Banks asked to comply with ethics

Unethical practices among some banks across the world have led to bad reputation, hefty fines and customer dissatisfaction in many instances. Charles Benoni Okine reports on calls for Ghanaian banks to take queue from that unethical behavior.

The Chief Host of the Ghana Banking Awards, Mr Willing Vanderpuye, has called on banks in the country to always abide strictly by what he termed as ‘demonstrable ethical practices’ governing the sector in order to ensure fairness and transparency in business dealings with their publics.

“The events of the past few years notably the hefty fines imposed on global banks, rogue dealings and bank failures provide evidence that it is now more important than ever that banks must demonstrate honesty, openness, transparency and fairness in all business activities”, said.

Mr Vanderpuye, who is also the Head of the Awards Planning Committee, gave the advice at the media launch of the 2012 Ghana Banking Awards on the theme "Promoting Ethics, Integrity and Compliance in the Financial Services Industry ".

He further noted that “Poor actions by single individuals can result in great costs to firms, both financially and through loss of reputation and added that “Fostering an environment of trust, integrity and professionalism leads to greater confidence ultimately strengthening a bank's reputation in the market”.

Unethical banking practices are said to have an impact on country in which the banks operate.

For instance, between the years 2000 and 2007, Ghana caught the world’s attention as a result of the high incidence of narcotic drugs trafficking, the discovery of oil in commercial quantities and the license issued to Barclays Bank Ghana Limited to operate offshore banking.

Consequently, the country was perceived as a weak anti money laundering (AML) jurisdiction.

Ghana was later blacklisted after a report that indicated among others that, there is increasing incidence of drug trafficking and the huge inflows of cash into the country which are strongly suspected to be laundered funds.

The report mentioned the surge in expensive real estate purchases paid for in cash and in United States dollars and; the apparent lack of public awareness of the phenomenon of money laundering and harmful effects as some of the reasons for its action.

In response, Ghana increased its commitments to fighting money laundering by establishing the Financial Intelligence Centre, passing the Anti-Money-Laundering Act of 2008 that requires that a Financial Intelligence Centre (FIC) with a legal personality and common seal be established among many other Acts passed to check the canker.

In September last year, the Chairman of the Economic and Financial Crimes Commission, EFCC, Mr. Ibrahim Lamorde, was also reported to have accused banks in the country of aiding and abetting unethical practices capable of undermining the commission’s work and the nation’s economy and warned them to desist from such practices forthwith.

The chairman decried a situation where banks refuse to cooperate with the commission in bank fraud investigation by not disclosing the identities of account owners even after repeated demands.

Among the vices, which the chairman accused the banks of promoting were; secrecy surrounding private banking, doctoring or non-disclosure of true position of statement of accounts of suspicious account holders and non-compliance with Know-Your-Customer, KYC, principle.

Mr Vanderpuje said based on the developments across the world in the banking industry and more, Corporate Initiative Ghana (CIG) decided to select a theme that will help raise awareness of the gravity of the problem and to address the challenges of ethics and compliance.

“We encourage banks to observe and comply with applicable laws and regulations, act honestly and with integrity at all times  and to develop their skills and knowledge as well as demonstrate their commitment to continuing professional development”, he added.

On the awards methodology, the Chief Host said “since the last awards, we have been engaging the stakeholders with the view to making the Awards methodology more robust to address all issues in the sector”.

He said the Technical Committee made up of bank representatives and other stakeholders are holding a series of technical meetings all with the view to plugging any loop holes in the award process.

Mr Vanderpuje said “In January also, letters were sent to Bank CEOs asking for their inputs, if any, towards the continuous development of the Methodology”.

On his part, the Executive Secretary of CIG, Mr Afotey Odarteifio said “It is argued that ethical banks can promote more equitable distribution of costs amongst consumers through the application of selective interest rates to certain sectors of the economy.”

He said the call to ethics and integrity in banking is a call toward more social and environmental responsibility in the financial sector based on principles of transparency, social and environmental impacts of projects financed, and narrower profit margins.

Mr Odarteifio said governmental regulation, initiated by an informed and involved public would be an effective way to ensure that all banks follow socially accepted morals and ethics.