Amhara Bank finds itself embroiled in a detrimental controversy after its Board Chairman, Melaku Fenta, faced a rebellion from shareholders who petitioned regulators to investigate the Bank's governance. These shareholders have raised alarming 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 has led to a chain of events, including the reshuffling of senior executives and the termination of the Bank's founding President, Henok Kebede, on Friday, December 8. This move was seen by many as an attempt to regain control amidst the escalating crisis.

The controversy surfaced about a month ago when the election committee revealed its bank board nominations. A 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 was once reputable 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, dating back six years. 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.

Melaku's response to these allegations has been one of retreat and silence. Initially, he expressed a desire to take time to address the issue. However, subsequent attempts to contact him for comments have been in vain, adding a layer of speculation around his role and position in Amhara Bank, which has the largest shareholders base of 150,000.

The Board's decision to end Henok's term as president of Amhara Bank was another significant development in this unfolding saga. It was signed by Melaku last week and alleged "incompetence, negligence, and misconduct" as reasons for the decision.

Previously served as Chief Operations Officer at Dashen Bank before assuming his role at Amhara Bank, Henock offered a different narrative. He claimed to have already resigned and maintained that his departure was unrelated to the allegations against the Board members.

"I had already resigned for personal reasons," Henok told Fortune.

He conveyed his commitment to seeing through a deal with PWC Consulting. He insisted that he left the Bank in good financial standing despite the Board's allegations, including a significant financial loss and mismanagement in acquiring the core banking system.

Amhara Bank has posted a loss of over 460.2 million Br from its operation in its founding year, although its Board had planned to achieve a 306 million Br profit.