Melaku Fenta, Chairman Board of Directors of the Amhara Bank, is in trouble amid an ongoing inquiry by the Ethiopian banking regulator i.e. National Bank of Ethiopia NBE. Amhara Bank is the newest addition to the Ethiopian banking industry. It officially commenced operations on 18th June 2022 after receiving business operation license from the National Bank of Ethiopia.
Chairman Melkau Fenta is the former director general of the Ethiopian Revenues and Customs Authority (ERCA) whose high-powered career abruptly ended in 2013 in prison in relation to a high-profile corruption case. In May 2018, He was released from prison following the decision by the new Prime Minister Abiy Ahmed to pardon all suspects and convicts in high profile corruption, terrorism and related charges. Melaku served in the Ethiopian civil service for over 24 years.
In December last year, Amhara Bank faced a controversy when shareholders petitioned regulators to investigate the Bank’s governance. These shareholders levelled accusations against several nominees for the Bank’s board of directors, including claims of violating the country’s laws and corporate governance rules.
The contentious situation led to a chain of events, including the reshuffling of senior executives and the termination of the Bank’s founding President, Henok Kebede, on December 8,2023.
Chairman Melaku Fanta fired the CEO of Amhara Bank, Henok Kebede Tadesse, and Chief of Corporate Services, Kindie Abebe accusing them of poor performance. The board of directors said that the bank had planned to secure a profit of more than 306 million birr during the 2014 and 2015 Ethiopian Fiscal Year, the Bank incurred a loss of over 460 million birr, according to the Board of Directors. The Board sued the two senior officials saying that they caused the loss of the stated huge amount of birr due to poor performances. Mekonnin Chanyalew took over the position of acting CEO of Amhara Bank.
The petition, signed by over 20 shareholders and some management staff, was lodged before federal agencies, including the National Bank of Ethiopia (NBE), the Federal Ethics & Anti-Corruption Commission and the Prime Minister’s Office. These petitioners, whose identities remained undisclosed, made solemn charges against nine of the 29 board nominees, alleging that they had a record of conviction, a serious indictment challenging their suitability for board membership.
The allegations against Melaku are particularly consequential. He once enjoyed good reputation for increasing the country’s tax-to-GDP ratio during his tenure as Director General of the Ethiopian Customs & Revenue Authority (ERCA). Melaku has a record of conviction in a corruption case tried at the Federal High Court. However, many believed at the time that the corruption charges against him and other defendants were politically motivated, a victim of an internal power struggle within the EPRDF-led government.
However, the petitioners raised his conviction history, as the central bank’s regulations forbid individuals with a criminal record from running financial institutions. Yet, despite this, Melaku not only played a key role in forming Amhara Bank but has also been actively involved in the board election process.
The petitioners questioned his eligibility and the integrity of the election process. They claim that under Melaku’s watch, the central bank locked approximately a billion Birr due to dereliction of duty in documenting information of share buyers. They accused him of nominating a former co-worker and co-defendant, Belachew Beyene, as a board member, a move that the shareholders argue violates corporate governance standards.
The National Bank of Ethiopia NBE has not approved the appointment of CEO Belacyew Beyene so far. The Ethiopian banking regulator is yet to make a decision about the complaint by Amhara bank share holders. It seems that it would be a challenge for Melaku Fenta to retain chairmanship of the Amhara Bank board of governors. Sources within NBE say that the petition by the bank share holders contains material and evidence which is difficult to be rejected the NBE.
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Well done