High court dismisses judicial review application against BoG

The High Court, presided over by Justice Nana Brew has dismissed an application for judicial review filed by George Smith-Graham, a former director of UMB Bank, against the Bank of Ghana (BoG).

On July 22, 2022, 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 purportedly appointed Mr. Smith-Graham, a non-executive director, as its board chair during an emergency board meeting. UMB did not comply with the BoG’s directive by failing to obtain the necessary “No Objection” approval. The BoG subsequently informed UMB of its breach and directed the bank to apply for the approval. However, UMB, advised by its lawyers, claimed it did not require the BoG’s “No Objection” and refused to apply.

Due to UMB’s non-compliance, the BoG exercised its powers under Act 930 and revoked its approval of Mr. Smith-Graham’s appointment as a director.

Judicial Review Application

Dissatisfied with the BoG’s decision, Mr. Smith-Graham filed an application for judicial review, arguing that the BoG’s powers under section 102 of Act 930 did not include the authority to revoke his appointment. He also contended that even if the BoG had such power, it was required by law to give him a hearing.

The BoG maintained that it had the authority to revoke the appointment under section 102 of Act 930.

Court’s Decision

The High Court ruled in favor of the BoG. Justice Nana Brew stated that the purpose of Act 930 was to enhance the supervisory powers of the BoG to ensure sanity in the banking sector. The court considered Section 102 of Act 930, which grants the BoG broad powers to address any violations of its regulations by banks and specialized deposit-taking institutions.

The court held that the BoG was entitled to exercise this power upon discovering any breach, and the contention that the BoG could not revoke a director’s appointment without a hearing was untenable. The court found that Section 102 (3) of Act 930 extended the BoG’s remedial actions to include the removal of a director.

Furthermore, the court determined that the exchange of letters between the parties showed that both the Applicant and UMB were given a hearing. The court emphasized that the Applicant, who was acting as both a director and Chairperson of UMB, could not claim ignorance of the correspondence.

Justice Brew concluded that the Companies Act, 2019 (Act 992), does not restrict the BoG’s broad powers under Act 930. The court added that Act 930, which specifically regulates the conduct of banks, takes precedence over the general provisions of Act 992 regarding the removal of directors by the BoG.

The court dismissed the application, ruling it unmeritorious and finding that the Applicant failed to establish that the BoG’s power was exercised corruptly or with any irrational, capricious, or unreasonable intent.