Ecobank’s Largest Investor Says Lender Must Evaluate Growth Rate

Ecobank Transnational Inc. (ETI)’s board must reconsider the speed at which the pan-African lender expands after allegations of management fraud and poor governance, South Africa’s Public Investment Corp. said.

“One of the key lessons coming out of Ecobank is that the pace at which you grow is very important,” Elias Masilela, chief executive officer of the PIC, the state pension fund that is Ecobank’s biggest shareholder, said in an April 1 interview in Johannesburg. “Governance issues are as important as investment considerations.’

Ecobank’s board replaced CEO Thierry Tanoh last month after the Pretoria-based PIC called for him to quit amid allegations of mismanagement, which he denied. That followed a probe by Nigeria’s regulator after Laurence do Rego, group executive director of finance and risk, told Nigeria’s Securities and Exchange Commission in August that Tanoh and former Chairman Kolapo Lawson planned to sell assets below market value.

Founded in 1985, Ecobank operates in France and 35 African countries and has representative offices in Beijing, Dubai and London. Ecobank reported in October that profit increased 65 percent to $250 million in the nine months through September as its businesses in Nigeria and Ghana expanded.

Whistle-blower Do Rego, who was reinstated last month, also said she was pressured to write off debts owed by a business headed by Lawson and manipulate the results of the Lome, Togo-based lender. Tanoh and Lawson have denied any wrongdoing.

Lessons Learned

‘‘The investors, the managers of the company, the regulators, and the consumers, we all have to learn from those experiences,” said Masilela, whose PIC owns more than 18 percent of Ecobank. “The main lesson for me, is when you run companies, you run them for all stakeholders, not just for the investors.”

The PIC is Africa’s biggest money manager with 1.6 trillion rand ($150 billion) of assets under management. The Government Employees Pension Fund accounts for 89 percent of those assets.

Investors approved a plan to improve corporate governance at an extraordinary general meeting last month, following recommendations by the SEC.

Albert Essien, who was named Ecobank CEO on March 12, will focus on consolidation and making operations in eastern and southern Africa profitable, the Financial Times reported this week.

To contact the reporters on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net; Franz Wild in Johannesburg at fwild@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net Dylan Griffiths

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