Is Ghana becoming morally bankrupt?

The banking system of a country is even more important than its Government.  For Governments come and go, whereas the banks stay and serve both supporters and enemies of the changing governments.

Because of their “permanent” status, and the never-ending need of humanity for economic support, banks assume a role in society that is almost “sacred”. 

Everyone expects them to be honest, fair and imbued with  unending integrity. Any society whose banks fall short of this is signalling that it is morally bankrupt.

Of course, since banks are staffed by human beings, it is only to be expected that some will occasionally fail to rise to the high standards they have set themselves, or are required by the laws of their host government to observe.

Banking laws are among the most stringent in the world, for, of course, such laws need to be strictly enforced so that the customers of banks can be rest assured that the laws will deter the staffs of banks from filching their hard-earned money.

This trust in the system that governs banking  is of the utmost importance, because the customer of a bank is necessarily a stranger to the staff. It is this stranger who is entrusting his whole month’s earnings (usually) or the entirety of his  business takings, to the agents of the bank. They entertain no natural sympathy towards him, such as could be expected of a person known to them, or a relative.

Will the bank be able to give him back his money if and when he needs it?  

Will the bank advise him on how to invest his money proficiently or save it for him in such a wise manner that it will grow when it is not needed for his own purposes?  

What guarantee does a bank customer have that his money will be safely and efficiently husbanded in the way I have described when the bank’s staff is made up of  strangers whose characters he has no way of ascertaining?

The customer is entitled to believe that the bank would not have been licensed by the financial authorities of his country to be in a position to  take his money from him, if they had not used their enormous resources to carry out the most thorough “due diligence” investigations into the backgrounds of the bank’s owners and principal officials before classifying them as persons worthy of being entrusted with other people’s hard-earned  money.

It is only with that assurance of governmental approval that the bank customer can rest his mind and rid himself of the fear that the  officials whom he encounters at the bank’s public counters might short-change him or somehow cheat him. 

The whole system, then, rests entirely on trust.  The financial authorities of the country trust in the people to whom they  give licences to operate banks; and the operators of the banks, in turn,  make sure they employ people of impeccable probity, so that the trust reposed in them by the financial authorities might not be misplaced.  

That is what will make “Johnny Public” happy that he has deposited his money in a bank and not hidden it under a mattress, where it can turn into feed for mice or  mouldy paper that’s unusable.

Thus, it is extremely sad that in recent months, banks in Ghana have been featuring prominently in the news. Banks as a whole cannot  simply afford to have their names associated with bad news to the extent they have been recently.   

Even where the regulatory authority, the Bank of Ghana acting on behalf of the Ministry of Finance, detects that malpractices are going on  in a bank, this should ideally not reach the ears of the public but should be settled behind the scenes.

However, if  the malpractices include fraud  or the exercise of bad faith,  then the Bank of Ghana has no option but to impose very serious punishment on the offenders. 

This should be done very speedily, without much public passing of the buck, in order that others might be deterred from catching the disease of cheating bank depositors.

It is regrettable indeed that in the past year, we have heard of so many shocking practices within the licensed banking system. 

What is ever worse is that, despite the way the public has felt scandalised by the baking malpractices,  no bankers have, so far, been punished with the sanctions provided for under our financial services regulations.

All the regulators are required to do is to establish that the law of banking was broken. Once they do that, they should speedily take the banks before the courts and allow the law to take its course.  

It is absurd in the extreme for officialdom to wait for ordinary members of the public to sue the banks in the courts for alleged wrongdoing.

The irony is that the moment the Bank of Ghana decided to bail the delinquent banks out by shoring up their diminished reserves, some of the defaulting banks apparently went “a-dancing”, thanking God for his mercy towards them!  

One bank was said to have allowed its top officials to “borrow” the money the Bank of Ghana had given them, to use as proof to the same Bank of Ghana, that they had adequate resources to open a new bank! 

And the Bank of Ghana accepted this KwakuAnanse-style   financial sleight-of-hand and gave the new bank a licence!

Another “bank” which started as a minor financial entity, was said to have been able to convince the financial regulatory authorities that it should be licensed as a bank. 

Yet a few stringent checks on the lifestyles of its “owner(s)” and their associates would have revealed that they were running a veritable  “Ponzy” scheme, given the number (and type) of motor vehicles they kept buying and displaying and the mansions they dwelt in, to say nothing of their peripatetic travel schedules.

Re-floating busted financial institutions or re-branding them; amalgamating some with others  while allowing others to go under : such measures are all well and good, but they do not answer one fundamental question:  where were the Bank of Ghana’s regulatory enforcers when the clever con-artists were carrying out their “Bernie Madoff-style” schemes whereby incredible opulence was used to entice people to throw their money away? (At one stage, Madoff had over $20 billion to play with!)

Fortunately, our Minister of Finance comes from a banking background. Of course, that can either be part of the solution to our banking crisis, or part of the problem.  Part of the problem? Yes –the answer is that when you are too familiar with the workings of a system,  you may be tempted to minimise its failings and  rationalise   its shortcomings.

The most important consideration at the moment is that no-one should dare repeat the practices that led to the disaster. So, the onus is clearly on our Minister of Finance to quickly clean the Aegean stables, and bring back financial integrity to Ghana.

I wish him good luck!

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