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Bankers, academics and the political opposition join voices on the controversial US$2.5bn bond. KAFUI GALE-ZOYIKU reports
While the Ministry of Finance was putting in strenuous efforts to explain and extricate itself from what many Ghanaians see as a scandalous affair, the NDC, was also explaining and asking so many question of the ministry. Whatever explanations given by government has failed to satisfy the opposition who has also been buoyed by recent activities of the NPP’s militia – Delta Forces and Invincible Forces – which have alienated many from the government.
Interestingly, the finance minister has kept quiet over the whole matter leaving the ministry to defend his actions or inactions. Surprisingly while the ‘scandal’ broke out at home, it was Vice President Alhaji Dr. Mahamad Bawumia who came to his defence in faraway Washington, USA, where the duo attended the International Monetary Fund, IMF, spring meeting.
But in defending the minister, the veep described the critics, especially the NDC parliamentary caucus as ignorant, a nomenclature the politicians did not take to kindly at all because as far as they are concerned Bawumia was looking down on them instead of answering the questions they asked and which needed clarification.
“It shows a lack of understanding. The minority has never understood this economy. It shows ignorance and I’m so sad this is coming from people who should know better,” Dr. Bawumia said of the Minority thereby inflaming passions higher.
“Maybe they should read a little…” he added.
As far as the NDC members of parliament are concerned, the stance of the ministry has reduced the bond issuance to a personality contest as it choose the path of attacking the former Deputy Finance Minister Hon. Cassiel Ato Forson, who is now the ranking member of the Finance Committee of Parliament for expressing their concerns.
As the NDC insisted, the issuance of the bond was shrouded in secrecy as the ‘…7-year and 15-year bond was not on the issuance calendar as claimed by the Ministry of Finance.’
They also pointed out that initial pricing guidelines of the Bond were issued around 5:37pm on ‘March 30, 2017 by e-mail at the time that domestic investors may have left their offices’ with the public announcement coming the following day via e-mail at approximately 9:09am on the 31st March, 2017, contrary to the statement by the Ministry of Finance that the announcement was made to the public on March, 30 2017. Clearly, the transaction was opened before the announcement was made to the public,’ the NDC pointed out in a statement signed by its leader in parliament, Haruna Iddrisu.
The issuance summary, the statement pointed out, was issued on March 31, 2017 at around 4:20pm by e-mail indicating that the bond transaction had been closed and announcement made to the public, contrary to the statement by the Ministry of Finance that the bond transaction was closed on April 3, 2017, a posture the NDC highly disputed.
“Indeed, April 3, 2017, was only a settlement date and not the closing date of the bond. It is for this reason that we believe that the bond transaction was not competitive. The timing of the opening and closing announcement was too short for any competitive bidding,’ the statement insisted.
The opposition then latched on to the issue of conflict of interest and interrogated why in defending the minister in its statement to the public, failed to deny the relational interest between Finance Minister, Ofori Atta and his good friend Trevor G. Trefgarne and his association with Franklin Templeton.
‘We urge the Ministry of Finance to come again and explain to the public the processes leading to the issuance of the bond and the conflict of interest situations arising out of the transaction,’ the statement pointed out.
This may not be the last Ghanaians have heard on this matter because as the largest opposition pointed out they will exploit all options available to them as a political party represented in parliament get satisfactory answers on the bond saga.
Former Deputy Finance Minister Kweku Ricketts-Hagan said the Minority MPs will petition the Commission on Human Rights and Administrative Justice (CHRAJ) if they do not get satisfactory answers on the bond saga.
“We will take it to parliament for investigation and if we don’t think we are getting a satisfactory answer we will take it to the right jurisdiction, which is CHRAJ,” said in a radio interview as they believe this bond is the riskiest issued by government.
It is not only the NDC that is raising eyebrows about the transaction, known consistent social critics and academics have also added their voices to the on-going saga.
Mr. Kwesi Pratt Jr., a fierce critic of every government that has ever been in power also raised the same issues about the seeming secrecy that surrounded the bond issuance. He also chided the NDC for calling for a parliamentary enquiry into this brewing and evolving saga.
As far as he is concerned, the apex court of the land, the Supreme Court, has years ago ruled that in cases of this nature, it is the Commission on Human Rights and Administrative Justice, CHRAJ, which has the final say on issues of conflict of interest and wonders why should the NDC opt for the parliamentary enquiry.
Pratt Jr., editor-in-chief of The Insight newspaper drew the party’s attention to the recent Joe Ghartey committee enquiry into an allegation of a ministerial nominee bribing or attempting to bribe NDC members of parliament during his vetting. The enquiry did not establish anything as it ended up asking an NDC member of parliament to apologise.
According to him, the NDC should not waste time in parliament where they are in the minority and therefore might not get a clear answer to their query.
Ninety-five per cent of the $2.25 billion domestic bond issued by the Government of Ghana recently is indebted to a non-resident creditor, Franklin Templeton.
However, the Minority, led by former Deputy Finance Minister Cassiel Ato Forson, said Mr. Trevor G. Trefgarne, a director at Franklin Templeton, is also a Director at Enterprise Group Limited, a company of which Ghana’s Finance Minister Mr. Ofori-Atta is co-founder, thus raising issues of transparency, conflict of interest, non-approval by parliament, and suspicion.
Head of the Finance Department at the University of Cape Coast, Dr. John Gatsi, also waded into the controversy and called for an investigation into the matter arguing that per the country’s Public Borrowing Guidelines and the fact that greater portion of the bond comes from private external source, “it [the $2.25 billion bond]is external borrowing” contrary to the explanation by the Ministry of Finance.
But Gatsi was not enthused with the ministry’s explanation which he described as “too simplistic” requesting that the Ministry takes time to especially “deal with the matter relating to conflict of interest” raised by the minority MPs.
“The Securities and Exchange Commission (SEC) should as a matter of public interest and in securing Ghana’s image and that of the Ministry of Finance investigate the matter broadly and with dispatch.”
“What is external borrowing” he further asked “in the context of the issuance of the 2.25 billion euro bond and Ghana’s Public Borrowing Guidelines,” reiterating that the said bond cannot be said to be a local one but rather external borrowing.
He went further to ask that the whole transaction should be subjected to the Public Borrowing Guidelines, which was prepared taking into consideration the legal requirement using the provisions of the 1992 Constitution, the Loans Act, the Public Procurement Act, Financial Administration Act and Risk Management principles.
Section 3.1.1 of the Public Borrowing Guidelines says an “external debt is defined on gross basis at any given point in time as disbursed and contractual liabilities of the central government to non-residents to repay principal, with or without interest, or to pay interest, with or without principal.
Basically, external debt is therefore the amount owed to creditors/lenders which are non-resident of the country. External borrowing sources are further segmented into four categories as; Multilateral, Bilateral, Commercial and Private”.
According to Gatsi, the bond is an external borrowing for which reason it “must comply with the approval requirements by cabinet and parliament as captured under Section 5.2 the Guidelines.
“Since the about 95% is indebted to non-resident creditor it is external borrowing. That external borrowing per the guideline has nothing to do with the currency in which it is issued,” he contended.
Following allegations of conflict of interest against the Finance Minister, Ken Ofori Atta, relating to the recent $2.25 billion bond issue, the
Chief Executive Officer of Dalex Finance, Ken Thompson also added his voice and called for more transparency about the bond saying the secrecy surrounding the bond issue is fueling the allegations of conflict of interest from the minority asking for further disclosures to be made to protect the “the integrity of the transaction.”
He also agreed with the minority that in times past when bonds are to be issued, there have been road shows, announcements or visits to Parliament “but this seems to have happened rather quickly.”
“So it is the secrecy to it that has brought all this attention so we need to be told more… We need full and better particulars and the secrecy is one of the things that has caused all these things to arise so I think we deserve some explanation of some sort,” he said.
Interestingly, the president of the Ghana Bankers Association Alhassan Andani has joined the controversy.
But speaking to a local radio station in Accra, Andani who doubles as the managing director of Stanbic Bank Ghana warned that notwithstanding the denials from the Ministry and the vice president, the allegation could hurt the country’s reputation which might lead to a future flop in bond flotation.
He said: “My caution is that once a nation decides to play from the international capital market, we have to be sure that the participants and the people we are going to tap for resources on those international capital market are very monstrous company.
“They are huge companies with wide international reputations and therefore we have to be extremely careful if we are making any comment that’s going to impugn wrongdoing to especially the people we will go to, to raise capital at any point in time.”
“And in truth it is a party-insensitive…. It is about country reputation so those of us who report on these transactions let’s make sure that we are well informed. Otherwise if we just touch these people they will give anything up for their reputation and therefore we should be very careful the kind of commentary we are running around,” he added.
For him, “this will not be the first time or the last time we will go into the international debt capital market [and] if we say something we are not just hurting Templeton…we are probably passing a message on to other serious players which I don’t want to say but suffice to say let’s be very careful.”
Source: The Corporate Guardian