GT–Vodafone deal: Was DIC sidelined?

By: Justice Lee Adoboe

It has been suggested that, had due process been followed, with the appropriate state agencies responsible for divestiture allowed to implement the Ghana Telecom(GT )sale agenda, Ghana Government would have received a far better deal than what was received from Vodafone.

According to reports, Telecom South Africa had offered $947million for 66.67% of the original Ghana Telecom shares after giving the company an Enterprise Value (EV) of $1.635 billion.

As to why government gave an enlarged GT for a relatively lower sum of $ 900 million to Vodafone who had given it an Enterprise Value of $1.286 billion is still a source of worry to many Ghanaians.

Assets such as the National Fiber Optic Backbone which was being constructed with a $ 30 million Chinese Exim Bank Loan and the Volta-Com fiber assets were added to the original GT assets, which were priced by South African Telekom for $1.635billion, with Vodafone pricing the enlarged GT at $1.286 billion. Enquiries by the Financial Intelligence (FI) have pointed to a possible circumvention of due process in the whole deal, raising questions of the legality of the Sales and Purchase Agreement (SPA) between Government of Ghana and Vodafone.

One of such acts of illegality that threaten the very basis of the Sale and Purchase Agreement between Government of Ghana (GoG) and Vodafone is the circumvention of the Divestiture laws of Ghana, as government is reported to have wholly ignored the Divestiture Implementation Committee (DIC), which is mandated by law (PNDC L 326) to carry out the divestiture of State Owned Enterprises (SOEs)on behalf of government.

However, checks from the DIC revealed to the FI that the committee was wholly ignored in the whole process leading to the sale of 70% shares of Ghana Telecom to Vodafone in August 2008. This therefore, leaves the deal open to legal tussles, with far reaching consequences for the two parties.

MP for Asikuma Odoben Brakwa, Hon. P.C Appiah Ofori has told the FI that when he raised this issue on the floor of Parliament, it was brushed aside. He insisted that the former president and a few of his officials dealt directly with Vodafone officials, leaving no room for the mandated state organs to act. “Issues of such importance must not be allowed to be decided to suit the parochial interests of a few people,” Hon. Ofori stated.

Former Minister of State at the Ministry of Finance and Economic Planning, Anthony Akoto Osei who spoke to this paper from outside the country noted that, the former Attorney General and Minister of Justice, Joe Ghartey should be in the best position to answer the legal issues.

“I am not sure the last time the DIC participated directly in any divestiture in this country,” Dr. Akoto Osei told this paper, adding that there have been many such divestitures without the participation of the DIC.

Efforts however to get Hon. Joe Ghartey proved futile and his deputy, Hon. Osei Kwame Prempeh also failed to answer his phone when this paper called. The law establishing the DIC specifically mandates the body to plan, monitor, coordinate and evaluate all divestitures. It is also to arrange for the effective communication of government policies and objectives for any divestiture.

This law which was enacted in 1993 gave an unambiguous mandate to the DIC to implement and execute all government policies in respect of divestiture programmes.

The DIC is also to ensure consistency in procedures for divestiture, in particular with regard to valuation, invitation for bids, negotiation of sales and settlement of accounts.

According to the mandate, when government of Ghana declares its intentions to diversify itself of some or all of its shares in a State Owned Enterprise (SOE), the DIC carries out the whole implementation, by placing announcements in the media, inviting bids from all interested persons/institutions.

After this is done, it receives the tender offers for short listing. The committee’s council which meets periodically then goes through the short listed applications and arrives at a fair conclusion as to which of the offers is likely to satisfy the purposes of the divestiture.

The DIC, membership of which includes technocrats, legal experts, and ministers of state then prepares the documents for the divestiture, which it forwards to the Executive for study and approval.

The executive, after approving the deal then forwards this document to the legislature for debate and approval, Parliament scrutinises the document and approves of it, but if Parliament discovers any problem in the agreement, it then makes recommendations for amendment before ratifying it.