Controversy: DICs apply for ‘Expression of Interest’ to settle judgement debt
Despite the controversy surrounding the Ministry of Trade and Industry’s (MOTI’s) request for all the five Destination Inspection Companies (DICs) to submit offers for the settlement of a GH¢197 million judgement debt to Bandswitch Ghana Limited, it has emerged that the companies have submitted Expressions of Interest for consideration.
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The DICs are: Gateway Services Limited; Ghana Link; BIVAC, WEBB Fontaine and Inspection and Control Services.
The Trade and Industry Minister, Ekwow Spio-Garbrah (Dr), told the Daily Graphic yesterday that the “Expression of Interest” offers by the five companies had been submitted to the Ministry of Finance for consideration and action.
He explained that the Ministry of Finance was the institution that pays judgement debts hence the need for MOTI to refer the offers to it before taking action.
MOTI reacts
Meanwhile, the Ministry of Trade and Industry, in a statement, has explained that it decided to ask the DICs to help settle the debt to avoid a double payment to Bandswitch.
It said until recently, Bandswitch sought to have the government pay the entire judgement debt over a five-year period and also demanded an award of 0.35 per cent of the FOB values of all Ghana’s imports over five years.
“This supplementary award of 0.35 per cent of FOB imports over five years, were it to be accepted by the Government of Ghana, would imply a contract to Bandswitch that would be worth more than GH¢1 billion over five years. This additional over-payment to Bandswitch of more than GH¢1 billion would be over and above the full settlement by the Government of Ghana of the GH¢197 million debt, whether paid in one lump sum or over a number of years,” it said.
According to the ministry, it was that 0.35 per cent of Ghana's import trade bill that Bandswitch would wish to be awarded that the Ministry of Trade “has invited DICs interested in paying off the Bandswitch debt to present expressions of interest to prevent the people of Ghana from being milked an extra GH¢1 billion for no work done”.
It said the MOTI's open and transparent invitation on official Government of Ghana letterhead to five destination inspection companies to express interest in pre-paying the GH¢197 million was motivated by the national interest in saving the country more than GH¢1 billion in overpayments that Bandswitch was seeking from the people of Ghana.
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No more DICs
The government will not renew its contract with Destination Inspection Companies (DICs) when the existing agreement expires on August 31, 2015.
In a June 15, 2015 letter addressed to the DICs, the Minister of Trade and Industry expressed the government’s appreciation “for the services rendered to this nation by your esteemed company”.
But Mr Spio-Garbrah explained that the June 15, 2015 letter informing the DICs about the expiration of the existing agreement was a formality.
He said it should, therefore, not be misconstrued that the notification had anything to do with the request for the offers to deal with the Bandswitch judgement debt.
$35 million demand
The decision of the government not to renew its contract with the DICs came 12 days after the sector minister had written to the companies informing them that “any one of them who can advance Government of Ghana an amount of US $35 million would be awarded a contract of 0.35 per cent of Free on Board (FOB) values on all Ghana’s imports for at least a period of five years to enable that company to recover its investments”.
The June 3, 2015 letter had given the DICs up to 12 noon of June 8, 2015 to “respond with an Expression of Interest”, indicating “how soon it would make the $35 million available plus any other terms including the above”.
It explained that for the 0.35 per cent FOB payment, any company that responded to the request of the ministry “will do relevant trade facilitation within the context of the National Single Window and work with West Blue on aspects of that exercise. West Blue will be paid separately.”
Bandswitch judgement debt
The June 3, 2015 letter had explained to the DICs that the amount being sought from them was to help defray a GH¢197 million judgement debt secured against the Government of Ghana by Bandswitch Ghana Limited.
The Government of Ghana was dragged to the Permanent Court of Arbitration in The Hague by Bandswitch Ghana Limited after its contracted was abrogated.
The court subsequently awarded damages in excess of GH¢197 million to Bandswitch Ghana, which had in 2007 signed a contract with the Government of Ghana to provide, among other services, an “electronic data interchange system to enable it to secure data interchange between Customs and allied electronic clearance system (s) and if required, with other stakeholders; issuance of authenticated copies of trade documents and verification of such issued documents and audit and management of manifest”.
Bad move
Industry players including some of the DICs told the Daily Graphic last Friday that whereas they agreed that the contract with the DICs would end on August 31, 2015, the minister’s letter asking the DICs to pay $35 million to defray the Bandswitch debt was not right.
According to them, if the government needed the services of the DICs, it could have renegotiated the renewal of the existing contract in a way that would enable it to defray the judgement debt.
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However, for the government to demand that $35 million from the DICs be awarded contracts was bad.
Breach of WTO agreements
Some senior officials at the Ghana Revenue Authority (GRA) and the MOTI who spoke with the Daily Graphic on condition of anonymity, said the use of the DICs was a breach of the World Trade Organisation (WTO) agreement which Ghana had signed.
They explained that Ghana was given a leeway to use the DICs to help build the capacity of government officials, especially Customs and others at the ports, to take over the valuation of imports and exports.
They also said it was in line with that that the government signed an agreement with Bandswitch Ghana Limited in 2007 to help build the capacity of the officials and institutions.
According to them, that contract with Bandswitch was unilaterally abrogated in 2009 hence the decision of the company to take Ghana to the Court of Permanent Arbitration.
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They said the demand for the DICs to help pay off the judgement debt in return for the award of contracts was a breach of WTO’s agreement.
They argued that if the government did not have the money to pay off Bandswitch, the best way was for the government to allow that company to continue its work to help defray the cost and also use it to build the capacities of the government officials and state institutions.
However, they said, the decision to use the DICs through the backdoor only went to prove that there were some individuals who did not want Bandswitch to work at all.
“Such persons tried to justify their action by asking the DICs to pay off the debt and continue to work. I believe it is the same group of people who abrogated the contract,” one top official said.
Writer’s email: albert.salia@graphic.com.gh
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