The board reiterated its resolve to recover the 38 million dollars borrowed by Engineers and Planners, a debt it described as constituting 30 per cent of the bank’s 50 per cent non-performing loan portfolio. The board highlighted how the Engineers and Planners debt alone was threatening the survival of Merchant Bank. The board also highlighted how the loan had been revised downwards from 38 million dollars to 28 million dollars to allow the company to pay up and yet it failed to do so. It warned of Merchant Bank’s collapse if the loan is not recovered. The board said QUOTE “a merchant bank that collapses will cause systemic risk to the banking sector, there will be loss of pension funds, total erosion of the Ghanaian staff provident fund; loss of jobs etc”. The board noted that the Engineers and Planners indebtedness was a purely commercial matter and it’s QUOTE “unfortunate that Lithur, Brew and Co, have escalated this to the office of the President.” They concluded by stating QUOTE “We leave the matter to the good judgment of his Excellency the President”.