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…….Statements on Peace FM &Asempa FM different from response to Martin Amidu’s Corruption Risk Assessment
Finance Minister, Ken Ofori-Atta, has been caught up giving a conflicting statements on the Agyapa Royalties deal on the involvement of some international companies, including JP Morgan, Goldman Sachs, Citi Bank, Morgan Stanley, Barclays Bank, Standard Chartered Bank and Rothschild & Co and IMARA Corporate Finance Limited (Pty), (Imara).
On Friday, September 4, 2020, Mr Ofori-Atta, told Accra-based Peace FM that “Bank of America (Merrill Lynch) is the main advisor and they have their own law firm. Usually, these international law firms, have an affiliate in Ghana and that’s where Gabby’s firm came in.”
However, in his statement to the President, Nana Akufo-Addo, “Bank of America (Merrill Lynch) did not feature as he had told Kwami Sefa-Kayi, rather it was the South Africa-based IMARA Corporate Finance Limited (Pty), (Imara) which runs a partnership with Data Bank owned by the same Ken Ofori-Atta, which he claimed rather worked on the Agyapa Royalties deal.
On the same Kokrokoo Morning Show with Sefa-Kayi, Mr Ofori-Atta, was emphatic that; “I will tell you to rest at ease, because the republic is always first in everything we do,” but that claim has been disputed by the Special Prosecutor’s Corruption Risk Assessment report.
According to Martin Amidu, “…In an analysis of the risk of corruption, and anti-corruption assessment, this is a fundamental issue of individual interest, greed, lack of ethicality and morality in public office, and not simply of conflict of interest merely.”
On August 29, 2020, Gabby Asare-Otchere Darko, also told Philip Osei Bonsu on the Ekosiisen on Asempa FM, that he got involved in the Agyapa transactions based on his law firm’s partnership with the UK-based White and Case, where Joshua Siaw is in-charge of the African Desk.
Earlier, same Gabby, had told The Herald in his Cantonments office that he got involved in the deal through White and Case after the UK company won the legal advisory contract, and at no point did he mention Imara of South Africa.
But many attempts by The Herald to get White and Case’s Joshua Siaw to speak on the matter, has been unsuccessful.
Another striking thing about Ken Ofori-Atta’s response to Martin Amidu’s report is that, the Akufo-Addo government had in previous statements said that the Agyapa transaction started in 2018, but now in his response dated October 30, 2020, the Finance Minister said, that “the approval of Public Procurement Authority (PPA), dated 16 November 2017, MoF initiated the engagement of a transaction advisor for the Transaction using the restricted tendering procurement process”.
“MoF shortlisted eight (8) reputable international financial firms, with the requisite expertise in advisory, capital markets and investment banking transactions, especially in the mining and natural resources sectors, and in Africa. The firms were:1. JP Morgan, 2. Goldman Sachs, 3. IMARA Corporate Finance Limited (Pty) (Imara), 4. Citi Bank, 5. Morgan Stanley 6. Barclays Bank, Standard Chartered Bank, and, 8. Rothschild & Co.
According to the Finance Minister, “On the 22nd of December, 2017, MoF invited the firms directly by Request for Proposal (RFP), to tender for the transaction. Out of the eight shortlisted international firms, only two (2), being Imara and Morgan Stanley, responded by the deadline”.
He claimed that “the RFP had provided that collaborations with eligible Ghanaian firms with complementary capabilities would be favorably considered, and as such, Imara submitted its proposal with local partner Databank Financial Service Limited (Databank), and Morgan Stanley with BouldersAdvisors, as its local partner”.
He stated that “The stipulation in the RFP for bidding entities to collaborate with local firms or present a “consortium” to bid for contracts is not alien or offensive to procurement practice or the Procurement Act, adding “Following an evaluation on 12/01/18, of the Technical Proposals submitted by the two sets of firms, by a duly constituted evaluation panel, Imara/Databank (Imara TA) emerged the winners”.
Mr Amidu had noted in his corruption and anti-corruption risk assessment of the gold royalty agreement that the Transaction Advisor(s) involved in the controversial Agyapa deal, were susceptible to “nepotism, cronyism and favouritism”.
Additionally, he said in the 67-page report that, the deal lacked “probity, accountability and transparency” in some aspects.
“All the parties to the Mandate Agreement are deemed to have known the law but ignored it with impunity in signing and implementing the Mandate Agreement, which is null and void ab initio as violating the Public Financial Management Act, 2016 (Act 921) and the Public Procurement Authority Procurement Act, 2003 (Act 663) as amended.
“This conduct, which appears to have been in furtherance of the suspected bid-rigging, in the assessment of this Office, severely lowered the risk of corruption, and rendered them a low-risk enterprise in the Agyapa Royalties Transactions process and their approval.
“It is with these new lenses that the analysis of the risk of corruption, and anti-corruption assessments of the legality of the engagement of the other services providers and underwriters on the recommendations of the Transaction Advisors acting as the Ministry of Finance’s procurement entity tender committee contrary to Part VI of the Public Procurement Act, 2003 (Act 663) as amended, and Sections 7 and 25 of the Public Financial Management Act, 2016 (Act 921) afore-quoted were made”, portions of the report said.
It continued: “It was further analysed and assessed that the Transaction Advisor(s) nonetheless, went ahead to identify and recommend services providers and underwriters to the Ministry of Finance for appointment by the Republic of Ghana.
“The Ministry acted contrary to the Public Procurement Authority Act and the Public Financial Management Act in delegating the power to appoint services providers and/or other underwriters to the unlawfully appointed Transaction Advisor(s).
“The Transaction Advisor(s), whose selection and appointment by the Ministry of Finance did not measure up favourably to the analysis of the risk of corruption and anti-corruption assessment that meets the fundamentals of probity, transparency and accountability was/were potentially susceptible to undue influence, favouritism, cronyism, nepotism, and all forms of discrimination abhorred under the 1992 Constitution leading to the suspected packing of the services provider and underwriters position with entities not chosen on merit.”
Below is Ken Ofori-Atta’s letter to the President.
I refer to the Report dated 16TH October 2020, from the OSP to H.E. The President, on theAnalysis of Corruption and Anti-Corruption Assessment with regard to the Gold Royalties Monetisation transaction (the Transaction) on which I was copied.
2. I wish to respond to the Report as follows:
A. Cabinet and Parliamentary Approvals for the Transaction
1. Prior to initiating the Transaction, MoF ensured to undertake all the necessary pre-requisite action required by law, from the procurement of transaction advisors, to the submission of transactiondocuments to the AG and Parliament for their review, input and approval.
2. This Ministry believes that it has been transparent from the onset. Once Government hadindependently assessed the potential value of the Transaction to Ghana, and Cabinet had approvedthe policy to monetize future gold royalties to support current developmental projects, MoF included in the 2018 Budget and Economic Policy Statement, Government’s intention to leveragethe future wealth of Ghana’s gold resources to support current developmental needs.
B. Engagement of Transaction Advisor(s)
1. As outlined below, MoF initiated the process of procuring and engaging a transaction advisor toguide the implementation of the policy in accordance with the Public Procurement Act, 2003 (Act663), as amended by the Public Procurement Act, 2016 (Act 914).
2. With the approval of Public Procurement Authority (PPA), dated 16 November 2017, MoF initiated the engagement of a transaction advisor for the Transaction using the restricted tenderingprocurement process.
3. MoF shortlisted eight (8) reputable international financial firms, with the requisite expertise inadvisory, capital markets and investment banking transactions, especially in the mining and natural resources sectors, and in Africa. The firms were:
1. JP Morgan
2. Goldman Sachs
3. IMARA Corporate Finance Limited (Pty) (Imara)
4. Citi Bank
5. Morgan Stanley
6. Barclays Bank
Standard Chartered Bank, and
8. Rothschild & Co.
4. On the 22nd of December, 2017, MoF invited the firms directly by Request for Proposal (RFP),to tender for the transaction. Out of the eight shortlisted international firms, only two (2), being Imara and Morgan Stanley, responded by the deadline.
5. The RFP had provided that collaborations with eligible Ghanaian firms with complementarycapabilities would be favorably considered, and as such, Imara submitted its proposal with local partner Databank Financial Service Limited (Databank), and Morgan Stanley with Boulders
Advisors, as its local partner.
6. The stipulation in the RFP for bidding entities to collaborate with local firms or present a “consortium” to bid for contracts is not alien or offensive to procurement practice or theProcurement Act.
7. Following an evaluation on 12/01/18, of the Technical Proposals submitted by the two sets of firms, by a duly constituted evaluation panel, Imara/Databank (Imara TA) emerged the winners.
8. On 6/8/2018, on my instructions, Deputy Minister for Finance, Charles AduBoahen, signed aMandate Agreement with Imara TA to exclusively advise and assist Government on theTransaction, as Transaction Advisor (TA). Imara TA was required to oversee all necessarytransaction advice for the Transaction including engaging various professionals and/orconsultants to assist in the drafting of any agreements or Bills that needed to be passed, duediligence, and the setting up of any corporate entities or vehicles for the Transaction.
9. Since Imara bid for the transaction as a partnership, it was not in our place to provide separate feepayment streams for Imara and Databank in the Mandate Agreement. Additionally, Imara, being the principal of the partnership with Databank, and being a foreign entity, was entitled, as isnormal, to be paid for the services in foreign currency.
10. An examination of the various transactions engaged in by Imara after the execution of theMandate Agreement, shows a clear recognition that Imara is the principal partner in theconsortium appointed as TAs. In fact in the Mandate Agreement, the retainer fee of $15,000 permonth over the duration of the Agreement (initially set as 12 months), is payable to Imara.
11. In order for Imara TA to successfully provide the services for which it was engaged, it wasnecessary for Imara TA to be able to directly engage other external experts and qualified technicaland other advisors, to support the successful implementation of the Transaction. Per the MandateAgreement, all such engagements were to be with MoF approval, and as is the norm in suchtransactions, the sponsor of the transaction, MoF in this case, bears the cost of such engagements.
As such, advisors would be engaged as and when necessary, it would not have been feasible todetermine their fees upfront at the commencement of the transaction. All the roles were advisory in nature.
12. Imara engaged professionals and service providers namely White & Case, BELA and ALA toadvise the Transaction Advisors on legal issues. Imara further engaged Korn Ferry to advise theTransaction Advisors on HR and the recruitment of board members and senior management for ListCo. Buchanan Communications Limited to assist with Branding, Communications and PR, aswell as another firm, Ogier, to assist the Transaction Advisors with the incorporation of the List Coin Jersey.
13. This is consistent with other transactions of this nature. For example with Eurobond transactionsthe Lead Managers are responsible for procuring the services of other service providers andprofessional service firms including lawyers, auditors, brokers and logistics amongst others eventhough the cost for such services are ultimately paid for by GoG.
14. Incorporating in Jersey, Channel Islands was to facilitate the listing of List Co on the London Stock Exchange, one of the worlds most regulated markets and also in a tax efficient manner. Itis important to note that 70% of the value of non-UK resident companies listed on the LondonStock Exchange are incorporated in Jersey. UK listed companies incorporated in Jersey cannotbe shrouded in secrecy. A listing on the LSE ensures that List Co will be subject to the mostregulated stock market in the world with the highest levels of corporate governance and reportingrequirements and under the Financial Conduct Authority (FCA) of the UK and subject to thetransparency rules of the LSE ie Transparency Directive (2004/109/EC). Companies listed on theLSE are required to comply with the UK listing rules and disclosure guidance and transparencyrules.
15. Imara is a leading independent asset management and investment banking firm in sub-SaharanAfrica with a reputation for providing quality financial advice to governments in Africa going back over 60 years with extensive experience in the natural resources sector in Africa. The Imarateam has executed over 200 transactions in 12 African countries and has over $550MM in fundundermanagement. Mining sector transactions include project financing for the Geita Gold Mine in Tanzania owned by AngloGold Ashanti and the and the sale of the Govt of Zambia’s shares inZCCM. The IMara team is led by Mr Tom Gaffney, with over 30 years’ experience in providingtransaction advisory services primarily to the mining sector. Previously he worked for RobertFleming and CO and JP Morgan Chase. Tom has advised on deals such as the Secondary offer of Metall Mining for Anglo American and the merger of BHP and Billiton. He also advised theFrench government on the acquisition and divestiture of gold mining interests globally.
16. I co-founded Databank 30 years ago, which is now the leading investment bank in Ghana. Seventimes winner of the Best Securities Brokerage Company in Ghana, Databank has been actively involved in virtually every initial public offering of state enterprises under all governments in theFourth Republic. In 1994, Databank formerly advised the Rawlings administration during theliquidity crisis that threatened to cripple Ashanti Goldfields Company (now AngloGold Ashanti)and subsequent part sale of its interest in the Geita Mine in Tanzania. Databank had earlier servedas a broker in the IPO of Ashanti Goldfields on the GSE in 1994. In 2007, Databank was co-Manager and dealer for the first ever Eurobond by a Ghanaian government, amounting to $750m,
Databank was also co-Manager in the 2014 Eurobond issue. In 2020, Databank was again part ofthe team that issued the highest ever tenure in Africa for a sovereign bond, the $750m 41-yeareurobond of February 2020. On the asset management side, Databank manages over $1 billionfor some 500,000 Ghanaians and a third of all mutual funds in Ghana. I resigned as ExecutiveChair of Databank in August 2012 and resigned from all Databank Boards in Feb 2014.
17. MoF lawfully appointed Imara TA for the transaction, in compliance with Act 921, Act 663 (asamended), and the Constitution of Ghana. There was no intention by any party to disregard and violate the laws of Ghana. MoF acted at all times, in good faith throughout the transaction.
Deputy Minister’s authority to sign the Mandate Agreement
4 | Ministry of Finance: Professional, Ethical, Efficient, Responsive – Transforming Ghana Beyond Aid
1. Section 3 of Public Financial Management Act, 2016 (Act 921), empowers the Minister for
Finance to designate any other public officer, other than those named in the Section, to managepublic funds and discharge their responsibilities in accordance with the Act.
2. Section 5(1)(c) and (d) of Act 921, empower the Minister to execute on behalf of Government,agreements in relation to matters of a financial nature and give directives and instructions necessary for the implementation of the provisions of the Act. Subsequently, Section 5(2)empowers the Minister to delegate any of his responsibilities outlined in Section 5(1) to the ChiefDirector, or a senior public officer in the Ministry, not below the rank of a Director. The DeputyMinister is such a senior officer, and therefore, qualifies to execute agreements of a financialnature on behalf of the Ministry, if the Minister so delegates the responsibility to him. In addition,Article 79 of the Constitution provides for the appointment of Deputy Ministers to assist aMinister in the performance of his functions.
3. The authority to execute public contracts in Ghana is set out in section 20 of the State Propertyand Contracts Act, 1960 (C.A.6), which stipulates thus:”Power to contract The Minister responsible for a subject or department, any other personauthorized by the Minister, may execute a contract for and on behalf of the Republic on a matterfalling within the Minister’s portfolio”.
4. The duties of the Principal Spending Officer (PSO) of a public institution, (defined in Section 102of Act 921, to include the Chief Director), are enumerated in Section 7 of Act 921, and are tooversee and manage the proper use of public resources. This includes authorizing thecommitments of the institution within a ceiling set by the Minister.
5. Section 25(3) and (4) empower the PSO to commit the budget of a public entity, but not to afinancial liability, including contingent liability, unless authorized to do so under the Act, itsRegulations or directives issued thereunder. These functions are in in line with the functions of aChief Director enumerated in Section 20 of the Civil Service Act, 1993 (P.N.D.C.L. 327).
6. Commitment of the approved and duly appropriated funds of a public institution is managed inthe Ghana Integrated Financial Management Information System (GIFMIS), under the oversightof the Chief Director. In this regard, the Deputy Minister cannot authorize a payment to any entitybeyond what has been approved in GIFMIS under the direction and oversight of the Chief Directorand the Minister. Thus, any payments or commitments to be made under the Mandate Agreementsigned by the Deputy Minister could only lawfully be made in compliance with Act 921 and itsRegulations. MoF, as overseer of public financial management under Act 921, did not deviatefrom this.
Parliament approval for the Mandate Agreement pursuant to Article 181(5) of theConstitution
1. Article 181(5) of the Constitution requires an international business or economic transaction withGovernment to be approved by Parliament in order to be valid. In the case of Attorney General v. Balkan Energy , however, the Supreme Court emphasized that, an international business transaction within the meaning of Article 181(5), must by itself constitute an autonomouscommercial transaction in a nature, which pertains to impact on the wealth and resources ofGhana. Further, the Court held that article 181(5) ought to be construed purposively to includeonly “major” international business or economic transactions to which Ghana was a party, andnot transactions of ordinary commerce.
MoF did not seek parliamentary approval for the Mandate Agreement, because MoF considered the role of Imara TA to be advisory, with regards to the structuring and the drafting of agreementsfor the IPO of Agyapa on the London Stock Exchange, the main transaction whose agreementshave all been submitted to Parliament for approval, and not to have economic impact anticipatedby the Supreme Court in the Balkan Energy case. Similarly, MoF has not sought parliamentaryapproval for other international transaction advisory service agreements it has signed in the past,such as the engagement of international investment banks for Eurobond issuances, for example.
E. The Governing Board of the Minerals Income Investment Fund1. Based on advice from the TA, and the fact that mineral royalties are deemed to be a tax that goesin the Consolidated Fund, MoF initiated the drafting of a Bill that would establish an independent,wholly-owned Government public fund, as an entity to oversee the implementation of theTransaction. In about August 2018, Parliament passed the Minerals Income Investment Fund Act,2018 (Act 978).
2. Act 978 established the Minerals Income Investment Fund (MIIF) to hold and manage theRepublic’s equity interests in mining companies, and receive and manage mineral royalties dueto the Republic under a Mining Agreement. MIIF only receives minerals royalties due toGovernment, and not any of the royalties due to chiefs or others.
3. The Board of MIIF is constituted pursuant to Section 5 of Act 978, which provides statutory requirements for the make-up of the Board and states clearly that:
The governing body of the Fund is a Board consisting of
(a) a chairperson;
(b) the Chief Executive Officer of the Fund;
(c) a representative each from the following Ministries not below the rank of a Director:
(i) Ministry of Finance; and
(ii) Ministry of Lands and Natural Resources;
(d) three other persons nominated by the Minister;
(e) the Commissioner for Domestic Tax Revenue Division of the Ghana Revenue Authority; and
(f) a Deputy Governor of the Bank of Ghana nominated by the Governor of the Bank of Ghana
(g) At least three of the members of the Board shall be women.
The members of the Board shall be appointed by the President in accordance with article 70 of the Constitution.
4. Additionally, Section 6 mandates that a member of the Board must be a person who qualifies for appointment as a director of a company incorporated under the Companies Act, 1963 (Act 179) (See Section 172 of the Companies Act, 2019 (Act 992). A review of the Curricula Vitae of theBoard Members shows persons of apparent established professional and technical backgrounds who are well qualified and suitable for the position.
5. It is noteworthy that, because of the financial and investor nature of MIIF, both the Bank of Ghana and the Securities Exchange Commission are regulators of MIIF, and consequently, Board members must meet the strict “fit and proper” test required by both regulators.
6. There is no justifiable reason for concluding that the current members of the MIIF Board willjeopardize their apparent professional integrity and reputations to engage in corrupt practices motivated by partisan considerations.
Submitted for your consideration.
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