Korean Firm Hoodwink Govt Into Bogus $3.5m Debt

* How Korean firm used fictitious bill of laden to win $3.5 million case against Ghana

A KOREAN company has hoodwinked the government of Ghana into a $3.5 million debt, The Chronicle has learned.

The scam worked like this: The Koreans, who operated under a company called Kolon UK Ltd in September 2001, submitted false documents to an arbitrator in London as evidence against Ghana and got a ruling in their favor.

The government of Ghana, represented in the arbitration by a former Solicitor General, Justice E. A. Addo, allegedly failed to scrutinize the documents, particularly the bills of laden, which were one major basis for the ruling against Ghana.

The documents, tendered as evidence by Kolon and its principal witness, 57-year-old Patrick Adamah, a Ghanaian and former employee of the company in charge of Africa trade, were accepted as bona fide.

But The Chronicle’s investigations and critical research of some of the documents in relation to the Kolon affair reveal that there is more to it than meets the eye.

The bill of laden and other documents tendered during the arbitration hearing in London by Kolon UK Ltd, and Mr. Adamah, must be thoroughly examined. It also appeared that one person, instead of at least two or more, allegedly nominated by Kolon, chaired the proceedings.

The outcome of this slackness is that chairman Michael Tselentis, noted for his bias toward blacks, ruled that the government of Ghana owed Kolon about $3.5 million, even though there is overwhelming evidence that there has never been any credible contract or direct business between Government of Ghana and Kolon UK Ltd, except through Gbewaa Civil Engineers, the local representative of the Korean firm.

The failure was costly. The Koreans sought arbitration as a means of settling the differences between them and the Ministry of Works and Housing and Feeder Roads under the Ministry of Roads and Transport over spare parts the company supplied to the two state institutions through its local representative, Gbewaa Civil Engineers.

When The Chronicle contacted Adamah, he initially refused to go into the details of the issues.

“I don’t want to comment on the issues because it can be prejudiced,” he said.

As to whether his evidence was credible against Ghana he said he did nothing wrong and that he only wanted the truth to prevail. He also maintained that Gbewaa was never a local representative of Kolon but a rather the Managing Director of the Gbewaa was a messenger to the company in the spare parts deal.

Adamah did not also agree that Kolon’s decision to marginalize Gbewaa’s MD as the local representative in the spare parts deal was an attempt to avoid a move by Gbewaa’s sister company, Mensul Ltd, to attach the company’s property to defray a compensation for unwholesome rice Kolon sold to Mensul Ltd.

The genesis of the Kolon affair was in 1996 when the Ministry of Works and Housing and Ministry of Roads and Transport, Department of Feeder Roads, were in search for spare parts for graders and Baukema excavators.

The Chronicle gathered that around that time Mr. Kasule Yakubu, the Managing Director of Gbewaa Civil Engineers, whose company used to service the ministries’ earth moving equipment, came up with the idea that he could arrange with his principals, Kolon UK Ltd, now Kolon International Corporation (KIC) to supply the spare parts.

The ministry therefore submitted a list of the parts it needed to Gbewaa, for consideration. A few days later Gbewaa tendered a draft contract on behalf of its principals (Kolon UK Ltd) to the ministries for consideration.

After weeks of scrutiny the ministries agreed to the terms of the contract, including the 180-days credit, and signed their portion of the contract and delivered it to the local representative of Kolon.

The hope was that Kolon was going to counter-sign its portion and return the ministry’s copies. But six months after, nothing was heard from Kolon, until the seventh month when Mr. Yakubu, the local representative of the company, got back to the ministry to tell them that Kolon could not sign its portion as expected because the company was seeking clearance or permission from its headquarters in South Korea.

The Chronicle gathered that after obtaining the permission from its head office, Kolon, through its local representative, asked the ministry to renew the contract since the old one had expired.

At the time of these new developments, The Chronicle learnt, the ministry had no budgetary allocation for the spare parts.

The position of the ministry was that the allocations made to cater for the aborted contract had been used for the purchase of the spare parts for the service of the equipment.

This paper gathered that Kolon’s representative in order to get the ministry into business, repackaged the contract and agreed to ship the goods into the country and sell it on credit instead.

Also the company was prepared to take cedis as payment, unlike the initial contract that stipulated that payment be effected in dollars.

When the Feeder Roads and its ministry found the new suggestion attractive, they agreed to patronize the goods, worth $1,593,291.62, if they arrived.

The parts were therefore supplied to the Feeder Roads and Works and Housing Ministry with invoices bearing the name of Gbewaa, the representatives of Kolon UK Ltd.

The Chronicle investigations revealed that after the receipt of the spare parts, Feeder Roads went ahead and processed some payment in the name of Gbewaa.

The arrangement for payment through Gbewaa never became an issue or attracted any protestation from anybody, particularly Kolon, because Kolon never had any direct dealing with the two ministries except its local representatives.

As a result, Feeder Roads even paid about half of the money to Gbewaa.

The Chronicle has in its procession a Kolon letter asking Gbewaa to handle some businesses for them in Ghana as the local representative.

It can be reported that Kolon’s decision to part ways with Gbewaa was to avoid the payment of the compensation for the unwholesome rice Kolon sold to Mensul Ltd.

Stay tuned for ‘The saga of the unwholesome rice’ that led to the breaking of the marriage between Gbewaa and Kolon in our next issue.