On July 10, 2024, Justice Nana Brew of the High Court dismissed an application for judicial review filed by George Smith-Graham, a former director of UMB Bank, against the Bank of Ghana (BoG).
The case stemmed from events beginning on July 22, 2022, when the BoG issued a directive under the Banks and Specialised Deposit-Taking Institutions Act (Act 930) and the Corporate Governance Directive 2018.
This directive required all commercial banks, including Universal Merchant Bank Ltd (UMB), to obtain prior written “No Objection” from BoG before redesignating an existing non-executive director to any other position.
On July 5, 2023, UMB appointed Smith-Graham, a non-executive director, as its board chair during an emergency board meeting.
However, UMB failed to comply with the BoG’s 2022 directive by not obtaining BoG’s prior written “No Objection” for this appointment.
The BoG informed UMB of its breach and directed the bank to apply for the required “No Objection.” UMB refused, claiming its lawyers advised that such approval wasn’t necessary.
Consequently, the BoG revoked its approval of Mr. Smith-Graham’s appointment as a UMB director, exercising its powers under Act 930. Mr Smith-Graham then filed for judicial review of this revocation.
He argued that section 102 of Act 930 didn’t grant BoG the power to revoke his directorship, and even if it did, he was entitled to a hearing.
The BoG maintained it had the authority to revoke the appointment under the same section.
Two years after, the Court has ruled in favor of the BoG, stating that Act 930 was designed to enhance BoG’s supervisory powers for maintaining stability in the banking sector.
It interpreted Section 102 as granting BoG broad powers to address violations of its laws and regulations, including the removal of directors.
The Court rejected the applicant’s argument that BoG couldn’t revoke a director’s appointment without a hearing.
It also found that the correspondence between the parties constituted a form of hearing, and that the applicant, as both director and Chairperson of UMB, couldn’t claim ignorance of this correspondence.
Furthermore, the Court held that the Companies Act, 2019 (Act 992) doesn’t limit BoG’s powers under Act 930, and that Act 930, being specific to banking regulation, takes precedence over Act 992’s general provisions regarding director removal.
The application was dismissed as unmeritorious, with the Court concluding that the applicant failed to prove that BoG had exercised its power corruptly, irrationally, capriciously, or unreasonably.
High Court
