‘SELLING GHANA CHEAP’!
…Excerpts Of 2002 SFO Report On How Mrs. Rawlings’ Family Friend’s Company ‘Looted’ Star Hotel Land & Cheated Govt. Of Millions Of Dollars/Pounds!
SOURCE: NEW CRUSADING GUIDE
The New Crusading GUIDE today embarks on a special exercise to recall details and excerpts of some investigative reports, published and unpublished, as well as legal, media reports and research documents; all relative to the process of divestiture/privatization of State Assets (lands, factories, equity interest & shares, shipping lines, airlines, etc.) over the last two or three decades.
This exercise, is tailored to inform, enlighten and educate the citizenry on the facts, figures, incidence and history of how various governments and regimes since 1966, have gone about the disposal of State/Government assets, and to create a critical mass of information, knowledge and material of evidential value, to facilitate an informed public discourse on issues arising out of the unfolding controversy over disposal of State assets including lands.
Hopefully, the totality of the information put out for critical analysis, would help policymakers and implementors, social commentators and all stakeholders including the citizenry to constructively engage in a search for solutions to whatever challenges or problems confronting the nation with regards to the issue of what to do with State Assets or how to handle them as we look forward into the future.
Today’s recall deals with excerpts of the 2002 Annual Report of the Serious Fraud Office (now the Economic & Organised Crime Office, Act 804) relative to the SFO’s investigations involving SSNIT and the Divestiture Implementation Committee (DIC).
The report under reference, as constitutionally stipulated, was submitted to the President and Parliament in accordance with Section 21 of the Serious Fraud Office Act, 1993, Act 466 through the Attorney-General and Minister of Justice.
It was transmitted via a letter dated April 10, 2003, signed by Mr. T.A. Cudjoe, then the Acting Executive Director of the SFO.
Please read our first installment and stay tuned for more…
*I. ORIGINS OF THE INVOLVEMENT
In 1993 the Divestiture Implementation Committee (DIC) sold the Star Hotel and the Labadi Pleasure Beach Hotel at a total cost of one million, five hundred thousand US dollars (US$1.5m) to International Generics (IG). A total of one million US dollars was paid in advance; the balance of five hundred million dollars is still outstanding; according to the DIC, the settlement of the balance depends on the resolution of an issue about the dimensions of the parcels of land on which the hotels stand.
Subsequently IG requested the government for assistance to develop the two hotels. THE GOVERNMENT CONTRACTED TWO LOANS FROM THE BANK OF SCOTLAND UNDER THE EXPORT-CREDIT GUARANTEE DEPARTMENT OF THE UK MINISTRY OF TRADE. IN AUGUST 1994 THE GOVERNMENT CONCLUDED TWO LOAN AGREEMENTS WITH IG AND THE REXOL GROUP B.V. FOR A TOTAL OF TWENTY-TWO MILLION POUNDS STERLING (£22,000,000), £11,305,000.00 FOR COCO PALM LIMITED (THE COMPANY WHICH TOOK OVER THE STAR HOTEL) AND £11,095,000.00 FOR LA PALM LIMITED (THE COMPANY WHICH TOOK OVER THE LABADI BEACH HOTEL).
IN JULY 1995 THE GOVERNMENT ENTERED INTO TWO FURTHER LOAN AGREEMENTS TOTALING NINE MILLION SIX HUNDRED THOUSAND POUNDS STERLING. (£9,600.000) WITH THE BANK OF SCOTLAND. THE GOVERNMENT THEN LENT THE MONEY TO COCO PALM LIMITED AND LA PALM LIMITED, (£4,461,550 AND £5,138,450 FOR COCO PALM AND LA PALM RESPECTIVELY). THE TOTAL THUS LENT TO THE TWO COMPANIES BECAME THIRTY-TWO MILLION POUNDS STERLING, (£32,000,000). VARIOUS DEEDS WERE EXECUTED TO SECURE THE LOANS.
In January 1996, the Ministry of Finance (MoF) requested the National Investment Bank (NIB) to join a consortium of banks to repay off the loan to the Bank of Scotland. The MoF’s reason for this request was that the Government wanted a reduction in the outstanding balance on the ECGD facilities granted to Ghana to facilitate the grant of further loans. The request to the NIB was made on behalf of the MoF by Dr. George Yankey, the representative of the Ministry of Finance on the Board of the NIB.
The paper Dr. Yankey presented to the Board in support of the request entitled, “BRIEF ON THE LOAN OF £32 MILLION ON-LENT TO LA PALM AND COCO PALM HOTELS AND GUARANTEED BY REXOL GROUP BV. AND INTERNATIONAL GENERICS COMPANY LIMITED” gave the impression that the NIB would not be financially prejudiced if the request was granted since there would be no problem of Coco Palm and La Palm not paying off the debts to the Bank of Scotland. This impression was conveyed by the following paragraphs in Dr. Yankey’s paper to the Board.
“IT IS WORTHY TO NOTE THAT ON NOVEMBER 22 1995 BANK OF SCOTLAND WROTE TO INFORM THE MINISTRY THAT COCO PALM LIMITED AND LA PALM LIMITED HAD BOTH INDICATED THEIR WILLINGNESS TO REPAY OFF ON BEHALF OF GOVERNMENT, THE LOANS OF £15,766,550 AND £16,233,450 RESPECTIVELY CONTRACTED BY GOVERNMENT AND ON-LENT TO THEM.
IN A RESPONSE TO A LETTER FROM THIS MINISTRY, THE TWO COMPANIES CONFIRMED THEIR WILLINGNESS TO REPAY THE TOTAL INDEBTEDNESS UNDER THE ABOVE AGREEMENTS AND APPEARS TO BE MAKING ARRANGEMENTS IN THAT RESPECT”.
Yankey stated that the request to the NIB was for:
“the sum of £36.4 million (thirty-six million four hundred thousand pounds sterling) being the value of the total sum to be repaid, interests already paid and the insurance premium”
and that
“THE BANK OF GHANA HAS AGREED TO ISSUE IN FAVOUR OF NIB A GUARANTEE TO ENABLE IT TO RAISE THE SUM OF £36.4 MILLION…”
Yankey, the representative of the MoF on the NIB Board, was here indirectly telling the Board that the Government had got the Bank of Ghana to guarantee the loan in advance and so they had nothing to worry about. In fact, Yankey’s request to the Board was not so indirect. His paper stated quite clearly that:
“TO ENSURE THE CONTINUATION AND SMOOTH DEVELOPMENT OF THE PROJECTS AND TO FORESTALL ANY CASH FLOW DIFFICULTY FOLLOWING FROM THE PREPAYMENT OF THE LOANS COCO PALM LIMITED AND LA PALM LIMITED HAVE APPLIED TO THE NATIONAL INVESTMENT BANK (NIB) FOR A FACILITY. WHILE NIB IS WILLING TO PROVIDE THE FACILITY IT WILL NEED THE SUPPORT OF THE BANK OF GHANA TO MOBILIZE THE REQUIRED FOREIGN CURRENCY”.
The NIB could not get a consortium of state owned banks to make up the thirty two million pounds sterling (£32 million) target. Only the Ghana Commercial Bank agreed to join in. In February 1996, the NIB Management approved a facility of two million, seven hundred and eleven thousand, eight hundred and forty-seven pounds sterling (2,711,847) to the two companies; (Coco Palm, £1,919,491.43, La Palm, £792,355,76). The NIB also gave an overdraft facility of one hundred and fifty million cedis (¢150 million) to each of the Companies in the same month. The loan of £2,711,847 which the NIB lent to the two companies was obtained by the NIB as a loan from their corresponding bank in Germany, BHF Bank. To obtain this loan the NIB pledged their fixed deposits held in foreign banks as follows:
BHF Frankfurt - US$ 411,133,25
Citibank, London - US$ 855,064,76
BHF, London - US$ 1,160,306,57
BHF, London - US$ 1,469,557.90
THE TWO COMPANIES DEFAULTED IN THE REPAYMENT OF THE LOANS. IN NOVEMBER 1998 THE TOTAL DEBIT BALANCED ON THE FOREIGN CURRENCY LOANS WAS (£2,823,747.66). THE DEBIT BALANCE ON THE CEDI OVERDRAFT OF ¢300M TO THE TWO COMPANIES WAS ¢697,492,366.42.
In November 1998 the Bank of Ghana wrote to the Ministry of Finance showing concern about the default of the companies. Yankey replied to the Deputy Governor in these words:
“…efforts are being made to support the companies to complete their respective projects to enable them to fulfil their repayment obligation to the National Investment Bank (NIB). Meanwhile, the Ministry will request the Central Bank to renew the gurantees it issued to cover the facilities owned to NIB”.
In May 1999 the MD of the NIB wrote to the MoF demanding a total of £3,153,579.09 in repayment as the balance outstanding on the loans. The MoF replied per Kwame Peprah by a letter to the Controller and Accountant General requesting the Controller to pay the cedi equivalent of £788,439.75 into the NIB account with the Bank of Ghana. This payment was to be charged to “expenditure for Coco Palm and La Palm Beach Hotel Limited respectively”. This part – repayment of the loan from the NIB to the Coco Palm and La Palm is the only repayment effort so far. (The repayment by the MoF is itself the subject for investigations and also the Guarantee by the Bank of Ghana).
AS AT JUNE 2002 THE FOREIGN CURRENCY INDEBTEDNESS OF LA PALM TO THE NIB WAS £1,097,708.22 AND THAT OF COCO PALM WAS £2,529,589.77). THE CEDI DEBT FOR BOTH COMPANIES WAS A TOTAL OF ONE BILLION, FIVE HUNDRED AND NINETY-THREE MILLION, SIXTY THOUSAND CEDIS (¢1,593,060,000.49).
*II. SSNIT’S MERGER WITH LA PALM, BIRTH OF GOLDEN BEACH HOTELS
In March 1999, when La Palm’s indebtedness to the NIB stood at over two million pounds sterling (£2 million) and three hundred and fifty seven million cedis (¢357 million) the SSNIT Board approved a guarantee for a five million US dollars loan (US$5 million) being granted by Merchant Bank to La Palm.
According to Mr. Charles Asare, then DG of SSNIT, the Government had approached SSNIT to assist La Palm to complete a section of La Palm Hotel to enable the Government host the African-America Summit Conference in June 1999. SSNIT agreed to the guarantee on condition that the La Palm Hotel, which according to Charles Asare was worth twenty five million US dollars ($25 million) at the time, would be pledged as security, and La Palm would execute an MoU agreement which would give SSNIT the option to merge its Busua Beach and Elmina Beach Hotels with La Palm, if SSNIT so wished.
SSNIT in due course began to explore the viability of a merger with La Palm and soon decided to enter the merger which was consummated in September 1999 but given retrospective effect from June 1999. According to Charles Asare the date was set back.
“to insulate SSNIT from debts unilaterally incurred by Rexol/La Palm during the period leading up to the consummation of the merger”.
The merged entity was called Golden Beach Hotels Limited.
*III. FINANCIAL CONSEQUENCES OF MERGER
SSNIT by November 2001 had expended fifteen million US dollars (US$15m) for additional shares it bought to bring it up to its current 70% shareholding. This brought SSNIT’s total direct funding in respect of this merger to twenty million US dollars.
In June 2000, SSNIT entered into an Agreement with the Ghana Commercial Bank (GCB). GOLDEN BEACH HOTELS (GBH) AND LA PALM ROYAL HOTEL BY WHICH SSNIT’S DIVIDENDS FROM GCB IN 1999 (SSNIT OWNS 17% IN GCB) WERE USED TO PAY OFF A DEBT OF ABOUT ONE HUNDRED BILLION CEDIS (¢100 BILLION) WHICH LA PALM OWED TO GCB. CHARLES ASARE WHO PRESIDED OVER THIS TRANSACTION CONTENDS THAT THIS TRANSACTION WAS BENEFICIAL TO SSNIT FINANCIALLY AS OTHERWISE THE DEBT WOULD HAVE BEEN WRITTEN OFF FROM GCB’S BOOKS (IN ANTICIPATION OF A PRIVATIZATION OF GCB) WITH THE RESULT THAT THE VALUE OF SSNIT’S SHAREHOLDING IN GCB WOULD HAVE BEEN DIMINISHED. HE CONTENDS ALSO THAT HIS ACT CONTRIBUTED TO THE SUSPENSION OF THE PRIVATIZATION OF THE GCB BY THE PRESENT GOVERNMENT. WHATEVER THE MERITS OF THIS EXPENDITURE HOWEVER THE POINT IS THAT SSNIT INCURRED, IN ADDITION TO THE TWENTY MILLION US DOLLARS (US$20 MILLION) SPENT IN THE MERGER WITH LA PALM, A FURTHER ¢100 BILLION TO PAY OFF LA PALM’S INDEBTEDNESS BRINGING THE TOTAL DIRECT EXPENDITURE TO TWENTY MILLION US DOLLARS (US$20 MILLION) PLUS HUNDRED BILLION CEDIS (¢100 BILLION)!
SSNIT is currently fighting off a claim for repayment for a loan incurred by Rexol International in the sum of six million, five hundred thousand pounds sterling (£6.5 million) which has been inherited by GBH. SSNIT is also fighting a claim by Rexol for eleven million, five hundred thousand US dollars (US$11.5 million) that Rexol is claiming from La Palm.
SSNIT’s involvement in La Palm brings out the essential point which has been made in the introduction to this Report, which is that FROM 1985 UNTIL 2000, SSNIT AND THE DIC WERE USED TO ALLOCATE STATE RESOURCES TO PERSONS WHO THE GOVERNMENT DECIDED SHOULD HAVE THESE RESOURCES. IN THE CASE OF THE DIVESTITURE OF THE LABADI BEACH HOTEL AND THE STAR HOTEL, INTERNATIONAL GENERICS, WHICH METAMORPHOSED INTO REXOL INTERNATIONAL BV, ACQUIRED THE LABADI BEACH HOTEL AND THE STAR HOTEL FOR 1.5 MILLION DOLLARS, AFTER WHICH THEY WERE GRANTED LOANS BY STATE INSTITUTIONS AS A RESULT OF WHICH THEY ARE CURRENTLY INDEBTED TO STATE INSTITUTIONS AS FOLLOWS:
*1. La Palm
To NIB - £ 1,097,708.22
To NIB - ¢ 1.5 billion
To SSNIT - US$ 5,000,000
To MoF - £ 16,200,000
(ECGD Loan)
To GCB - ¢ 1.6 billion
*2. Coco Palm
To NIB - £ 2,529,589,77
To MoF - £ 15,556,550.00
Both companies have defaulted in the repayment of all these loans, Yankey’s assurances not withstanding.
A FOREIGN INVESTOR THUS BUYS STATE ASSETS FOR 1.5 MILLION US DOLLARS AND ENDS UP BEING THE BENEFICIARY OF STATE LOANS TO A TOTAL OF THIRTY-FOUR MILLION POUNDS STERLING (£34 MILLION), FIVE MILLION US DOLLARS (US$5 MILLION) AND ONE HUNDRED BILLION CEDIS (¢100 BILLION). THE LA PALM HOTEL IS STILL NOT COMPLETED. THERE IS NO STAR HOTEL YET. THE “INVESTORS” PUT UP LUXURY CHALETS AT THE STAR HOTEL SITE FOR SALE. AS AT FEBRUARY 2001 TWENTY-NINE (29) OF THESE UNITS OF DIFFERENT SIZES HAD BEEN SOLD AT BETWEEN US DOLLARS $250,000.00; AND US$300,000.00 EACH GIVING THEM A TOTAL OF US$7,250,000; NONE OF THESE PROCEEDS WERE PAID TO THE NIB TO SETTLE ANY PART OF THE DEBT. THE MANAGING DIRECTOR OF COCO PALM TOLD THE SFO THAT THE PROCEEDS HAD BEEN INVESTED TO PRODUCE MORE UNITS.
A lot of important questions have been raised about the divestiture of Labadi Beach Hotel and the Star Hotel and the involvement of the State and SSNIT in respect of the State resources allocated to these enterprises, the propriety of the State’s expenditure in favour of the ‘investor’, and the identities of the persons who have benefited from the huge State financial resources that have been committed to these projects.
The investigations by the SFO are proceeding to answer as many of these questions as possible. However on the issue of the beneficiaries of these resources the facts that have been indicated by the investigations so far are:
*LA PALM BEACH HOTEL
The Shareholders at present are:
M/s Glisne Holdings SA (offshore) - 98.5%
Mr. I.N. Kankam (Ghanaian) - 1.0%
Mr. F. Akwasi Kuma (Ghanaian) - 0.5%
100%
*COCO PALM HOTEL
M/s Grunta International SA (offshore) -98.5%
Mr. I.N. Kankam (Ghanaian) -1.0%
Mr. F. Akwasi Kuma (Ghanaian) -0.5%
100%
BOTH GLISNE HOLDINGS SA AND GRUNTA INTERNATIONAL SA ARE OFFSHOOTS OF INTERNATIONAL GENERICS (IG) AND THE REXOL GROUP B.V. INTERNATIONAL GENERICS TRADED WITH THE GNTC FROM THE 1960’S, ITS FOUNDER BEING LEON TAMMAN THE FATHER OF ONE OF THE PRESENT DIRECTORS OF INTERNATIONAL GENERICS. THE RECORDS SHOW THAT AT THE TIME OF IG’S TRADE WITH THE GNTC MR. AGYEMAN WAS THE MD AND MR. KANKAM AND AKWASI KUMA WERE MANAGERS AT THE GNTC. MR. AGYEMAN (DECEASED) WAS THE FATHER OF NANA KONADU AGYEMAN RAWLINGS WHO WAS FIRST LADY OF GHANA AT ALL MATERIAL TIMES TO THESE TRANSACTIONS.
*(Source: SERIOUS FRAUD OFFICE (SFO), GHANA, 2002 ANNUAL REPORT, SUBMITTED TO THE PRESIDENT & PARLIAMENT ON APRIL 10, 2003, IN ACCORDANCE WITH SECTION 21 OF ACT 466 PAGES 25-30)
