Ecobank’s Biggest Investor Wants CEO Gone as Old Board Kept

Ecobank Transnational Inc.’s biggest investor repeated a call for Chief Executive Officer Thierry Tanoh to quit after a shareholder meeting yesterday failed to resolve corporate governance issues.

“We believe it is in the best interest of the company that he steps down,” Dan Matjila, chief investment officer of South Africa’s Public Investment Corp., which owns more than 18 percent of Ecobank, said in an e-mailed response to questions today. He said the board of the Lome, Togo-based bank couldn’t meet because the representative of the International Finance Corp., the second-biggest investor, had left the city.

Investors decided at an extraordinary general meeting yesterday to retain the 12-person board and withdrew a motion to create a smaller interim grouping, said Mwambu Wanendeya, a spokesman for the lender. Shareholders unanimously approved a plan to improve corporate governance following recommendations by Nigeria’s Securities and Exchange Commission, he said.

Nigeria’s regulator investigated Ecobank after former Director of Finance Laurence do Rego told the SEC in August that Tanoh and former Chairman Kolapo Lawson planned to sell assets below market value. Do Rego said she was pressured to write off debts owed by a business headed by Lawson and manipulate the bank’s results. Both Tanoh and Lawson deny any wrongdoing.

Shares Decline

Ecobank’s shares fell 1.9 percent to 14.22 naira at the 2:30 p.m. close in Lagos, Nigeria’s commercial capital. That’s the biggest decline since Feb. 20. The Nigerian banking index, which tracks the 10 most capitalized lenders, rose 0.3 percent today, its highest level since Feb. 12.

“The market is receiving this very negatively because it’s coming from the PIC,” Tosin Ojo, the head of equity research at Lagos-based Cardinal Stone Partners Ltd., said by phone today. It will be disruptive to remove the CEO and “the board may have to reach a compromise,” she said.

Tanoh’s mobile phone was engaged when Bloomberg called for comment, and he didn’t immediately respond to a text message or e-mail.

“The SEC is still weighing the outcomes of the Ecobank EGM against the backdrop of our concern for the enthronement of a new, sounder regime of corporate governance,” Obi Adindu, a spokesman for the Abuja-based regulator, said by e-mail today. The SEC said last month that it had told Ecobank in January to reinstate its finance director after the lender said do Rego was no longer an employee.

Shareholders Vote

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.

At yesterday’s meeting, shareholders voted to limit the maximum size of the board to 15 members and to ensure that no directors can serve more than nine years in total. A motion to raise capital didn’t pass after getting the backing of 68 percent of shareholders, short of the 75 percent required, Wanendeya said.

Keeping the old board effectively means “the company will stumble from one crisis to the next allowing the top five squabbling senior executives including the CEO to still hold the bank’s future hostage,” Sebastian Spio-Garbrah, managing director of New York-based DaMina Advisors LLP, said in an e-mailed reply to questions today.

Strange Tactics

The PIC said on March 1 that it wanted Tanoh to resign immediately. The CEO used “strange tactics” to stop Ecobank’s board meeting on Feb. 25 and continues to use the “Ecobank platform and shameless abuse of the judicial system of Togo to pursue what we believe to be his own political and personal interests,” Matjila said in a letter to the bank’s interim Chairman Andre Siaka.

The IFC holds about 6 percent directly and a further 8 percent indirectly. Asset Management Corp. of Nigeria owns about 8.6 percent.

“We are pleased to see progress made during the EGM through the adoption of the corporate governance action plan as recommended by the Nigerian SEC,” the Washington-based IFC said in an e-mailed statement today. “Transparency and accountability will lead to stronger Ecobank governance, and will enable the institution to capitalize on its fundamental strengths.”

New Rules

Under the new articles of association approved at yesterday’s meeting, Ecobank shareholders agreed that the bank shall not undertake any acquisition, merger or disposal of the company’s assets whose value is equal to or above 20 percent of the book value of the lender without the approval of a majority of investors present in a general meeting.

“Amcon’s objective is for good corporate governance in Ecobank that would translate to increased share value,” Hewett Benson, an executive director at Amcon, said by e-mail today. Benson said he wasn’t a member of the lender’s board and so wasn’t privy to its discussions. Benson was proposed as an interim board member to represent Amcon.

Nedbank Group Ltd. CEO Mike Brown said last week that the South African lender controlled by Old Mutual Plc would consider governance issues before deciding whether to exercise a right to buy a stake in Ecobank. Nedbank has until the end of November to convert the $285 million loan it made to Ecobank in 2011 into an equity holding and then increase the stake to as much as 20 percent.

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