Exclusive: Ecobank CEO's contract must be terminated immediately - PIC letter

ACCRA Sat Mar 1, 2014 2:55pm EST

French Finance Minister Francois Baroin (L) shakes hands with socialist party member Laurent Fabius (R) as Ivory Coast's Thierry Tanoh (C), IFC's (International Finance Corporation) Vice President for Sub-Saharan Africa, Latin America and the Caribbean and Western Europe, looks on at the French employers' body MEDEF union summer forum on the campus of the HEC School of Management in Jouy-en-Josas, near Paris, August 31, 2011. REUTERS/Charles Platiau

French Finance Minister Francois Baroin (L) shakes hands with socialist party member Laurent Fabius (R) as Ivory Coast's Thierry Tanoh (C), IFC's (International Finance Corporation) Vice President for Sub-Saharan Africa, Latin America and the Caribbean and Western Europe, looks on at the French employers' body MEDEF union summer forum on the campus of the HEC School of Management in Jouy-en-Josas, near Paris, August 31, 2011.

Credit: Reuters/Charles Platiau

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ACCRA (Reuters) - The main shareholder in Ecobank (ETI.LG), one of the biggest banks in sub-Saharan Africa, called on Saturday for its Ivorian chief executive Thierry Tanoh to be dismissed immediately.

The South African government-owned Public Investment Corporation's (PIC) demand was made in a letter to the interim chairman of the bank, which is headquartered in Togo and is listed in Nigeria and Ghana and on the West African regional bourse BRVM.

Four senior executives called several weeks ago for Tanoh to step down, and the letter raises the pressure on him ahead of Monday's extraordinary general meeting of the bank, although his position is not on the official agenda.

It lists a series of allegations, including that Tanoh took a unilateral decision to dismiss finance director Laurence do Rego, contrary to a decision by the board. Tanoh did not immediately reply to a request for comment.

Interim chairman Andre Siaka told Reuters he would respond to the letter, which was signed by Daniel Matjila, the chief investment officer of the PIC. Matjila is one of 12 directors on Ecobank's board.

"We ... request the chairman to persuade the GCEO (Tanoh) to resign with immediate effect failing which his contract will be terminated as soon as the Board is in the position to meet and discuss the business of the Bank," said the letter, seen by Reuters.

"If we don't take this drastic step, we may not have a bank in the near future. That will be the death of a pan African dream," it said. PIC has an 18.35 percent stake in Ecobank, according to Thomson Reuters data.

Ecobank has assets of around $20 billion and operates in 33 African countries, giving it an unusually broad footprint and a significant role in financing economic expansion on a fast-growing continent.

The bank's profit rose 56 percent in the first nine months of 2013.

FINANCIAL HEALTH

Senior bank officials say most shareholders view Tanoh's leadership in the context of Ecobank's financial health. PIC, however, said it understood that dividends may not be paid this year.

"Several Ecobank subsidiaries are in dire need of capital to do business," the letter said, accusing Tanoh, a former vice president of the World Bank's International Finance Corporation, of failing to raise money for the bank.

The EGM at the bank's headquarters in the Togolese capital Lome is due to vote on governance reforms including the establishment of a seven-member interim board with places for Tanoh and Matjila.

The four members of Tanoh's Group Executive Committee who called on February 13 for him to step down to solve what they said was a crisis of leadership are on the current board, but would not have seats on the interim board.

A senior bank official said it was against bank regulations to place any additional items on the EGM's agenda, which would mean there could be no vote on Tanoh's tenure.

Matjila said in the letter that the board had hoped to discuss Tanoh's tenure at a meeting in Lome last Tuesday, but had been thwarted by a court injunction that prevented the meeting taking place.

The letter said PIC was shocked and dismayed over the injunction, which it described as a "strange tactic".

It said seven board members supported Tanoh's dismissal as CEO, which would constitute a majority. It was not possible to confirm the figure and other board members did not respond to a request for comment.

A former board member told Reuters last week that seven board members were likely to vote against Tanoh. The letter also listed other groups who it said wanted Tanoh's departure.

"TANOH CAN FIGHT"

At the same time, former chairman Kolapo Lawson said Tanoh, who joined the bank in January 2013, would defend his position. "Thierry Tanoh can fight his own corner," he told Reuters on Saturday.

The letter said PIC's complaints about Tanoh were shared by directors Kwasi Boatin and Sipho Mseleku. They included accusations of failure to focus on the bank's business, being unfit to lead and bringing Ecobank into disrepute.

They also focused on two issues that have caught the attention of Nigeria's Securities and Exchange Commission (SEC), which last August launched a probe into corporate governance following allegations made by do Rego.

Ecobank officials say do Rego was suspended in August in part in a dispute over her professional qualifications, and only later made her charges to the SEC. She left the bank in January and the SEC said last month she must be reinstated, a move that Ecobank said would be criminal under Togolese law.

Do Rego has declined previous requests for comment.

The letter also said Tanoh had awarded himself a $1 million bonus without board approval.

Tanoh has said that correct procedures were followed over the bonus and that any perception of unfairness is false. Tanoh said in September he would forego a bonus for 2012 as part of efforts to rebuild confidence, given the SEC investigation.

(Editing by Kevin Liffey)

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