Ethical Issues Arising:

1. Conflict of Interest (Friendship Influence on Board Decisions):
   The relationship between the Financial Controller, Dominic Atubiga, and Salifu Adams, the Managing Director of Sissala Ltd, raises a potential conflict of interest. The sales director’s resignation letter suggests that Atubiga’s judgment may be compromised due to his close friendship with Adams. The conflict arises because decisions regarding Sissala might be influenced by personal relationships rather than what is best for Bolgatanga Ltd.

   Step to Address:

   • The board should review the governance structure to ensure decisions are made objectively, free from personal biases. A formal policy on conflicts of interest should be implemented or strengthened, requiring disclosure of personal relationships that may affect decision-making.
2. Leadership and Board Governance Issues:
   The resignation of the sales director indicates governance issues, particularly with how Dominic Atubiga’s leadership is perceived. His statement that the marketing department will have to “cope” until a new sales director is appointed suggests a lack of strategic leadership and disregard for potential operational risks due to the vacancy.

   Step to Address:

   • The board needs to ensure that leadership changes are handled strategically to avoid operational disruption. An interim plan for marketing leadership should be devised until the position is filled, with clear responsibilities assigned to maintain smooth operations.
3. Related Party Transactions (Legal Services Provided by Brother and Co.):
   The legal fees paid by Bolgatanga to Brother and Co., where the wife of Bolgatanga’s Managing Director is a partner, constitutes a related party transaction. Although the FC’s wife works in a different division of the firm, the relationship still creates a perception of bias or undue influence, which should be addressed to ensure transparency and fairness.

   Step to Address:

   • The related party transaction must be disclosed in accordance with IAS 24 to ensure transparency in financial reporting. The company should ensure that all related party transactions are conducted at arm’s length and are fully disclosed in the financial statements.
4. Corporate Governance and Professional Ethics (Board Dominance):
   The dominance of the Financial Controller, as mentioned in the sales director’s resignation letter, suggests poor governance practices where one individual exerts too much control over board decisions. This undermines the principle of collective decision-making and could lead to poor judgment or biased decisions, which is against good corporate governance practices.

   Step to Address:

   • The board should ensure that its governance structures promote balanced decision-making. Implementing formal governance guidelines and independent oversight would help distribute power and prevent any one individual from dominating decisions. An audit or governance review could help identify weaknesses in the board’s operation.
5. Lack of Clear Strategic Response to Bank Rejection:
   Bolgatanga Ltd had its request for additional funds rejected due to insufficient assets to offer as security. This could indicate underlying financial issues or poor asset management, suggesting that the company may not have a strong financial position.

   Step to Address:

   • The company should re-evaluate its financial strategy, including exploring other financing options or improving asset management. Additionally, clearer communication with stakeholders, including the banks, might help in securing future funding. Strategic financial planning should be prioritized to address asset management concerns.

Conclusion:

The ethical issues identified relate to conflicts of interest, board governance, leadership, and related party transactions. To address these, Bolgatanga Ltd should implement formal governance structures, disclose related party transactions transparently, and ensure that leadership changes and financial strategies are aligned with ethical standards and good corporate governance practices.