African Gov’ts called to assist SMEs

…as Ghana hosts international businesswomen summit
- From the News Desk

Juliet Asante, President of the Eagle Women Empowerment Club (EWEC), has called on governments in Africa to provide the required support for the growth of Small and Medium-scale Enterprises (SMEs) since they hold the key to the development of such economies.

Ms Asante, who is also the CEO of Eagle Productions Limited called for hurried actions to be taken to solve such problems affecting the operations of SMEs such as the high cost of borrowing and to empower women entrepreneurs to withstand challenging situations such as the current economic crises.

The EWEC president stated that in line with these demands, EWEC, an NGO working to empower women, in collaboration with the African Business Women's Network (ABWN) is organizing an international business women's summit from October 21 to 22, 2009 in Accra.

Speaking at a pre-seminar press conference last week, Ms Asante explained that the rationale behind the summit is to “awaken the woman to see the current world situation as an opportunity to fine tune and emerge from the world crisis better business people, through best practices and advocacy, aimed at ensuring a better future for all peoples.”

Under the theme,‘Synchronizing global business - A new orientation for the African woman’, the conference is being organised against the background of the global economic downturn and the challenges it presents to many businesses, particularly, SMEs.

About 200 women from all over Africa, USA and Europe are expected to attend the summit to share ideas and their successes to mentor other women.

Major issues expected to be considered at the summit would include: Creating customer value, Satisfaction and loyalty, Building and maintaining Corporate Image, Women Transcending Cultural Limitations, Entering new Markets, Relevance of IT, Global trends and survival after the recession, Investment opportunities in Ghana and sources of funding.

A number of seasoned businessmen and motivational speakers are billed to make deliveries at the two-day seminar and these include Madam Dorothy Gordon of Ghana’s Kofi Annan ICT Centre, Yoofi Grant of Databank Financial Services, Pat Mitchell, an international mentor and leader in global women's issues, the CEO of Paley Centre for Media, and Fiona Egberts, a woman's Advocate from UK.

There will as well be representatives from the Bank of Ghana, the Ministry of Finance and Economic Planning and from the Ghana Investment Promotion Centre (GIPC).

The International Businesswomen summit is facilitated by Vital Voices, Exxon Mobil Foundation and Fortune 500 companies. Media partners include the Financial Intelligence Newspaper and Daily Graphic.

The African Businesswomen Network is a partnership between local businesswomen organisation throughout Africa, Vital Voices Global Partnership and Exxon Mobil Foundation.
The group in Ghana is represented by The Eagle Women Empowerment Club (EWEC), a leading women's network dedicated to accelerating economic growth and the general empowerment of women in Ghana.

The partnership in Africa also included the Cameroon Businesswomen’s Network (CBWN), Kenya association of Women Business Owners (KWABO), Uganda Women Entrepreneurs Association Limited (UWEAL), Women in Business and Management (WINBIZ) Nigeria and the South African Business Women Association.

MOFEP budget director siphons ¢7 billion from GT

Ripples over issues concerning operations and divestiture of Ghana Telecom (GT) have just begun as the Financial Intelligence (FI) can reveal that very big heads will soon begin to roll.

President Mills has directed the various relevant state agencies to start dealing with issues raised by the Inter-Ministerial Review Committee’s report, and some of the people whose activities would soon become subjects of forensic audit are Kwabena Agyei Mensah, immediate past Director for Budget at the Ministry of Finance and Economic Planning(MOFEP), Nana Antwi Boasiako, former Board Chairman of GT, Dickson Oduro Nyaning, former Chief Executive Officer of GT and Deputy Chief Financial Officer of GT, Joseph Owusu-Ansah.

The committee, under the heading ‘Illegal payments to some local Union Officials; and the use of Debt Collectors to collect revenue from Government of Ghana (GoG), the sole owner of GT,’ averred that there was money racketeering in the employment of “Kobby Mensah and Associates” a debt collection agency to collect debts owed GT by GoG (sole owner of GT).

According to the committee “Koby Mensah and Associates’ has links to personnel at the Ministry of Finance, the paying Ministry.”

Documents available to the committee, which this paper has also seen indicate that Mr Agyei Mensah, and one Papa Kofi Mensah had used the said debt collection agency to siphon at least ¢ 7 billion from GT.

According to these documents, after the exit of the Malaysians from GT, Mr Owusu-Ansah approved of the payment of 10% of all invoice values made by Ministry of Finance and Economic Planning to GT to Mr Kofi Mensah and Mr Adjei Mensah under the guise of commission for the collection of debts from the MOFEP.

Documents however available from Ghana Telecom indicate that all letters demanding payment for the use of GT telephones by the Ministries, Departments and Agencies (MDAs) made to MOFEP were written by Mr. Owusu Ansah, to Dr.Osei Akoto, the then deputy minister at the finance ministry.

These letters were supported by Invoices from GT for the respective Government Departments and based on these letters; payments were made to Ghana Telecom.

It is therefore surprising how the sum of ¢ 7 billion ended up in the pockets of Mr. Agyei Mensah and Mr Kofi Mensah as commission for the period of eight months.

Payment vouchers also made available to the committee points to a possible issue of forgery, as the Official Stamp used to collect the money from the Bank of Ghana was that of the Deputy Chief Financial Officer, but the signature was that of Mr Kofi Mensah, the alleged debt collector.

A witness (name withheld) who spoke to the committee stated that a Bank of Ghana cheque of ¢17.45 billion paid by MOFEP issued on 14th April 2005 has not been paid into any known GT Account.

This witness noted that if Nana Antwi Boasiako, who was also the Chairman of the Audit Committee of the company had performed his functions as expected, many of the loop-holes would have been plugged to save a lot of money for GT.
It is interesting to note that one of the major arguments postulated for the sale of GT was liquidity.

This lack of funds led the company's management team to complete a bond issue for $200 million at 8.5% coupon, without informing the GoG in 2007 at the time the privatization was on-going. This became part of the debt that the GoG had to pick up as part of implementing the debt-free, cash-free transaction sale terms of GT.

By:Justice Lee Adoboe

ECOWAS gets tough on EU

...As Ghana comes under intense pressure to sign EPAs

The October 31 deadline granted ECOWAS to conclude a regional trade agreement with the EU will soon be due, with trade negotiators pointing out unequivocally that they cannot meet the current deadline because they are not satisfied with current provisions in the proposed agreement.

A meeting between ECOWAS and the EU in Brussels last month did not make any progress due to unresolved issues of market access, and the regional body appears to be firm in its decision after meetings in Lome and Abidjan.

Another of such meetings between ECOWAS trade negotiators and Civil Society Groups is scheduled for Abidjan on October 18 to 22, 2009, and Tetteh Hormeku, a trade expert at Third World Network (TWN) believes the team of negotiators will maintain their firm stance.

Mr Hormeku, who was himself on his way to the meeting observed with admiration how ECOWAS negotiators had taken a firm stand for what would be in the interest of the region.

He said as good negotiators, the team “is insisting on what terms will be in their favour rather than just sticking to deadlines,” and called on Ghanaian negotiators to learn from their example.

On arguments that ECOWAS might just be interested in protecting its current 0.5% community levy, Mr Hormeku remarked that the EU’s promise of 700million dollars in support assistance for 70 countries cannot in anyway compare with what the region can itself generate, stressing “It is important for the regional body to generate its own funds.”

ECOWAS had earlier in May pointed out that disagreements between it and the EU meant a June 30, 2009 deadline for concluding its comprehensive regional Economic Partnership Agreement (EPA) could not be met, for which reason the deadline was extended to October.

The European Union under the new trade arrangements is seeking to allow ACP countries, including those in the ECOWAS region, 100 per cent access to the EU market in return for a reciprocal 80 per cent access to their domestic markets.

But ECOWAS Commissioner for Trade and Industry, Alhaji Mohammed Daramy has maintained that based on the commission’s technical analysis, ECOWAS can afford only up to 65 per cent market access, but would be willing to go up to 70 per cent “at most" in return for a firm commitment by the EU to support EPA-related projects, mainly processing of primary products for value addition.

He told media men at the sidelines of a recent meeting of ECOWAS trade and industry experts in Abidjan that "West Africa is not negotiating for time… all we are saying is to add value to our primary resources in order to create employment for our people.”

Negotiations between the ECOWAS grouping and the EU have dragged with several postponements, compelling Ghana and Cote d'Ivoire to initial interim agreements that ensured trade between them and the West were not disrupted.

Cote d’Ivoire has however gone ahead to sign the stepping stone agreements it initialed, and increasing pressure is reported to have been mounted on Ghana to sign and ratify its own Economic Partnership Agreement (EPA).

…Ghana under pressure
A statement by Hannah Tetteh, Ghana’s trade minister in that past week that government could go ahead to sign the EPAs since the consequences of failing to enter into an agreement could be disastrous for several Ghanaian businesses in the export sector has made civil society conclude that Ghana might finally succumb to EU pressure ahead of a regional agreement.

In line with the minister’s assertion, Emmanuel Awuri, a trade expert at the Ministry of Trade and Industry at a recent training workshop on trade explained to the media that government aims at creating an agric based export led economy, and is pursuing a policy to process 50% of its cocoa with significant investments being attracted into the country.

He explained that Ghana’s failure to initial an interim EPA would have made this sector the first casualty.

He noted that what the country is negotiating currently is a goods only arrangement, with all other issues left in the hands of the regional body, ECOWAS.

Mr Hormeku explains that the Ghanaian Government has come under direct pressure from the European Commission, the British Government and other governments in Europe who are utilizing their Aid agencies to compel Ghana to sign the EPAs.

According to the trade expert, a few firms of European descent producing in the cocoa and banana export market in Ghana are also putting intense pressure on government to sign the EPAs for their own interest.

“These have argued that about 2000 jobs will be lost should government fail to sign the EPAs,” he said.

Even though government ought to consider the needs of all its citizens under the negotiations, Mr. Hormeku believes that “this is a choice between the export of a few bananas and thousands of jobs that will be lost if a number of local industries collapse from the eventual flooding of our markets should the EPAs be signed.”

Source: Financial Intelligence (Charles K. Amoah)
Mr Hormeku further explains that, comparison of Ghana’s commitment under the interim EPA with those of other countries reveal that Ghana would be going for a worse deal.

Citing an instance, he said whilst Ghana has 15 years to liberalise 80% of its imports by 2022, liberalization in Kenya and other regions will not be complete until 2033.

“Ghana cannot sign the Interim Partnership Agreement (IEPA) as it stands now, without crucial changes”, Mr Hormeku remarked.

He said as the second largest economy in the region, Ghana cannot let down the region by going for a stand-alone agreement.

He indicated that Nigeria had always had a course for complaint as “we have opened up our markets indiscriminately; a situation that has caused our markets to be flooded by cheap imported goods to the detriment of our local industries.”

“Nigeria has fears, for example, that cheap poultry products coming through Ghana could collapse their local poultry industry just as it has happened to our country,” he remarked.

“We have much to loose from strained relations with Nigeria as most of our local industries producing such items as pharmaceutical products, furniture, and textiles, aluminum by-products and plastics have the West Africa region as their main market, of which Nigeria constitutes about 60%.

Ghana’s new government had said when it assumed office that it intended to study carefully the text of the Interim EPA initialed by its predecessors before continuing with negotiations.

Insanitary living threatens NHIS survival

Costs scheme GH¢ 70 million in 2008 alone


Extension services Coordinator of the Community Water and Sanitation Agency CWSA Theodora Adomako Adjei has warned that the National Health Insurance Scheme (NHIS) faces imminent extinction if the scheme does not focus on the issues of hygiene.
She said if the issues of hygiene are not addressed properly, there could come a time when the scheme may not have money to run.

Speaking to this paper after a 'a media/children's forum' in Cape Coast to usher in the 2nd Global Hand Washing Day celebrations, Mrs. Adomako-Agyei disclosed that NHIS spent over GH¢ 70 million on sanitation related diseases in 2008 alone.

“Majority of the cases reported at the Out Patient Department (OPD) of our health institutions are hygiene related, and if the trend is not stemmed, it would have dire consequences in terms of the cost of treatment sooner than later,” she cautioned.

Mrs. Adomako-Agyei explained that the poor hand washing habits of many Ghanaians is mostly responsible for this turn of events where diseases such as cholera, diarrhoe and respiratory tract infections such as the N1H1 (Swine flu) have become so prevalent in the country.

She lamented that many Ghanaians eat their own, or other people’s excrement because many are those who, either do not wash hands at all, or do not wash hands with soap after visiting the toilet, or before touching food.

Addressing the forum, the Coordinator revealed with statistical evidence that only 2.3% of mothers wash their hands with soap after disposing of their children’s feaces, while 2.7 % also wash hands with soap after visiting the toilet.
According to her, 41% of mothers also wash hands with water only after cleaning the child’s toilet, while 32% also wash hands with just water after they visit the toilet.

She noted, “As many as 63% of Ghanaians do not wash hands at all in a situation where about 68% of Ghanaians depend on public toilets due to the lack of toilets in their homes.

“The nature of public places of convenience is so unhygienic that one must always wash hands with soap after visiting those places,” she urged.

She called for the culture of hand washing with soap after visiting the toilets and before eating to be inculcated into children right from infancy so that it would become ingrained in the psyche throughout their lives.

The coordinator lampooned Ghanaians’ attitude of watering hands before eating but washing them with soap after eating, apparently to kill the scent of meat or fish on the hands.

She emphasised that hand washing with soap, is the single most effective health intervention method that can save a lot of lives, particularly among children, urging the public to demand the provision of hand washing facilities such as clean water and soap at vantage points: near public latrines, lorry parks and market places to promote further the practice in the society.

At the celebration which fell on October 15, Deputy Minister for Water Resources, Works and Housing , Hanna Bisiw urged all parents to develop the practice of hand washing with soap in order to prevent diseases such as the N1H1( Swine flu) and other respiratory tract infections from attacking their Children.

“Women as mothers and care-givers are the major the major providers and servers of food both in the home and at public places,” Dr. Bisiw noted, warning, “Thus, one woman with contaminated hands will affect the health of her whole family and any outsiders who are served food or drinks by this woman.”

She therefore called on all Ghanaians to adopt the habit of hand washing with soap and make it a part of their lives.

Communication and Campaign Officer of WaterAid, Janet Alamisi Dabire called on both school children and the media to partner promoters of the campaign to send the message into the communities.

WaterAid Ghana, Schools Health Education Project (SHEP), Ministries of Local Government and Rural Development, Women and Children’s Affairs, Education, as well as Works and Housing are some of the collaborating agencies in the hand washing with soap campaign.

The campaign was initiated by Colgate Palmolive, Unilever, Procter & Gamble, while the World Bank, United Nations Children’s Fund (UNICEF) WHO, LSHTM and WSP are the other global partners.

By: Justice Lee Adoboe

These little things matter-Editorial

It is said that “a stitch in time saves nine,” and “to be fore-warned is to be fore-armed.”

That is why it is heart warming to realise that some Civil Society Organisations (CSOs), international organisations and Ministries Departments and Agencies (MDAs) operating in the water and sanitation delivery sector have taken it upon themselves to promote hand washing with soap in the Ghanaian society.

The fact that this simple and cost effective habit, if well harnessed and inculcated into the life styles of the average Ghanaians would be a panacea to majority of the health problems people face cannot be overemphasised.

Diseases such as Cholera, Diarrhoea and other respiratory tract infections which break out in many communities with fatal consequences are all hygiene and sanitation related.

Food vendors have been identified as one of the major sources of these infections as many of them throw hygienic practices to the dogs and treat food which ends up in people’s stomachs with careless abandon.

Visit the preparation points of staples such as kenkey, banku, fufu wache and Hausa koko, and you will be appalled by the sheer tolerance for house flies. Many of these people leave the food items and utensils being used uncovered for these disease-laden flies to feast on.

Unfortunately most of the Ghanaian delicacies sold along the streets are prepared from households and communities that do not have toilets, making people defeacate around in what is described in local parlance as “Free-Range.”

Moreover, workers pick their noses while working while some of them only water their hands, after visiting the very toilets that are mostly unkempt and dip those same hands back into the food they are preparing for public consumption.

Vendors along the streets especially those girls selling dough nuts (bofrot) and other such pastries leave them uncovered for the whole day. They pick their noses while selling and visit public toilets which have the reputation of being some of the nastiest places in the Ghanaian society intermittently, but do not have water or soap to wash their hands with.

With these same hands they serve food to the general public to eat, thus causing an increase in the rate of contraction of these hygiene related diseases.
The GH¢70 million the National Health Insurance Scheme (NHIS) alone is said to have spent on such infections in 2008 is frightening.

Also frightening, but real is the statistical evidence that only 2.3% of mothers wash their hands with soap after disposing of their children’s feaces, while 2.7 % also wash hands with soap after visiting the toilet.

Furthermore, 41% of mothers also wash hands with water alone after cleaning the child’s toilet, while 32% also wash hands with just water after they visit the toilet.

Amidst all this, it is important to note that as many as 63% of Ghanaians do not wash hands at all in a situation where about 68% of Ghanaians depend on public toilets due to the lack of toilets in their homes.

The implication is that majority of Ghanaians visit public places of convenience, and carry germs from there to distribute to all those they greet with their hands.
It is for this reason we would like to join in the campaign of encouraging our folks to start cultivating the habit of washing their hands with soap after visiting the toilets, and before dealing with food.

Why eat back your own or another person’s excrement with the billions of infections and viruses each gram carries?

By this simple and cost effective intervention of hand washing with soap people will save their own lives and those of others, while at the same time reducing the propensity of the outbreak of epidemics such as cholera, diarrhoea, N1H1 (pandemic flu) and many others which come along with high financial costs and the potential for the loss of life.

Indeed, for truly clean hands, wash your hands with soap.

EXECUTIVE SUMMARY OF THE GHANA TELECOM SALE REVIEW COMMITTEE REPORT

The Committee
1. The Minister of Communications, on behalf of the Government of Ghana (GoG),
established an inter-Ministerial Review Committee (the Committee) on the 18th of May,
2009 to provide the government with investigative analysis as well as findings,
conclusions and recommendations on numerous controversial issues surrounding the
privatization of Ghana Telecom (GT). The Committee was chaired by Mr. Justice
Emmanuel Akwei Addo, a retired Justice of Appeal, and made up of representatives of
the Ministries of Justice, Finance and Communications and the Office of the Auditor-
General. A Technical Team comprising communications, financial, and legal
consultants supported the Committee.
The Work of the Committee
2. The terms of reference of the Committee covered the examination of all the issues
relating to: the management and finances of GT from the tenure of TMP up until the
sale of 70% shares of GT to Vodafone; the terms and conditions of the Sales and
Purchase Agreement (SPA) entered into between the GoG and Vodafone International
Holdings BV (Vodafone) including the transfer of the national fibre optic; offer of a 3G
license; employee restructuring and labour rationalization programs of Vodafone;
safeguards for the minority shareholder; the Ghana Telecom University; and the
contract with the transaction advisors for the divestiture of GT. The work involved the
examination of documents and witnesses.
3. The former Minister of State for Finance, Dr. Akoto Osei refused to honour invitations
of the Committee. Mr. Oduro Nyaning, the immediate past CEO of GT could not
attend to the Committee’s call for information and explanations for personal reasons.
Findings of the Committee
The Committee made the following findings:
Constitutionality of the SPA and the Effect of Parliamentary Ratification
4. The Committee finds that Parliament acted unconstitutionally in purporting to ratify
an SPA that was not authorized by the President (Articles 75, 108, 181). This is because
the Constitution only allows Parliament to ratify agreements that have been entered
into by or on behalf of the President. This is a fundamental error that cannot be cured
by any internal procedures within Parliament. Parliament is subject to the Constitution
of Ghana and not above it. This makes the purported ratification of the SPA by
Parliament void and of no effect.
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Concerns of the SPA
5. The SPA may be open to serious Constitutional challenges on the grounds of illegality
and due process.
6. The relationship created by an Investor-State Contract is, to say the least, a legal
mixture and this also extends to the nature of disputes arising from them. First, the
parties enter into a contract over a subject matter uniquely classified as ‘Investment’ but
which, quite aside from theories; proceed from the commercial ambitions of the
Investor that interacts with the administrative responsibilities of the host state. We
have a natural or artificial legal person strike a deal with a sovereign entity. We have
two parties bound in principle by two sets of laws – Public International law on the
state side and then Private International laws on the International investor’s side. Yet
at the background lies an interested third party, the home state of the investor, who
needs to protect its citizen (the investor) and enhance repatriation of exported capital,
but who must equally respect the sovereignty of the contracting host state. These
issues generate conflicts.
7. Although strong allegations were made about bribery and corruption of the then
majority side of Parliament during the purported ratification of the SPA, the
Committee did not have the powers and resources to investigate these claims. The
Committee, therefore, refrains from making any findings on this specific allegation.
The Justification and Rationale for the Indemnity Clause in the SPA
8. The indemnity clause in the SPA is not balanced inasmuch as its purpose appears to be
solely to protect the interests of the buyer, and not the mutual interests of both parties.
It should be redrafted in a simpler form. Indemnities are important because they set
forth the way in which risks and liabilities will be shared between the parties, as
related to the main point in the contract. Stated another way, an indemnity clause sets
forth obligations of one person to secure or cover another person against an anticipated
loss, damage, or liability. These clauses, in effect, shift risk from one party to another.
Value for Money of the SPA
9. The Committee finds that GT was valued more by the Transaction Advisors and could
have fetched a price much higher than the SPA price of US $900 million (enterprise
value (EV) of US$1.286billion) for 70% of the Enlarged GT Group. Telecom S.A. offered
$947million (EV of US$1.635billion) for 66.67%. The Committee also finds that the
quoted price, through a series of complicated financial arrangements led GoG to
eventually realize only US$266.57 million from the SPA. The Committee finds that the
transaction was basically a sale of assets. All that the “cash free debt free” meant was
that the debts of GT were retired from the proceeds of the transaction and the available
cash. GoG did not get value for money from the sale.
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The National Fibre Optic Backbone
10. The Committee finds that the National Communications Backbone Company (NCBC)
that was included to create the enlarged GT group, was grossly under valued. This
value was determined solely on the costs of the stated value from the Volta River
Authority (VRA) for the VoltaCom fiber assets and the US$30million Chinese Exim
Bank concessionary loan. The value of the National Fiber Backbone Company should
have been determined based on the synergies of creating a high performance service
delivery platform with nationwide reach, with revenue and annual profit potential far
in excess of the total assessed asset value. In any case, the Committee finds that the
Fibre Optic Network is a strategic national asset and should have remained an
independently operated infrastructure as originally intended and must not be sold to a
private investor with a solely commercial agenda.
Ghana Telecom University
11. The Government should take steps to decouple the Ghana Telecom University from
Vodafone GT without delay.
Other Findings
Management of GT before the Sale
12. The Committee finds that the appalling financial state of GT before the sale was due to
the fact that the Telenor/Telecom Management Partners (TMP) and the 3 member
Interim Management Team of GT grossly mismanaged GT by indulging in or allowing
all sorts of financial malpractices and irregularities. They plundered the company into
crippling debt, and to the point of insolvency.
Executive Interference in the GT Sale
13. The former President Mr. J. A Kufuor held at least one meeting alone with Vodafone
Executives in London and a second meeting with the Vodafone Executives also in
London and this time with his Secretary present. Mr Kufuor also on several occasions
in Ghana and with some of his Ministers (Ministers of Communications, Finance and
the Chief of Staff) present, held meetings with Vodafone to negotiate and agree the
transaction consideration and the underlying assumptions of the Vodafone offer. This
was done without expert advice.
14. The Committee heard testimony that the former President subsequently agreed on the
transaction price, technical considerations and the underlying legal assumptions of the
Vodafone offer contained in their offer letter dated 15th May 2008. The offer letter was
then signed by Dr. Akoto Osei, Minister of State of the Ministry of Finance and
Economic Planning (MOFEP), instead of the substantive Minister. This was within 24
hours of presentation of the Vodafone bid and granted exclusivity to Vodafone.
9
15. The process undertaken by the former President was highly irregular and
unconventional and did not rely on expert advice.
The US$228 million Shareholder Loans/US$63 million Escrow
16. Advisors of Government and Vodafone (Boulders and PWC) have already presented
expenditure statements covering the US228 million and also claiming up to about
US$45 million from the US$63 million Escrow. Charges against the Escrow include
increases in provision for bad debts and exchange differences arising from delayed
updates of Vodafone records with GoG assumed debts. This does not appear to be a
valid claim. The Interim Management Committee (IMC) should have also advised
against payments such as for the US$1.9 million made to the TMP in 2008 because they
know that TMP had illegally paid monies to itself long before the GT sale.
Termination of the Transaction Advisors
17. In December 2007 the TAs Contract was not renewed nor extended and they were not
used in subsequent Vodafone negotiations. Fixed fee payments due them remain
outstanding and a success fee claim for US$1.5m had been negotiated with the former
Chief of Staff as of December 2008.
The US$200 million Bridge Facility
18. Vodafone could not provide the required information to enable the Committee confirm
the expected US$200 million capital injected into GT post the SPA even after several
requests had been made of them. They informed the Committee that they had made
several payments since August 2008 and had drawn about US$187 million from the
bridge facility as at May 2009. The payments list provided the Committee included
payments to Huawei amounting to GH¢61million between August 2008 and May 2009.
On request for confirmation, Huawei submitted documents indicating that they had
invoiced and received only GH¢37.29million and not the Ghc61million that Vodafone
alleged they had paid them. The Government may wish to confront them with this
matter and ask them to account for the difference of GH¢23.71m. This matter can be
used as a bargaining chip for Vodafone to back down on the renegotiation.
RECOMMENDATIONS
19. Negotiation of the SPA
The Committee recommends that:
(i) The unconstitutionality of the purported ratification of the SPA by Parliament
should be brought to the attention of Vodafone without delay.
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(ii) GoG should consider requesting Vodafone to renegotiate the SPA and in
particular, a reconsideration of the following:
a. Parties to the SPA
b. The compliance or otherwise of the SPA with the laws of Ghana, particularly
the NCA Regulations and the Internal Revenue Act 592.
c. Value for money/Transaction Consideration.
d. The retention of the National Fibre Optic by GoG as a strategic national
asset.
e. Decoupling of the Ghana Telecom University from the transaction (already
done).
f. Return of GT investments to GoG such as the Telecom Emporium.
(iii) The SPA was negotiated in an inelegant manner by GoG. GoG gave everything
and took nothing in the context of the inequalities in bargaining power that were
allowed to prevail. This should never be allowed to happen again in this country.
(iv) Ghana has access to some of the world’s best experts in every field and those
human resources should be engaged and deployed in aid of negotiations such as
the SPA in order to safeguard the national interest.
20. Future Negotiations/Agreements Entered into by GoG
The Committee recommends that:
(i) GoG conducts a serious audit into the way and manner it negotiates such business
deals.
(ii) A working party of experts, consisting of a corps of technical experts and
negotiators, should be in charge of such negotiations.
(iii) Copies of all GoG Agreements should be lodged with Government Archivists as
required by law. Copies of such Agreements should be lodged with the
Attorney-General (AG) as the second repository and copies retained by the
respective MDAs who should superintend the execution and implementation of
the respective public agreements to ensure that the best interests of Ghana are
protected.
21. NCBC
The NCBC must be decoupled from the enlarged GT Group and a public entity
established with a nationalistic mandate and given the resources to complete and
expand the backbone to all socially and economically necessary locations to enable it
act as the foundation for GoG’s ICT Policy.
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22. Management of GT before the Sale
The Committee recommends:
That a forensic audit be conducted into the affairs of GT to cover the TMP and the
Interim Management era. The former Interim Management Committee and relevant
Board Members must be compelled to provide the information necessary to
understand and assess the management and finances of GT during those periods.
23. Post the SPA
(i) Other post SPA issues, such as the determination of closing working capital and
Net debt adjustments, should be finalized with negotiations and following
detailed audits and reviews of those payments being claimed. The short term
reviews, as have been implemented by GoG so far, do not provide enough
information to enable confirmation of payments claimed on the escrows nor of
the injection of capital by Vodafone. Forensic reviews into these specific issues
are required.
(ii) Detailed reporting requirements based on forensic accounting and reporting
principles should be requested by GoG of GT-Vodafone, following the
establishment of actual sourcing and use of funds purportedly introduced by
current management as working capital.
CONCLUSION
24. The purported ratification of the SPA by parliament was unconstitutional as it violated
due process provisions of the Constitution and other laws of Ghana; it disrespects the
sovereignty of Ghana by tying GoG’s hands in many unacceptable ways; it is illegal in
several respects; and it does not constitute a transaction that provided value for
money. The purported ratification by Parliament is therefore void and the SPA should
be renegotiated by GoG. The TMP and IMC tenure should be audited and
management at the time made to answer for their stewardship.
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Billions remain in unclaimed financial assets

As Finance Ministry stalls legislation

A proposed legislation to cater for unclaimed financial assets in Ghana has been abandoned, Financial Intelligence enquiries have revealed.

The Ministry of Finance and Economic Planning appears to have shelved the idea of crafting the legislation that should have provided principles, guidelines, regulations and legislations on the treatment of such assets which experts estimate to amount into billions of Ghana Cedis.

After a study by the Securities and Exchange Commission (SEC) revealed widespread and extensive incidence of unclaimed dividends owed to shareholders by listed companies, the Commission set out a number of proposed actions it wanted to take to that effect, and proceeded to solicit the views of industry participants, to make way for the enforcement of definite rules which would bind all market operators.

The apex regulatory body for the capital markets noted that whilst jurisdictions all over the world with operating capital markets have extensive provisions on the treatment of unclaimed dividends, there seem to be a gap in Ghana’s securities industry and related laws and regulations on the subject.

But with the realization that the issue of unclaimed financial assets in the system extended beyond the realms of the capital markets industry, the SEC pushed for the Ministry of Finance and Economic Planning to come out with wholesale legislations that would cater for such other assets as unclaimed pensions, bank deposits and insurance benefits.

After announcing in the 2007 budget statement the ministry’s decision to craft a bill on unclaimed financial assets, the demise of the then hardworking Finance Minister, Kwadwo Baah-Wiredu, appears to have taken the steam out of the proposed project, resulting in its abandonment.

Painstaking efforts by the Financial Intelligence (FI) to make follow ups on progress made so far on the proposed bill has revealed that no particular office has been tasked to work on the bill yet.

FI enquiries however show that unclaimed financial assets in the system keep mounting despite advances in market operations, with thousands of Ghana cedis in financial assets going uncashed each year.

Continues retention of such unclaimed assets by companies has distorted the true financial position of some companies and institutions, many of who treat them as free money, spending them on ostentatious corporate conveniences.

SEC opined in their study on unclaimed dividends that “By law, dividends become debt of a company once declared and must be paid. This implies that unclaimed dividends do not belong to companies that have declared them but to investors”.

In the absence of a written code however, many companies (listed and unlisted) and securities market operators continue to enrich themselves with substantial sums of monies belonging to unidentified shareholders.

SEC had proposed the setting up of a Trust, the ‘Unclaimed Dividends Fund’, that would hold unclaimed assets, with part of the proceeds of the fund being utilised to service the fund and pay interest to claimants.

Under the proposal, a dormancy period of 12 to 15 months was to be set for all unclaimed dividends to be paid into the special fund.

But a cross section of finance industry operators interviewed by the FI were of the opinion that such a move by the securities operator will pitch capital market operators against facilitators of such a code.

It has been suggested that there might be power blocks that stand in the way of attempts to put up a legislation to will retrieve such resources for an agreed purpose.

It is reported that a similar attempt by Nigeria’s Securities and Exchange Commission to set up Unclaimed Dividend Trust Fund (UDTF) to annex unclaimed dividends received stiff opposition from industry participants and shareholders, insisting that the money rightly belonged to them.

Under the country’s existing statutes, dividends not claimed within six months after declaration are returned to the company, from where the investor can make claims not later than 12 years. The shareholders however forfeit dividends not claimed within 12 years.

Dr Paul Acquah, immediate past Governor of the Bank of Ghana confirmed in an interview with this reporter that there is currently no legislation regarding bank deposits that become dormant for years.

He however remarked that the non-existence of such a law on our market favoured clients, who can lay claim on their funds at any point in time.

“For some jurisdictions, such dormant funds are transferred to treasury after a specified period,” he said.

Dr Amoako Tufuor, an advisor to the Ministry of Finance noted that such a legislation exists in countries such as Canada, and indicated that it would be useful to Ghana too, but could not tell what has been done so far on the proposed legislation in Ghana.

The high incidence of unclaimed dividends results from a number of factors including wrong address of shareholders, death of shareholders without any notification, heirs who might not be aware of a deceased’s shareholdings, and the hitherto high minimum deposit requirements by commercial banks that forces small shareholders to close their accounts resulting in the high incidence of return of dividend cheques back to registrars.

Ignorance of shareholders and policy holders of insurance products is also a major cause of the unclaimed assets in the financial services sector.

On the part of pensions, frantic efforts by relatives and heirs to retrieve the retirement benefits of their dead relatives sometimes end up unrewarded due to long bureaucratic procedures that cause people who might be either totally illiterate or semi-literate to abandon the process halfway, leaving such funds eventually for the institution holding them in trust.

An expert in Ghana’s financial services sector told the FI “the lives of many poor families could be changed if millions of such claims they are entitled to were freed to them”.
By:Charles K. Amoah

More shocking revelations on Vodafone deal

Gov’t dashed $ 28 million 3G license fee

In addition to the several hundred million dollars government allegedly lost in the Ghana Telecom (GT) sale as a result of rejecting the higher offer from Telekom South Africa, Ghana government also lost $28 million in the Vodafone transactions, Financial Intelligence (FI) can reveal.

This loss was as a result of the then Minister of Communication's decision to waive the $28 million 3G technology license fee Vodafone had been asked to pay.

The National Communications Authority (NCA) had fixed a fee of $28 million for telecom service providers who wanted to migrate onto the 3G technology.

While officials of the other service providers believe the NCA had been unfair by waving Vodafone's fee, the NCA also shifts the blame on the Ministry of Communications which wrote to instruct them not to pursue the money from Vodafone.

Director General of the NCA Bernard Forson told the FI that the Authority had instructed Vodafone to pay the $28million being the fee for the 3G license, but the Minister for Communications wrote back to state that the GT sale was co-mingled with the fee for the 3G.

Facts available to the FI however indicate that at the time the Vodafone deal was struck, the NCA had not settled on the fee to be charged for the technology.

"We had fixed the license fee a year earlier," Mr Forson told the FI against the fact that the NCA's own documents show that the said fee was arrived at on October 24, 2008, two clear months after the Vodafone deal had been ratified by Parliament.

Parliament of Ghana ratified the Vodafone deal on August 14 while the Divestiture Implementation Committee (DIC) effected the transfer on August 16.

The then Communications Minister, Benjamin Aggrey Ntim however responded that there was no wrongdoing in waving the license fee for Vodafone. According to him it had been part of the GT/Vodafone Sale and Purchase Agreement (SPA) that Vodafone would not pay an additional License fee for the 3G.

He however contradicted the assertion of Mr Forson that the 3G License fee had been fixed a year earlier. Dr Aggrey Ntim added that NCA fixed the 3G license fee on October 24 based on what vodafone had paid in August.


"From our calculations, Vodafone had paid $28 million as part of the $900 million they paid for Ghana Telecom, and that is how come the NCA had to fix the 3G license fees at that price," said the former minister.

This claim is in spite of the fact that the NCA boss says the authority was not a party to the Vodafone deal and as to how government could take such a decision without the expert input of the NCA leaves much to conjecture.

FI’s perusal of the SPA however reveals that there is no portion of that document which included the 3G license fee in the $900million Vodafone was to pay for GT.

It is also however instructive to note that on July 2, 2008 the NCA had written to Vodafone informing them that the 3G license was going to be offered to them on the same commercial terms that other operators were going to get it. These commercial terms were however not determined until October 24.

Interestingly, Zain which acquired 75% of WESTEL under similar circumstances paid the $28 million license fee for the 3G technology to the NCA.

A source at the Ministry of Communication also reveals to the FI that government is considering making public soon the findings and recommendations of the committee set up by the Minister of Communications to review the Vodafone deal.

By:Justice Lee Adoboe