In a landmark judgment, the Supreme Court on 22nd January, 2025 unanimously ruled in favour of Universal Merchant Bank (formerly Merchant Bank) in a legal battle against its former Managing Director (MD), Mr. Peter Illiasu, affirming the bank’s decision to dismiss him in 2010 over unauthorised financial and credit transactions.
The Supreme Court justices who delivered the unanimous judgment were Sackey Torkornoo (Mrs.) CJ (Presiding), Amadu JSC, Prof (Mrs.) Mensa-Bonsu JSC, Asiedu JSC, Darko Asare JSC.
The case involved allegations that the former MD approved loan facilities in the millions of United States Dollars well beyond the Bank’s statutory lending limit contrary to banking legislation, in breach of existing limits already sanctioned by the board and by the credit policy manual of the bank.
Additionally, the former MD was found to have wrongly authorised the payment of GHS349,593.75 from the account of Volta River Authority (VRA) in favour of Abi Capital without VRA’s consent.
The disputed payment was linked to a service variously described as brokerage fees and/or fees for due diligence services which the court determined was neither validly entered into by the MD nor approved by VRA.
The payment was also not justifiable since the purported payment was linked to a credit transaction sanctioned by the former MD in breach of statute and which violation Abi Capital was aware of.
Further, VRA not having approved the service nor the payment, the debit on its account was unauthorised and the reversal of the transaction by the bank and the subsequent absorption of the loss of GHS349,593.75, was a financial loss recoverable from both the former MD and Abi Capital, jointly and severally.
Delivering judgment, the Supreme Court upheld the bank’s position, emphasising the duties of directors to adhere strictly to statutory regulations and internal governance structures of a bank.
The court found that the MD not only breached the terms of his service contract with the bank, but also his fiducial duties as a director of the bank, thereby undermining corporate governance principles.
The former MD with Abi Capital has been ordered by the Supreme Court to refund the sum of GHS349,593.75 with interest at the bank’s lending rate from 21st April, 2010 to the date of full and final payment.
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