General News of Wed, 12 Sep 201810

Edward Bawa petitions CHRAJ over BOST’s $3m Springfield payment

Edward Bawa22 Edward Bawa, Member of Parliament for the Bongo Constituency

Bongo MP Edward Bawa, has petitioned the Commission on Human Rights and Administrative Justice (CHRAJ) to investigate the Managing Director of the Bulk Oil Storage and Transportation Company (BOST), George Mensah Okley, and his deputy, Mr John Kojo Ankoful, for agreeing to unlawfully pay one of the state-owned firm’s clients, Springfield Energy, an additional $3 million as part-payment of a $9 million interest they claimed they lost on an oil consignment worth $11,104,143.2, which Springfield took to BOST for storage in 2013.

In the petition, the Minority lawmaker said: “The respondents knew that Springfield did not merit that but still went ahead to effect payment to them.

“In line with my duties as a citizen of this nation, and in light of the above, I have no option than to petition CHRAJ for an investigation into the matter, and the application of the necessary sanctions,” the petition read.

The MP is asking CHRAJ to “investigate all instances of alleged or suspected corruption and the misappropriation of public money by officials, and to take appropriate steps including reports to the Attorney General, and the Auditor-General resulting from such investigation.”



Background

Apart from paying the $11,104,143.2 principal to Springfield as ordered by an Accra High Court after the company sued BOST for the loss of the product while in storage, Springfield was also paid $4 million as part-payment of the $ 9 million interest it demanded on the principal.

However, external lawyers of BOST advised the company against paying the remaining $5 million, since in their view, Springfield did not deserve that amount.

Despite that legal advice, BOST, under the leadership of Mr Okley, went ahead to order a second part-payment in the sum of $3 million, for which, Mr Bawa, said the two officials must interdicted and investigated.

Below is an earlier statement issued by Mr Bawa on the matter:

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BOST AGAIN!

MR. GEORGE MENSAH OKLEY AND MR JOHN KOJO AKOFUL MUST BE MADE TO STEP ASIDE.

Over the years, the Bulk Oil Distribution Companies (BDCs) have had a relationship with the Bulk Oil Storage and Transportation Company (BOST), in which BDCs without tank farms, store their products at the tank farms of BOST, at a fee.

In some occasions, these products are not accounted for by BOST for various reasons.

This occasions what is referred to as product losses, a liability chargeable to BOST.

It is, therefore, with this background that: • Springfield Energy brought its product to BOST tank farm in 2013 October for storage.

Part of the product could not be accounted for. Springfield Energy took advantage of this loss and made a claim of $20,226,717.75, which was far more than the actual quantity lost. This was at a time when Mr. John Kojo Ankoful, now the head of Finance, was the Acting M.D. of BOST.

• Therefore, on the 18th November 2015, Springfield Energy filed a writ against BOST at an Accra High Court, claiming the following:

I. Recovery of $20, 226,717.75 for their lost products II. At the interest rate of 19% from October 2015 till the final payment of the principal; III. Loss of profit of $3,420,000.00

• When Mr. Awuah Darko assumed office as the M.D. of BOST, and having studied the documents on this case, challenged all the claims of Springfield and hence engaged Ernst and Young Audit Firm to audit the transaction to ascertain the actual quantity of products lost. Ernst and Young found out that the actual quantity of product lost was worth $11,104,143.2.

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Both BOST and Springfield agreed and accepted this finding.

• A summary judgement was awarded to Springfield for its claim by the Accra High Court.

At this point, Mr. Awuah Darko engaged external lawyers to fight the case.

BOST filed a stay of execution at the court to enable them appeal against the judgement.

The High Court granted it partially and ordered the payment of the cost of actual product lost as ascertained by the auditors and agreed by both parties.

This was $11,104,143.29. On the 20th December 2016, BOST, under Awuah Darko, paid the said principal amount of $11,104,143.29 through a Five-Year Term loan from Fidelity Bank.

The remaining unresolved issue of the 19% interest rate being claimed by Springfield on the principal is still pending at the High Court and Court of Appeal.

• Springfield in September 2017, under Mr. Alfred Obeng's tenure as M.D., approached BOST to have the matter settled out of court.

The Head of Finance, Mr. John Kojo Ankoful (under whose tenure as acting M.D. when this product loss was occasioned), and the Head of Legal Department, Mrs Harriet Amoah negotiated the settlement agreement of $9 million with Springfield.

This was supposed to be the interest on the principal ($11,104,143.29). Alfred Obeng ordered the payment of $4 million as part of the $9 million interest payment before the settlement agreement was even signed. This was on the 27th September 2017.

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It is important to note that this was without the presence or advice of the external lawyers who were handling the case in court.

• The Head of Legal Department, Mrs Harriet Amoah then sent the Settlement agreement to the external lawyers for their perusal and in a response via email, the external lawyers clearly advised against further payment to Springfield because Springfield, in the opinion of the lawyers, was not entitled to an amount of $9 million as interest payment.

For the purposes of clarity, the following were the exact words of the lawyers: "We have not revised our view that Springfield Energy is smartly trying to blow hot and cold at the same time.

“We, therefore, stand by our professional advice given earlier that BOST should not cave in to the blackmail of Springfield to hand them underserved millions of dollars from the public purse.

“The modus operandi of Springfield is not new. It has been so since the inception of this case. Let Springfield boldly go to the court, prove their case in accordance with the law and let the court deliver its judgement.

“BOST will then have the option of satisfying the judgement, or if it is unhappy, challenge the judgement higher up.

“That way, it would be seen that BOST stood its grounds and fought a good battle to protect the public purse. That way, nobody can accuse all those involved in the case of creating, looting and sharing. This is our position on the matter”.

• As a result of this advice, the settlement agreement was not executed – both parties did not sign and, therefore, no one can refer to any duly executed settlement agreement. BOST made it clear to Springfield that they cannot claim interest on their products and at the same time, loss of profit on the same product. In the opinion of BOST, the two are the same.

• Against the legal advice of BOST’s external lawyers, George Mensah Okley, the M.D. and John Kojo Ankoful, the head of Finance order the payment of an additional $3 million as interest payment.

BIG QUESTION: why would Mr. GEORGE MENSAH OKLEY, the New M.D. AND MR, JOHN KOJO ANKOFUL, the former acting M.D., and now the head of Finance, go ahead and pay $3 million against the advice of their legal counsel?

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To supply the required response to this question which is boggling the minds of many Ghanaians, I proposed the following:

1. The interdiction of the two officers

2. A full-scale investigation of the issues to ascertain the facts

3. A full audit of the systems at BOST to identify challenges of this nature, and propose solutions to these challenges to forestall future occurrences.

I hope and pray the New Minister of Energy will take keen interest in this matter and act appropriately.

EDWARD ABAMBIRE BAWA MP FOR BONGO

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