UMB's 2010 dismissal of former MD justified-Supreme Court

The Supreme Court has upheld Universal Merchant Bank’s (UMB) decision to terminate its former Managing Director (MD), Peter Illiasu, over unauthorized financial transactions. 

In a unanimous decision, the court affirmed that Illiasu’s dismissal in 2010 was justified due to breaches of banking regulations and internal policies.

The panel, presided over by Chief Justice Sackey Torkornoo (Mrs.), included Justices Amadu, Prof. (Mrs.) Mensa-Bonsu, Asiedu, and Darko Asare, the court examined allegations that the former MD had approved loans amounting to several million US dollars, exceeding the bank’s statutory lending limits without proper authorization. 

Additionally, he was found responsible for sanctioning a GHS349,593.75 payment from Volta River Authority’s (VRA) account to Abi Capital without VRA’s prior approval.

This transaction, allegedly for brokerage and due diligence services, was deemed invalid by the court. It was determined that the payment had no formal approval from VRA and was linked to an irregular credit transaction authorized by Illiasu, of which Abi Capital was aware.

Since VRA neither approved the service nor the transaction, the deduction from its account was considered unauthorized. 

The bank later reversed the transaction and absorbed the financial loss, which the court ruled should be recovered from Illiasu and Abi Capital.

In delivering its decision, the Supreme Court emphasized the fiduciary responsibilities of bank directors and the necessity of strict adherence to regulatory and internal governance frameworks. The court concluded that Illiasu had violated his employment contract and failed in his duties as a director, undermining the principles of corporate governance and thus ordered Illiasu and Abi Capital to repay GHS349,593.75, at the bank’s lending rate.