Gold crisis exposes seam of suspicion

Ghana's president fears the political power of the boss of one of Africa's biggest mining firms

Chris McGreal in Accra


It is said that there are only two important institutions beyond the reach of the government of Ghana, and both have Ashanti in their names. President Jerry Rawlings's efforts to impose his candidate for monarch of the powerful Ashanti kingdom six months ago fell flat when the oligarchy crowned someone else. The president was said to be particularly angry with the head of the other Ashanti empire - the gold mining company - who threw his support behind the new monarch.


Now the struggle is on for the control of Ashanti Goldfields. A financial crisis has left the company, Ghana's biggest source of hard currency, vulnerable to a foreign takeover. The government has responded by trying to assert greater influence over a company which has steadfastly refused to play political ball.


The crisis has already cost the minister of mines his job, and provoked a strange rescue offer by a Saudi prince. It has also indirectly roped in the Queen, for the government is trying to use her visit to Ghana this week as an endorsement of President Rawlings's policies.


The crisis has baffled most Ghanaians, because it was brought on by a sharp increase in the gold price just weeks after Ashanti laid off 2,000 workers, ostensibly because gold prices were tumbling. As a precaution against gold falling further, the company more than a third of its future production at a guaranteed price. When gold shot up $75 an ounce to more than $325 (?198), those who had contracted to buy the future production made what is known as a margin call to Ashanti to deposit more than $300m. It did not have the cash.

As the company scrambled to win a grace period from its creditors, Lonmin, the mining rump of Tiny Rowland's Lonrho, launched a bid for control of Ashanti Goldfields. It already owns about a third of Ashanti, and the two companies had been discussing a merger for more than a year.


But as Ashanti faced its cash crunch, Lonmin saw an opportunity to snatch the prize.


The takeover bid is regarded with suspicion by the government, which is afraid that it will further undermine its influence over Ashanti Goldfields. Lonmin plans to merge the Ghanaian company with platinum mines in South Africa under a single company headquartered in London. Ashanti would be a subsidiary with limited control over its mines in Tanzania, Zimbabwe and other parts of Africa.


Perhaps the greatest mystery of the crisis has been the arrival of a Saudi prince, al-Waleed bin Talal bin Abdulaziz al-Saud. The prince, who has a stake in a big Ghanaian bank which owns nearly a fifth of Ashanti Goldfields, offered to help rescue the company from the margin call.


No one, including the government, is clear whether he was offering to put up the money for the margin call or trying to take over the company. But barely a word has been heard from him since his initial offer.

Personal hostility


Meanwhile, the government quietly agitated for a change of management at Ashanti. Its criticism focused on Sam Jonah, the chief executive and a protege of Mr Rowland. As one political analyst in Ghana observed, the company has long been too independent for the taste of Mr Rawlings's government. "To have your biggest company refusing to give money to the party is never popular in Africa. Ashanti has refused to let itself be bled by the government or used to improve its image," he said.


"Rawlings has an extreme dislike of Jonah. The government is now saying that, because of this crisis, maybe Jonah's legendary talents are limited. This is their chance to get rid of him and install a management more friendly to the government."


But the government's agitation goes beyond concern about the company. Mr Rawlings has made no secret of his hostility to Mr Jonah. They were once friends, but the selection of the Ashanti king appears to have confirmed the president's fear that Mr Jonah poses a political threat to Mr Rawlings's National Democratic Congress (NDC).


Mr Rawlings cannot stand again in next year's general election and the NDC has been struggling to find a credible candidate. It is expected to nominate Professor John Evans Atta Mills, Mr Rawlings having ruled his wife out of the race last week.

Prof Mills is neither charismatic nor in command of a particularly large personal following. But neither is the opposition New Patriotic Party's candidate, JA Kufour. Mr Jonah, on the other hand, is highly respected by Ghanaians for overseeing the growth of Ashanti Goldfields into one of the biggest mining companies on the continent. Not only is it big, it is reputedly well run.


Mr Jonah's confidants say he has no intention of standing for the presidency but, with the Ashanti king's selection fresh in political minds, he does not rule out his influencing what may prove to be a closely-fought race between two weak candidates.


The government's effort to undercut Mr Jonah has focused on Ashanti's talks with Lonmin. It says it was not kept fully informed, despite two cabinet ministers sitting on the company's board.


But James Anaman, Ashanti's corporate affairs manager, says the government has no cause for complaint. "This is not a government company," he said "We don't tell everything to them. As a company listed in New York and London we must be careful with the information we release.


The law prevents us from favouring one shareholder over others. We are scrupulous in seeing that all our shareholders are treated the same when it comes to information."

A fortnight ago Mr Rawlings dismissed the mines minister, Fred Ohene-Kena, after he tacitly endorsed the Lonmin bid in public. Mr Ohene-Kena was both a private member of Ashanti's board and the minister responsible for the industry.


The government owns 20% of Ashanti, and a "golden share" which allows it to veto major decisions. But it has to be careful about how it handles Mr Jonah. One of the reasons for Ashanti's credit problems is the perception that it is vulnerable to political interference. A successful bid to remove Mr Jonah could significantly undermine confidence in the company.


The government is keen to be seen as guarding the national interest. The president of Accra's chamber of mines, John Bentum-Williams, says Ghanaians are suspicious of greater foreign control. "Ashanti means a lot to them politically," he said. "They see it as a gift for all Ghanaians. They view gold mining as a God-given national heritage. Any government disposing of it as a national asset has a problem. Any change has to be structured in a manner that it isn't seen as selling it out."


The government is also keen to distract attention from the increasingly gloomy economic prospects before the elections. A fall in many commodity prices and a rise in the cost of oil have left their mark. The currency has lost nearly a fifth of its value this year.