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Today, Kebede
claims he is leaving behind a Bank that has a loan to deposit ratio
of 95pc, an outstanding performance according banking experts.
Why would the
Board of Directors fire a chief executive officer that has brought
such outstanding success to the Bank, many wondered after the news
was first published in the Amharic Reporter, on Wednesday,
October 11?
The Board of
Directors appeared to be unforgiving for the mistake committed on
the payment of remuneration to the previous directors, three of
whom, including Kebede, are still serving. However, they have more
to say.
Kebede's resistance and legendary stubbornness is at the
centre of their complaints: he pushed for the Bank to invest 50
million Br to bring a core banking system - a computerized way of
automating cheque payment - despite concerns from the Board; he
refused to sign minutes after attending meetings; and is rough to
his own staff leading to mass resignations.
"He is insubordinate to the board of directors," they
claimed in their minutes signed on October 9.
Submitting to the Board of Director's wish appears to be
the reason, on the surface. In part it is. The president, who is
also member of the Board, has had an uphill battle against the Board
of Directors not to surrender the power to approve loans to
borrowers.
Although many of the powerful shareholders want the Board
to have the final say on loans over half a million Birr - and the
latter demanded input on loans that are over three million Birr and
five million Birr with collateral - the President was adamant. He
believes, and is even reportedly supported by the chairman, Philipos
W. Mariam, that the Board should limit itself on policymaking,
oversight and supervision roles. Giving the Board mandate to approve
loans makes the operation bureaucratic and inefficient, if not
blurring the checks and balances, according to the President.
This was an issue fought inside the boardroom where the
President managed to win a passionate argument last year, few weeks
after the new board was installed, according to the minutes of the
board, number 234/98-09. The Board decided at this meeting that
loans be approved by senior management credit committee.
Major shareholders still maintain the view that giving
complete power over loan approvals to management is too dangerous;
left unchecked, they fear, would lead to unethical conduct by the
senior management team.
Several members of the Board see Kebede's refusal to comply
with their request as complete defiance. According to a member of
the Board, Kebede even insulted their integrity with his "character"
dismissal that "the board members knew nothing about banking".
"No doubt that Kebede has done a remarkable job in the past
four years," admitted a major shareholder who would like to see him
go. "But, his interpersonal communications with the Board,
prospective borrowers and the staff has been awful."
Kebede contested all these charges as "frivolous". If he is
unpopular - and he is in the eyes of many - he believes it is
because he wanted to instil diligence and integrity among his staff,
while he sees his personality as dedicated, disciplined and of a man
see himselfas integrity. He rather claims to have become a victim of
vengeance by powerful shareholders.
"What I was continuously receiving for the last three and
half years from a very powerful group of shareholders and major
defaulters was that they will do everything within their power to
have me removed from my position as president," he told Fortune.
He believes these
"powerful" shareholders have "orchestrated and engineered foul-play"
in his removal, after arm twisting the Board of Directors.
Although he
declined to disclose the identity of these "powerful shareholders",
it was obvious on whom he is pointing his fingers: Abebaw Desta and
Minweyelet Atnafu, two of the seven largest shareholders and owners
of the Star Business Group. Their company had owed the Bank of
Abyssinia close to 300 million Br when the government arrested them
four years ago, accusing them of being involved in grand corruption,
charges they were both acquitted from last year.
According to
industry observers, Kebede has accomplished a lot during his time at
the Bank of Abyssinia, in recovering badloans from defaulters,
including the Star Business Group and Nile International, a company
owned by Temesgen Mehari, one of the major shareholders of Nile
Insurance that has a substantial stake in the Bank.
Kebede has alleged
the Board has become captive to these "powerful shareholders".
Abebaw denied any involvement with the Board's decision, and
declined to comment further.
Kebede said he is
leaving Abyssinia proud and with a sense of accomplishment. He is
happy for bringing a "technically bankrupt" Bank to the light of
day. Judging from his tone and body language during an interview for
this piece on Saturday, he was also bitter, believing that the
summery dismissal will prohibit him from assuming a similar position
in any financial institution in Ethiopia, according to a rule of the
National Bank of Ethiopia.
His legacy will remain, though. What followed the Board's
decision to fire Kebede is the survival of an unusual alliance
created last year by seven of the largest shareholders of the Bank
of Abyssinia that control close to 51pc of the Bank.
Members of the G7 have now divided among those who opposed
the decision outright; those who wanted to offer Kebede a honorable
exit and forcing him to resign; and those who wanted him to be
dismissed immediately. The issue has been on the table for some
time, according to reliable sources.
With the latter group appearing to have prevailed, the
others have begun to harbour a sense of betrayal, according to
several interviews conducted by Fortune. A few claimed that
the group has been dissolved.
"It is a coup staged behind our back," said one member of
the G7, vehemently opposing the dismissal.
"I would have liked it be conducted slowly and in a fair
manner," said another, but claiming the G7 remains alive.
With the 10th general assembly ahead of them, most likely
to be held in November this year, shareholders of the Bank of
Abyssinia will have a lot of boardroom politics in store, on top of
the remarkable performance report in their annual report.
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