Court declares BoG's action null and void

Friday, June 4, 2010 (Front Page)

THE Human Rights Court has declared as null and void, a directive from the Bank of Ghana (BoG) which ordered the removal from office of Mr Oluwole Ajomale, the Managing Director of the Amalgamated Bank.
The court also declared that the BoG had no power to impose a fine on Mr Ajomale under the Foreign Exchange Act, 2006 (Act 723) and as such the BoG could not rely on same to issue a disqualifying directive in respect of Mr Ajomale’s position as Managing Director.
It also awarded GH¢20,000 damages against the BoG in favour of Mr Ajomale.
Counsel for Mr Ajomale, Kwame Boafo Akuffo, filed an application for judicial review after the BoG had in March, 2009, written to the Board Chairman and Board of Directors of Amalbank, requesting the replacement of Mr Ajomale, whose conduct the BoG described as constituting serious violations of the banking regulations and the Foreign Exchange Act and undermined the trust and confidence reserved for a person in that position.
The applicant also challenged an order from the BoG which directed him to pay a GH¢18,000 fine while the bank was directed to pay GH¢48,000 after the BoG had allegedly found fake foreign currencies in the bank’s vaults.
Granting the applicant’s reliefs, the presiding judge, Mr Justice U. P. Dery, held that it was wrong for the BoG to have come to such a conclusion without giving Mr Ajomale a fair hearing, which, according to the court, violated Mr Ajomale’s constitutional human rights as enshrined in Article 23 of the 1992 Constitution.
“The respondent failed to give the applicant a hearing before imposing penalties and sanctions on him contrary to the requirements of the Banking Act 673 (2004 ) as amended by the Banking (Amendment) Act 738 (2007). The respondent’s decision is thus null and void.
“Secondly, the respondent had no power to impose a fine of GH¢18,000 on the applicant under Act 673 as amended by Act 738, since the applicant did not violate these Acts but rather allegedly violated the Foreign Exchange Act 723 (2006 ) by which only a court of competent jurisdiction could have been the body to try the applicant and impose the requisite penalties,” the court further contended.
The court also quashed the directive that Mr Ajomale be replaced, as well as the directive that a penalty be imposed on him on the grounds that the directive was “ultra vires, in breach of natural justice and violates the fundamental human right of the applicant to administrative justice”.
The court further upheld submissions by counsel for the applicant that the BoG acted beyond its scope of statutory powers contained in the Foreign Exchange Act, which eventually denied Mr Ajomale substantive fairness or due process, thereby rendering the BoG’s order wrongful and invalid.
It also agreed with counsel’s submissions that the central bank’s failure to observe procedural fairness and due process in arriving at its conclusion and issuing the directive disqualifying Mr Ajomale was also invalid.
The court further held that Act 673 clearly explained the functions and powers of the BoG and “nowhere in these provisions were specific provisions made for dealings in foreign exchange,” adding that “the penalties provision referred to in section 52 (4), 53 (2) and 56 (5) do not refer to violations of foreign exchange guidelines”.
“Following from above, it is clear that the penalties imposed on the Amalgamated Bank and the applicant by the respondent by its letter of 03-03-2009 has no lawful basis,” the court ruled.
Touching on the BoG’s response to the suit, the court held that the BoG gave two contradictory stories to whether or not the bank or the applicant were heard and that, according to the court, “exposes the evidence of the respondent as a make-up story and untrue”.