Drill ship saga: KT sues Gov’t, EOCO

Adansi Asokwa MP, KT Hammond, has sued the Republic of Ghana through the Attorney General (first Defendant) and the Economic and Organised Crime Office (EOCO) (Second Defendant), in an attempt to enforce his fundamental human rights, as far as moves to investigate him by the 2nd defendant is concerned, in relation to the sale of a drill ship in 2001.

The former deputy Energy Minister is to be probed over how he disbursed $900,000 being part of proceeds realised from the sale of the ship, which belonged to state oil firm, Ghana National Petroleum Corporation (GNPC), during the early days of the Kufuor administration.

A government White Paper on a report presented by the Judgment Debt Commission, which conducted an inquiry into the drill ship sale, as well as other judgment debt cases, directed EOCO to get Mr Hammond to account for the difference of $900,000, which went untraced following the sale of the ship for $24 million, to defray a $19.5-million debt owed Societe-Generale (SG) Bank, at the time.

$3.5 million of the total proceeds could not be traced, necessitating an appearance of Mr Hammond before the Judgment Debt Commission, which was set up by the President to dig into several judgment debts paid to individuals and institutions.

Mr Hammond’s lawyer, Mr Egbert Faibille Jr., has, however, filed a case at the human rights division of the High court of Justice, Accra, to safeguard his client’s human rights per the 1992 Constitution, as far as cases probed by a commission of inquiry are concerned.

Mr Hammond averred in the suit that no adverse finding was made against him by the Commission.

He added: “That even in relation to persons against whom adverse findings have been made by a commission of enquiry; they cannot be investigated and/or prosecuted thereafter in the light of Article 280(2) of the 1992 Constitution.”

Article 280(2) states that: “Where a commission of inquiry makes an adverse finding against any person, the report of the commission of inquiry shall, for the purpose of this Constitution, be deemed to be the judgement of the High Court; and accordingly, an appeal shall lie as of right from the finding of the commission to the Court of Appeal.”

Mr Hammond averred further: “That there exists very rational policy basis for the provision at Article 280(2) of the 1992 Constitution by way of the memorandum on the proposal for a constitution for Ghana, 1968 and the proposals of the Constitutional Commission for the establishment of a transitional (interim) national government for Ghana, 1978; both of which documents having been relied on by His Lordship Marful Sau J.A (sitting as an additional justice of the High Court) in the unreported ruling of the High Court in the case entitled: The Republic V Dr Charles Wereko-Brobbey and Anor (Suit No. ACC39/2010) delivered on the 10th day of August, 2010. Exhibited hereto and marked ‘Exhibit B’”

According to the White Paper, “K. T. Hammond sold the drill ship for US$24 million, used US$19.5 million to pay off the [judgment] debt, and gave US$1 million to the London solicitors, who had represented Ghana in the drill ship sale negotiations, Constant & Constant.”

It said Constant & Constant were to take “US$100,000 for their services and keep the balance of US$900,000.00 to cater for the future debts of GNPC to other creditors. He handed over the remaining US$3.5 million to Ghana’s High Commissioner in London.”

“Government further directs EOCO to investigate the mandate, authority and/or basis of Hon. K.T. Hammond’s disbursement of the US$900,000.00 to the Law Firm ‘Constant and Constant’ to cater for future debts of GNPC to other creditors.”

Below is the report on the drill ship as captured by the White Paper:

The GNPC entered into a contract involving derivatives or hedging with the SG, a French commodities bank, in 1996 under the NDC Government.

ii. A dispute arose, and SG sued GNPC in a London High Court over payments that SG alleged GNPC owed it.

iii. GNPC denied the claim and counter-claimed against SG through its external lawyers, Bindman & Partners, for negligent advice given by SG.

iv. Subtle attempts by the two parties to settle the matter out of court came to no avail.

v. In 2001, the NPP Government which had replaced the NDC Government wrote to dispense with the services of Bindman & Partners, the GNPC’s external lawyers in the case, and asked Ghana’s Attorney-General, Hon. Nana Akuffo Addo, to assume responsibility for the conduct of the case.

vi. The Ghana Government, through the Deputy Minister of Energy, Hon. K. T. Hammond, resumed the settlement talks with SG, but the government neither appeared to defend SG’s action in the London High Court nor informed the court about the out-of-court settlement attempts.

vii. The London High Court entered a default judgment against the GNPC for US$47 million in June 2001.

viii. At the time of the default judgment, SG had accepted a final out-of-court settlement of US$14 million from the Ghana government.

ix. Hon. K. T. Hammond was sent by President J. A. Kufuor to Paris and London to amicably resolve the US$47 million default judgment debt with SG by convincing the Company to accept the US$14 million out-of-court settlement instead of insisting on the US$47 million judgment debt.

According to the Commission, Hon. K.T. Hammond “who was in the thick of affairs”, had this to say: “My Lord, I also think partly because after ten (10) years’ practice at the Bar of England and Wales, my Minister felt confident that I could settle the judgment that had been entered; ‘you go and plead your case with those you owe and see what they could do about it’, he said. My Lord, so I left. I went to Paris back to London and back to Paris; to and fro”.

The result of Hon. K. T. Hammond’s efforts was a compromise settlement of US$19.5 million.

x. The Government of Ghana then decided to sell one of GNPC’s marine assets, the Drillship ‘Discoverer 511’, a going, profit-making concern, to pay off the compromise settlement amount of US$19.5 million.

xi. The Acting Managing Director of GNPC, Dr. Ofori Quaah, was made to sign a Power of Attorney for and on behalf of GNPC (in the Office of the AttorneyGeneral) empowering Hon. K. T. Hammond to sell the Drillship ‘Discoverer 511’ while in London and use the proceeds to pay off the debt owed by GNPC.

xii. Hon. K. T. Hammond sold the Drillship for US$24 million, used US$19.5 million to pay off the debt, and gave US$1 million to the London solicitors who had represented Ghana in the Drillship sale negotiations, Constant & Constant, out of which they were to take US$100,000 for their services and keep the balance of US$900,000.00 to cater for the future debts of GNPC to other creditors. He handed over the remaining US$3.5 million to Ghana’s High Commissioner in London.

14 xiii. Ghana’s High Commissioner in London, Ambassador Chris Kpodo, handed over the cheque for the amount to the staff of the Treasury Office of the Controller and Accountant-General’s Office in London who used it to open a special account at the Ghana International Bank in London.

xiv. This was how money belonging to the Corporation which was alleged to be in a huge financial distress was utilized on the blind side of the management and board of the corporation, contrary to Act 64 that established the corporation.

On the judgment debt and the sale of the Drillship transactions, the Commission made the following findings and observations:

i. The Attorney-General, Hon. Nana Akuffo Addo, failed to make any appearance in the London High Court after dispensing with the GNPC’s external lawyers, Bindman & Partners.

ii. ii. At the time this happened, the Government of Ghana, represented by the Ministry of Energy, had wrongfully taken over the running of the affairs of the GNPC.

iii. The GNPC had all along been contesting SG’s claims since 1999 and had put up a strong defence and a counter-claim.

iv. The Acting Managing Director of the GNPC, Dr. Ofori Quaah, was not given room to operate and was coerced into signing a Power of Attorney prepared at the Attorney-General’s Office to empower Hon. K. T. Hammond to sell the GNPC’s marine asset, the Drillship, ‘Discoverer 511’.

The Attorney-General, Hon. Nana Akuffo Addo, failed to bring to the attention of the London High Court, the settlement attempts. It was this failure that led to the entry of the US$47 million default judgment against GNPC.

It was this failure that made it possible for SG to demand more than the US$14 million dollars that they had earlier on agreed to accept as final settlement of the suit.

The payment of US$19.5m instead of US$14 million earlier on agreed constituted financial loss to the Corporation and Ghana.

v. Governmental interference in the running of the affairs of the GNPC accounted to a large extent for that financial loss.

15 On how the balance of US$3.5 million was utilized, the Commission made the following findings and observations:

i. The cheque for the amount was paid into an account that was opened with the Ghana International Bank in London by the Treasury Office of the Controller and Accountant-General’s Department in London.

ii. US$1.657 million out of the amount was used to defray alleged debts owed by the GNPC.

iii. US$169,548.25 was used to pay monthly salaries of staff not properly described in October 2003 and March 2004.

iv. US$141,361.29 was transferred into a different account with the same Bank. The utilization of the transferred money remains a mystery to date.

v. The outstanding balance of US$1,532,090.46 is unaccounted for to date.

vi. The two accounts were closed in December 2005.

vii. There was no justification for paying the amount of US$3.5 million into a new account because as the proceeds were from the sale of a GNPC asset, it belonged to the GNPC and should have been paid into GNPC’s account.

viii. Records on the sale of the Drillship ‘Discoverer 511’ disappeared from the offices of the Attorney-General’s Department and the Ministry of Energy only for Hon. K. T. Hammond to present to the Commission a sealed envelope which he claimed contained the alleged relevant documents, his explanation being that a ‘Good Samaritan’ who he never identified left it in his pigeon hole in Parliament House.

ix. The Commission’s conclusion is that: “The totality of these developments raises strong suspicions that the whole transaction involving the sale of the Drillship ‘Discoverer 511’ is shrouded in mystery”. In the light of the established facts and the findings and observations made by the Commission, Government accepts the following recommendations of the Commission:

i. The Minister of Finance and officials of the Controller and Accountant-General’s Department at the Ghana High Commission in London at the time in question, (i.e. between 2001 and 2006), should be made to:

• render proper accounts on how the US$3.5 million that was lodged in the London Bank was disbursed since the money belonged to the GNPC;

• explain what happened to the US$141,361.29 that was transferred into the second account that was also opened at the Ghana International Bank, London;

• explain what happened to the balance of US$1,532,090.46 that was left in the first account that was opened at the Ghana International Bank, London;

• explain how the Law Firm which assisted in the sale negotiations, ‘Constant and Constant’, disbursed the US$900,000.00 that was paid into an escrow account in London supposed to ‘cater for the future debts of GNPC to other creditors’.

ii. The Executive arm of Government should be slow in interfering in the running of State institutions that have independent legal capacities as such interferences do not augur well for good governance and disable the State from holding such institutions accountable for their stewardship.

Government directs the Economic and Organised Crime Office to undertake the assignment in (i) above. Government further directs EOCO to investigate the mandate, authority and/or basis of Hon. K.T. Hammond’s disbursement of the US$900,000.00 to the Law Firm ‘Constant and Constant’ to cater for future debts of GNPC to other creditors.