Kufuor’s Waterville/Shanghai Scandal

and the € 25million payment to

Waterville…….. The Full facts

Contrary to the position articulated by the former chief of staff, Mr

Kwadwo Mpiani, the managing editor of the New Crusading Guide newspaper, Mr

Kweku Baako, and other NPP Propagandists that Waterville fraudulently made

fresh claims after receiving payment on its abrogated contract with the

government, documents in possession of the _True Statesman,_ shows that the

Euros 25million paid to Waterville is legitimate and legal.

Various correspondences between Waterville Holding (BVT) Ltd, Micheletti

and CONSAR LTD, and the former chief of staff, Kwadwo Mpianin indicate that

Waterville has been consistent with its figures for the claims made, and

the claims was within its legal right.

Painstaking investigations conducted by the _True Statesman_ revealed

that, in January, 2005, the Government of Ghana put out international

invitations to bid for the construction and rehabilitation of a number of

projects, namely; Stadia, Hospitals, and Hostels/Accommodation facilities

for football teams and their supporters. The Stadia and the accompanying

facilities were in preparation for Cup of African Nations, 2008 (CAN.

2008).

Seven pre-qualified companies including Waterville (BVI) Holdings

submitted technical and financial proposals. A team of three persons were

appointed by the Ministry of Finance for evaluation of the financial

offers. The team recommended the finance proposal submitted by the

Waterville Consortium comprising of M. Power Pak, Austro Invest and Vamed

Engineering.

Vamed Engineering on 1st July, 2005 assigned its rights as part of the

Waterville Consortium to the contract for the construction of the stadia to

Waterville Holdings (BVT) Ltd.

Waterville was subsequently awarded a formal contract for the projects

and the contracts were executed on 26th April 2006. The contracts covered

the following projects:

Ohene Djan Sports Stadium €36,9 56,29 5.69

Baba Yara Sports Stadium €34,459,428.20

EI-Wak Sports Stadium €2,969,302.00

Prior to the formal award and signing of the contractual documents, the

sites were

formally handed over to Waterville on 6th February 2006 by a letter from

the Ministry

of Education and Sports. Works involving demolition, excavation and

clearing

commenced on site well before the formal signing of contracts given the

limited time

available for the completion of projects for the hosting of the CAN 2008

tournament.

In addition to the works Waterville had been mandated by the Ministry of

Finance

And Economic Planning to source finance for the rehabilitation of the

stadia, 12 Youth Centres, 6 District and Regional Hospitals, and Armed

Forces Housing Project. Waterville was able to source the funding and was

going to execute the various projects under Finance, Design Construct

basis.

Waterville indeed found the finance with a grant element of which was

accepted by the Ministry of Finance and Economic Planning. As a result of

the termination of the Stadia contracts these Projects could not take off.

The Central Tender Review Board (CTRB) on 5th August, 2005 formally issued

a concurrent approval for the award of the contract for the construction

of the above

stadia to Waterville Holdings (BVT) Ltd.

At this stage, it is clear Waterville, through an open, fair and

international bidding process, and in compliance with Ghana’s public

procurement law, won the contract to construct two (2) new stadia,

rehabilitate two (2) more. And subsequently, the construction of a third

stadium was added to the scope.

In spite of Waterville being given approval for the award of all five

stadia, the Kufuor government decided to award two out of the five stadia

already awarded to Waterville to Shanghai Construction (Group) General

Corporation. The procurement process for the two (2) stadia awarded to

Shanghai Construction (Group) General Corporation was not done in

compliance with Ghana’s Public Procurement Law.

The Minister of Education and Sports on 22nd August, 2005 wrote to

Waterville to

terminate the contract for the construction of the three stadia.

Waterville challenged

the validity of the termination of these contracts. On August 1, 2006,

the Attorney-

General confirmed the termination of the contracts.

We also found out that, Kufuor regime later admitted that Waterville was

entitled to some monies for work done on the site before the 1st day of

August 2006. It was as a result of this that Government tasked the

Consultants and the committee including the Chief of Staff, Kwadwo Mpiani

to value the work done by Waterville.

As a consequence of expenditure already made by Waterville at the time

of the government’s cancellation of the contract, Waterville made an

immediate claim for reimbursement of the amounts it had already spent

towards its execution of the contract. It has to be noted that the

Government’s Consultant verified and certified the value of works

provided by Waterville to be a total of Euros 21,569,946.71.

Waterville sought full compensation for the work it did and the losses it

incurred as a result of the Kufuor government’s actions in cancelling the

contract awarded to it to construct and renovate five stadia.

The Consultants certified that an amount of ??21,569,946.71 due to

Waterville for work done before the termination of the contracts. However,

from this amount must be deducted certain payments which had already been

paid to Waterville. Thus what was owed to Waterville and still outstanding

for the works executed was ??9,634,240.16.

It also emerged through our investigations that due to time constrain and

the fact that subcontractors were in financial crisis as a result of the

termination of Waterville contract, Waterville instructed _Government _to

_avoid _the works been jeopardize, to pay some amount as advance payment to

subcontractors on behalf of Waterville and subsequently deducted from

Waterville certificates.

_Government _partially accepted such instruction only with the intention

to allow the

works to continue and then they entered into a new agreement with the

subcontractors. The amount paid as "on account" they deducted from the

new

contract value signed with the subcontractors.

The work done value was calculated_ _based on percentage of works _value

_certified by the _Government _consultant. The _values _are the following:

_a. _Ohene Djan Euro _3,390,728,77 _

b. EI-Wak Euro 909,944,74

_c. _Saba Yara Euro _4,679,848,76 _

The total amount of Euro 8,980,522,28 were therefore declared to be

deducted also

from Waterville certificates.

The two amounts for:

a. Drawing

b. Subcontractors Works

TOTALLING to

Euro 2,955,184,28 amount received by Waterville

Euro 8,980,522,28 amount _received _by subcontractors

Euro _11,935J06,56 _amount so deducted from

Waterville certificate Our investigations further revealed that

Waterville accepted to be paid for the drawings to the following amount:

a. Ohene Djan Euro 1,472,179.08

b. EI-Wak Euro 106,645.80

c. Saba Yara Euro 1,376)59.40

Therefore the total amount of Euro 2,955,184,28 was deducted from

Waterville certificates amounting to Euro _21,569,946.71 _

Further to change of Government in 2009, Waterville presented its claim

again and in the letter dated 14th March 2010 after many meetings with the

Attorney-General and her staff, Waterville submitted the last claim before

going to mediation as prescribed by art.16 of the contract.

Due to the fact that negotiation with previous Government and also

negotiation with current Government did not reach positive agreement,

Waterville asked for mediation as prescribed by art. 16 ARBITRATION of the

Contracts signed between Waterville and the Government of Ghana on 26 April

2006 Following a number of mediation sessions with the

Attorney-General’s department, of which Waterville made a presentation,

together with documentary evidence, which demonstrated that notwithstanding

the fact that no contracts were signed in respect of the proposals for the

construction of various projects such as regional hospitals to the

Government through the Ministry of Finance color: black; background: none

repeat scroll 0% 0% white;">Economic Planning, Waterville was directed by

the Government to continue with arrangements and documentations with

proposed financiers and guarantee agencies for the execution of those

projects. Consequently, the mediation team was of the opinion that

Waterville were at least entitled to the following claims:

Certified

Works

€9,634,240.15

ii, Interest due on the Certified works at Eurobor plus 3 points

from September 1, 2006 till

date

€3,123,754.56

iii. Loss of profit calculated at 20 of€ 52,569,946.71

€1O,563,015.00

iv Interest on the loss of profit at Euro plus 3 points

from September 1, 2006, to

date

€2,863,248.67

v. General damages for breach of contract including

mobilization and demobilization.

€10,000,000.00

vi. Legal

fees

€500,000.00

TOTAL

??36,684,255.99

Following further mediation sessions Waterville stated that in spite of

its claim

in the sum of €36,684,255.99, it is prepared, as a goodwill gesture, to

accept

€32,000,000.00 as full and final settlement of _its _claim, including

certified works,

interest, loss of business profit, general damages for breach of contract

including

mobilization and demobilization and legal fees.

Upon taking professional advice the Attorney-General was informed that

where a contractor has mobilized, gone on site and commenced works, any

termination of the contract attract the payment of loss of profits and

demobilization.

Our investigation team further discovered that Clause 11(4) (4) of the

Contract executed by both parties provide that in case the termination is

caused by default of one party, the other party shall be entitled to claim

the damages suffered for the termination. Thus Waterville is entitled to

payments for loss of profits and damages.

We also found out that should the mediation fail Waterville is entitled to

go to Arbitration in London. It is probable that they can substantially get

this sum or more given the manner in which cases involving African

Governments against European nationals are viewed.

Attorney-General having considered the claims closely recommended to

Waterville to accept the sum of ??25 MILLION as a final figure for

settlement of all its claims without the further time and expense of

arbitration.

Waterville duly accepted and was subsequently paid the settled sum of

??25 MILLION in three tranches, namely €9 million upon the Settlement

and Release Agreement, €8 Million in January, 2011 and the final sum of

€8 Million in April. 2011.

Under this circumstances is clear that Waterville has not _received _any

double payment,

rather any amount paid or _received _that has base on the Waterville

Certificate _have _been

duly deducted to _avoid _double payment.

Waterville as from the date of August 2006 _never received _from previous

Government

any payment under any form. Payment _received _and exchange with

subcontractors were explained in Waterville claims and deducted from the

original Certificate _values _as Waterville _never _intend to ask to paid

twice for the same service.

The issue of M-Powapak and Alfred Woyome as it were has no bearing on

Waterville’s claim. Woyome had no role in the claims Waterville made to

the government for reimbursement and compensation against loss.

There is a clear distinction between payments received by Alfred Woyome

and Waterville’s legitimate claim.

Watervillle made full payment to M-Powapak and Alfred Woyome for their

services, and terminated their services as far back as 2006.

M-Powapack, a firm represented by Mr. Alfred Woyome, was hired for a fee

by Waterville to provide financial advisory and consulting services for a

limited period to assist in Waterville financing the stadia contract.

Waterville made full payment to M-Powapack and Mr. Woyome for their

services. Therefore the claim that Waterville and Woyome conspired to dupe

the state cannot be true. It is clear Waterville followed due process.

What is however not clear is the motive behind Kufuor’s disregard for

the public procurement laws of Ghana and award two out of the five stadia

already awarded to Waterville, to Shanghai Construction General

Corporation, in spite of Waterville being given approval for the award of

all the five stadia.

Stay tuned for more anon.

The True Statesman

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