Minority berates Finance Minister’s loan deal for private company

The Minority in Parliament has questioned the propriety and capacity of the Minister for Finance, Ken Ofori-Atta, to singlehandedly instruct the Agricultural Development Bank (ADB) to grant a GH¢10,459,500 loan facility to a private company.

At a press conference Tuesday morning headed by Minority Leader, Haruna Iddrisu, the group said a letter dated June 9, 2017 shows that Mr. Ofori-Atta has directed the bank to grant the said amount to MacDan Shipping Company Limited to enable it execute a supply contract awarded it by the Ghana Cocoa Board.

According to the Minority, the loan directive and the award of the Cocobod contract to MacDan at a time the two institutions did not have their boards in place were illegal as they were done without due processes.

The Minority consequently wants President Akufo-Addo to reverse those decisions and several others they say are in clear breach of laid down procedures.

“This adds to a growing list of conflict of interest situations in which the Finance Minister seems to be entangled- the USD 2.25 bond, as well as the appointment of close relatives and his business associates to key positions at the Finance Ministry, the Bank of Ghana and a number of other state institutions.”

The Minority also reiterated the need for the government to appoint Boards of Directors for all government entities to ensure best corporate governance practices in the country.

“We call on President Nana Akufo-Addo to direct a reversal of these illegal decisions and acts of malfeasance as well as take appropriate steps to restore good corporate governance practices in our state-owned enterprises, in this case ADB.

“Finally we wish to make clear to the President and his cousin the Finance Minister, that the resources of Ghana and it's public institutions do not exist for the betterment of their family and friends. Those resources belong to all Ghanaians hence the brazen distribution of same to family members, business associates and friends without recourse to due process must be curtailed.”

Read the Minority's statement below

MINORITY NDC IN PARLIAMENT
PRESS STATEMENT

MINISTER FOR FINANCE FLOUTING CORPORATE & BANKING RULES FOR POLITICAL INTERESTS

The Minority NDC in Parliament has received with shock details of yet another action taken by the Minister for Finance, Hon. Ken Ofori-Atta, which is not only a usurpation of the role of the Board of Directors of a listed company, the Agricultural Development Bank (ADB), but also a confirmation of the increasing cases of financial and procurement malfeasance being superintended by the Minister.

At a time the country, shareholders, customers and taxpayers of commercial banks, continue to wait for more information on Ghana Commercial Bank’s takeover of two banks, the Minority has in its possession a letter dated 9th June, 2017 with Reference No. PID/PEU/01/2017 and signed by Hon. Ofori-Atta giving approval for a loan of GH¢10,459,500 from the ADB to MacDan Shipping Company Limited.

The letter addressed to the Managing Director of the ADB with the heading, RE: APPROVAL OF CREDIT FACILITIES – MACDAN SHIPPING COMPANY LTD states in paragraph 2 that: “Approval is hereby granted you to disburse a credit facility in the sum of GH₵10,459,500.00 (Ten Million, Four Hundred and Fifty-Nine Thousand, and Five Hundred Ghana Cedis) to MacDan Shipping Company Ltd. This is to enable the company undertake its business operations and in particular to execute a supply contract awarded to it by the Ghana Cocobod.”

The Minister has by this action usurped the authority and functions of the Bank’s Board of Directors, which has curiously not been constituted despite several reminders and complains.

Furthermore, it clear that no due diligence was conducted by even the management of the bank before the Minister’s approval.

Best corporate governance practice requires that the Board of Directors of a Bank, which is vested with the responsibility of overseeing the management and governance of the Bank, approves or sanctions financial transactions of the Bank.

The rationale for such a provision is to ensure that due diligence is done before any financial commitment is made. This provision ensures that the financial risk and exposure of a Bank are reduced to the barest minimum if not completely eliminated, to ensure that shareholders are well protected.

The unduly delay in the constitution of the Boards of many critical institutions of the country could legitimately be construed as a deliberate attempt by the Akufo Addo Government to usurp the functions of the governing boards and take illegal and inappropriate decisions in favour of its cronies like the MacDan loan approval.

Does the Minister for Finance have the authority to assume the role of management and the Board of Directors of a listed company, in this case the Agricultural Development Bank, to approve a loan of such an amount?

We note that the ADB has Minority Shareholders, as is the case with the Ghana Commercial Bank which took over Capital and UT Banks (also a listed entity).

We consider the usurpation of the responsibility of the Board of Directors of a Listed Company to authorize the disbursement of a loan of such an amount without due diligence and recourse to the law as irregular and a clear violation of the law.

A number of Banks in Ghana are currently in distress due to non-performing loans and, in the case of some state banks, poor corporate governance practice.

One would have expected that the Minister for Finance would steer clear of interfering with the mandate of the Board of Directors of a Listed Company in order not to compromise corporate governance and increase fiscal risks.

PROCUREMENT ISSUES:

The contract for which authorization of the ADB loan was approved by the Minister for Finance, we are told, originated from the Ghana Cocoa Board.

Serious questions arise from what seems to be a clear abuse of the procurement process.

Was the contract awarded using the ‘Sole Sourcing’ procurement process? If the answer is "yes", then the law requires that approval be sought from the Public Procurement Authority (PPA). As at now, the PPA has no Board, so who granted approval for the use of the sole sourcing process to the Ghana Cocoa Board? Have the procurement laws of the nation been adhered to?

Was the contract awarded through a Competitive Tendering procurement process? If this was done, the value of the contract (GH¢10.46 million) would dictate that it goes through the Central Tender Review Board (CTRB). As at the time the contract was awarded, the CTRB was not in place. Using the Competitive Tendering procurement process without recourse to this critical government entity would also constitute a violation of the procurement laws of the nation.

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It seems clear that whatever process was used in awarding the contract could not have been in line with the procurement laws of the nation.

The selection of the beneficiary company in the award of this contract raises serious conflict of interest issues that must be addressed since it is the same MACDAN SHIPPING COMPANY that is alleged to have facilitated the smuggling into Ghana of some South African mercenaries by the then Opposition NPP to train their militant groups.

Given the key role played by the current Finance Minister in the campaign and related activities of the NPP, the hasty unilateral approval of this loan in breach of laid down laws and procedures raises serious questions.

It is clear that the decision to award this contract and loan to MacDan in clear breach of due process, was influenced by political considerations arising out of a desire to reward an entity that assisted the NPP in its activities while in opposition.

This adds to a growing list of conflict of interest situations in which the Finance Minister seems to be entangled- the USD 2.25 bond, as well as the appointment of close relatives and his business associates to key positions at the Finance Ministry, the Bank of Ghana and a number of other state institutions.

The nepotism and blatant partisanship that is gaining root in this administration is becoming increasingly worrying.

Conclusion

In conclusion, we reiterate the need to appoint Boards of Directors for all government entities to ensure best corporate governance practices in the country.

We call on President Nana Akufo-Addo to direct a reversal of these illegal decisions and acts of malfeasance as well as take appropriate steps to restore good corporate governance practices in our state-owned enterprises, in this case ADB.

Finally we wish to make clear to the President and his cousin the Finance Minister, that the resources of Ghana and it's public institutions do not exist for the betterment of their family and friends. Those resources belong to all Ghanaians hence the brazen distribution of same to family members, business associates and friends without recourse to due process must be curtailed.

Thank you.