(P)NDC ‘Kalabule Divestiture’ Revisited (4)

…More On How Mrs. Rawlings’ Family Friend’s Company Looted Star Hotel Land & Cheated Government Of Millions Of Dollars/Pounds!

Summary Of Findings By Special Investigations Task Force (SITF) Issued & Signed By Commissioner Of Police, Legal/SITF, SAM AWORTWI, January 15, 2003

SOURCE: NEW CRUSADING GUIDE

*FACTS OF THE CASE:

THE LOANS:

On 02/08/94 Dr. Kwasi Botchway then Minister of Finance and Economic Planning, acting on behalf of Government of Ghana contracted an Export Credit Guarantee Department (ECGD) loan facility of £32.0 million from the Bank of Scotland and on lent £15,766,550.00 to Coco Palm Limited and £16,233,450.00 to La Palm Beach Hotel Limited to finance the construction of five a star hotel and a leisure complex at Cantonment and La respectively in Accra.

The two companies were to repay the principal amount of the subsidiary loan in seven (7) years by fourteen (14) equal and consecutive semi-annual installments of £792,500.00 and £805,500.00 respectively, commencing from 15/07/96 and ending on 15/01/03 to the Bank of Scotland. They were also to pay interest on the loan at the rate of 5.95% per annum and an additional interest fee of 0.5% on the principal amount of the loan disbursed.

The Bank of Ghana, guaranteed the loan while International Generics Company Limited (IGCL), a United Kingdom based company and the parent company of the two companies also provided an indemnity to the Bank of Ghana. A Deed of Indemnity and Floating Charge to indemnify the Bank of Ghana was therefore prepared for which the Borrowers and the Guarantors to the loan jointly and severally irrevocably and unconditionally guaranteed to the Government the due and punctual payment in pounds sterling of the principal, interest, charges and all amounts which may become due on the Borrowers (whether as stated maturity, by acceleration or otherwise) under the On-lending Agreement.

In order to further indemnify Government against liability with respect to the performance of its obligations under the Loan Agreement, Borrowers committed to the Government by way of Floating Charge the whole of their present and future assets.

The Floating Charge was to be a continuing security which will remain in full force and effect until such time as Government is discharged from its obligations to the Bank under the Loan Agreement by notice to it in writing by the Bank.

REPAYMENTS:

As at the end of January, 1997, Coco Palm had paid £5,066,883.23 and La Palm Beach Hotel £8,401,301.93. The total repayment by both companies to the bank of Scotland therefore stood at £13,468,185.16.

AS A RESULT OF THE DEFAULT IN THE REPAYMENT OF THE SUBSEQUENT INSTALLMENTS, BANK OF SCOTLAND SERVED BANK OF GHANA WITH A DEMAND NOTICE. THIS WAS REFERRED TO THE MINISTRY OF FINANCE. MR. KWAME PEPRAH WHO HAD THEN REPLACED DR. KWASI BOTCHWAY AS THE MINISTER OF FINANCE, AUTHORIZED THE CONTROLLER AND ACCOUNTANT GENERAL DEPARTMENT AND THE BANK OF GHANA TO START SERVICING THE DEBTS. AS AT NOW (JANUARY 2003), BANK OF GHANA HAD PAID £20.014,389.41 TO THE BANK OF SCOTLAND ON BEHALF OF THE TWO COMPANIES AS FOLLOWS: COCO PALM LIMITED - £9,503,261.46 AND LA PALM BEACH LIMITED - £10,511,128.03. THE CONTROLLER AND ACCOUNTANT GENERAL HAS ALSO MADE AVAILABLE THE CEDI EQUIVALENT OF £3,379,675.21 TO THE BANK OF GHANA WHICH STILL REMAINED OUTSTANDING.

INVESTIGATIONS:

In another development, the Ex-Minister of Finance instructed GCB and NIB to advance a loan of £13,0 million and £2,711,846.89 respectively to the twin companies. The Bank of Ghana was also instructed to guarantee the loans. The break down of the money disbursed to the companies was follows:-

NIB LOANS GCB LOANS

LA PALM £ 792,355.76 £ 6.0 million

COCO PALM £1,919,791,13 £ 7.0 million

Total: £2,711,846.89 £13.0 million

THERE WERE ANOMALIES IN THE PROCESSING OF THE LOANS. FOR EXAMPLE, GCB GRANTED £13.0 MILLION TO COCO PALM AND LA PALM BEACH WHICH CONSTITUTED 47.6% OF ITS NET WORTH OF ¢87.1 BILLION AT 31/12/95, IN CONTRAVENTION OF SECTION 11 OF THE BANKING LAW 1989. WITH REGARD TO THE NIB, THE PROCESSING OF THE LOAN DID NOT FOLLOW THE NORMAL PROCEDURES OF THE BANK E.G. THERE WERE NO FORMAL LETTER OF APPLICATION FOR THE LOANS, APPRAISAL REPORT, EXECUTIVE COMMITTEE APPROVAL (EXCEPT BOARD APPROVAL EXTRACT) ETC.

The twin companies again defaulted in the repayment of the local loans. Upon persistent demands by the Banks, the Ex-Minister, Mr. Kwame Peprah authorized the Bank of Ghana through the Controller and Accountant General’s Department to pay ¢2,590,041.21 and £1,300,813.00 to NIB and GCB respectively. The following is the break down:

NIB LOANS GCB LOANS

LA PALM £ 792,355.76 £1,300,813.00

COCO PALM £1,797,686,45 £ 747,967.48

Total: £2,590,041.21 £2,048,780.48

The repayments to NIB were made under two provisions that:

*1. NIB would recover the loan from the companies for reimbursement to the Ministry of Finance

*2. THE PAYMENT BY THE MINISTRY OF FINANCE WOULD NOT BE DIVULGED TO THE COMPANIES.

In all, the Ministry of Finance has paid a total of £24,653,211.10 on behalf of the Companies to the Bank of Scotland, GCB and NIB.

IT WAS ESTABLISHED THAT COCO PALM DID NOT PUT UP ANY HOTEL. INSTEAD, IT BUILT CHALLETS AND SOLD THEM OUT TO THE PUBLIC. IT TRANSFERRED THE PROCEEDS TO ITS PARENT COMPANY. INTERNATIONAL GENERICS LIMITED, UNITED KINGDOM.

IT WAS FURTHER ESTABLISHED THAT THE SALE OF THE CHALLETS WAS FRAUDULENT BECAUSE THE CHALLETS WERE PART OF THE COMPANIES’ ASSETS USED TO INDEMNIFY GOVERNMENT AGAINST LIABILITY WITH RESPECT TO THE PERFORMANCE OF THE COMPANIES’ OBLIGATIONS UNDER THE BANK OF SCOTLAND LOAN AGREEMENT.

It was also detected that in July, 2000, SSNIT used its 1999 Dividends of £650,000.00 and May/June, 2000 interest of $350,000.00 respectively to pay off part of the La Palm Beach Hotel GCB loan. This is a subject of separate investigations. Meanwhile, a formal request was made to the Managing Director of Coco Palm Limited, to furnish the Police with the following information which has not yet been provided:

*1. Names of Purchasers of the Challets and proof of payments – how payments were made (cash or cheque).

*2. Copy of their alleged letter to Bank of Scotland indicating their willingness to pay off the loan – see Ministry of Finance letter dated 8th December, 1995 authored by Mr. Kwame Peprah. (other documents C5–6).

*3. Copy of the MoF letter requesting for the companies’ confirmation about the letter written by Bank of Scotland (this could not be obtained at the MoF).

*4. Copy of the companies’ confirmation letter, if any

*5. All the duplicate copies of the Qualifying Certificates collected from the Consultant/Architect, Mr. Ekow Sam which are allegedly sent to the companies’ office in UK.

*6. Copy of all receipts of payments from National WestMinister Bank (UK), National Investment Bank (Ghana) and Ghana Commercial Bank (Ghana) to Bank of Scotland made on behalf of the two companies to prove payments.

COMMR. OF POLICE/LEGAL/SITF

(SAM AWORTWI

THE ATTORNEY GENERAL’S DEPARTMENT

P.O. BOX MB 60

ACCRA

15TH JANUARY, 2003