One thing was clear: The truth had finally hit home. The chickens have come home to roost. The nation had been forced to eat a humble pie. No $1 billion would be available for this country, Finance Minister Yaw Osafo-Maafo had sadly informed the nation through Parliament.
But before he finished his revealing statement last Tuesday morning, the spin meisters jumped to work. The donor partners had pressurised government to back out of accessing the loan, they trumpeted.
Nope, the decision to pull out of the loan was not due to donor pressure, the Minister said Wednesday morning on Peace FM newspaper review programme.
He was right, but to some extent. The decision to halt dealings with the Horst Schneider-led IFC had been taken by President Kufuor long before the donor community met members of the government about a fortnight ago. That was after the President had received proper briefing after dilligent enquiries on the IFC by the appropriate agencies, sources say.
Insiders say the donor community had no doubt expressed dissatisfaction with the loan processes, with British Premier Tony Blair virtually ‘warning’ the government to stay off the shady IFC group, irrespective of whether a loan was coming or not.
Diplomatic sources say the British Head of Government in a diplomatic but brutally frank letter to the Ghanaian presidency had advised the government not to destabilise the relations between the two states over the IFC imbroglio, lest London withdrew a loan/grant facility of over $200 million to Ghana.
Other donor partners, including the Bretton-Woods institutions, equally protested over the apparent lack of transparency in the loan process and government’s failure to provide credible information to confirm that the Consortium was genuine, Concord learnt.
But the key reasons for terminating the deal with the IFC included what Osafo Maafo told GTV Breakfast Show Thursday: the slow pace at which the IFC was responding to requirements from the Kufuor administration.
Moreover, there was no tangible proof of the availability of the first tranche. By the time the cancellation of the loan agreement was announced, the Schneider-led IFC group was still frantically sourcing for the first tranche of the $1 billion loan.
In the end, mounting domestic and external criticisms and pressures, including incessant media critique, coupled with the fear of making Ghana’s sovereign guarantee available to a group that could misuse it, and the inability to dispell the shady clouds over the background of the IFC, forced government to take the easier and wiser road to safety. Don’t dine with the devil that appears in angelic apparel if you’re not sure of the length of your spoons was the reason that prevailed.
Abrogate the loan agreement, President Kufuor directed, after various sessions within the week before with Senior Minister John Henry Mensah, Finance Minister Yaw Osafo Maafo, Bank of Ghana (BoG) Governor Paul Acquah and others at the Castle.
These men, together with Professor Edward Ayensu, the originator of the deal, had led the campaign for the IFC money that never came.
So exclusive had been their preserve over the negotiation for the loan that the first loan agreement was drafted with no input from the Attorney-General’s Department, National Concord can confirm. Rather, officials at the Legal Department of the BoG ‘lawyered’ the agreement and made recommendations on it.
According to Osafo Maafo, the BoG had always handled such financial deals and he therefore had no problem relying on their expertise.
But reacting to mounting public concerns, Cabinet later authorised Attorney General Nana Akufo Addo and his Chief State Attorney to meet with officials of IFC to re-negotiate some portions of the agreement, sources say.
Subsequently, some clauses in the agreement appraised by officials of the Attorney-General’s department as a “sell out’ were later changed, following a meeting in the US late July by the AG with Schneider and Co., insiders say.
Credibility of IFC
In all these dealings, the credibility of the IFC as a lending agency was not fully addressed. All government had was the trust in the advocates of the loan that the IFC was genuine.Yet, despite government’s belief that the IFC could syndicate the $1 billion loan, available evidence suggested the contrary.
Asked last Wednesday morning on Peace FM by this reporter what proof he could provide to convince members of the public that the IFC was a credible lending agency, the Finance Minister said he felt convinced by the fact that the BoG Governor okayed the group.
He cited Eastern Europe as the region that had benefited from the IFC loan, but could not give a specific country when asked to do so by the host, Kwame Sefa Kayi.
As at that day, according to Osafo Maafo, he had not received a search he had directed should be conducted on the Consortium to be able to cite the specific country that had benefited from an IFC loan.
Earlier Concord reports had, however, indicated that at the time the loan agreement was passed by Parliament on July 12 after initial clearance by the Finance Committee, the BoG had not completed its due diligence checks on the consortium. The Bank had not received relevant information on the IFC from Dun and Bradstreet, a high profile United States-based establishment reputed for its due diligence work, despite credible evidence that Dun and Bradstreet could have furnished the government with the due diligence report within 48 hours.
The only information about the consortium that was made available was the Curriculum Vitae (CV) of two of its board members.
Queries by investment lawyers and analysts on the bona fides of IFC, its background, antecedents and debt profile were also unanswered, and remained so till date.
Strikingly, the IFC’s claims of a credible lending history and statements by Ghanaian officials that it had the endorsement of the Bretton-Woods institutions were denied by sources within the IMF and official statements by the World Bank.
In its official statement on the IFC issued late July, the World Bank said it was yet to learn of the IFC from Ghana.
“The World Bank has no dealings with nor direct knowledge of the International Finance Consortium. We are pursuing inquiries with the Ghanaian authorities about the details of this possible transaction”, the statement said.
“We have no relationship - financial, legal, programmatic or otherwise - with this group. In fact, we are quite concerned about possible confusion and have already tried to contact them to request that they immediately cease using such a similar name,” real IFC manager (corporate relations) Joe O’Keefe said in another independent statement.
“We believe this is already leading to confusion and could jeopardise the good relations we have with our clients and member nations”, the Washington-based real IFC, which is the world’s leading multilateral agency providing debt and equity financing to private companies in the developing world, said, asking the Bahamas-registered but New Jersey-represented IFC to stop misusing its name.
World Bank Country Programme Director for Ghana, Nicola Dyer, weeks later told the Concord that the bank’s position on the IFC remained unchanged.
Claims that major American companies like Chemac Inc. were behind the IFC also turned out to be empty. Chemac, it turned out, is a small sales and service family company with only two offices across the continental USA. Chemac’s only other office, apart from its head office in New Jersey, is in Houston, Texas. Chris Schneider, a son of Horst Schneider, the only publicly known board member of the IFC, mans it.
Sources at the South African High Commission in Washington also told the Concord last July that they were unaware of Pretoria dealing with the IFC.
In India, an official of the Indian state of Punjab described a claim to provide his state a $1 billion loan by the IFC as a fraud.
Ronald Gershen, Chairman of the Board of Directors of The International Society of Financiers, whose membership includes a variety of lenders and loan brokers across the world, had this much to say on the IFC loan when reached by a Ghanaian friend in a chat published on the US-hoisted ghanaweb.com.
“…I don’t know of anyone that would lend at 2.5%. Would you? I don’t think so...The only way to check someone out is to ask them directly for VERIFIABLE proof that they are who they say they are and that they have done this before, successfully. Everything else is just so much conversation. For $35m I would offer a rate of 1% for 50 years. Then, as soon as I got the $12.5m I would get on the first plane to another planet. I find it impossible to believe that your government would even entertain listening to such nonsense. Basically it’s called “tell them what they want to hear then take the front fees and run...” The reason you can’t find IFC is because it’s a ghost operation.”
IFC and North American NPP, NDC branch reactions
For many Ghanaians abroad, the IFC issue turned out to be the most contentious, fuelling all sorts of speculations. One of it was that the IFC deal was a sweet package by the ruling NPP to garner campaign finance funds before election 2004. But there was inadequate evidence to lend credence to this speculation, which gained widespread acceptance following the apparent inability of NPP functionaries abroad to explain the issues involved.
Conspicuous silence and a desire not to put one’s neck on the line among the NPP North American branch members, who found the $1 billion loan quite too sweet to be true, did not help matters.
Members of the party reached by this reporter in the US last July were unwilling to talk officially on the issue. Not even the Public Relations Officer of the NPP North America branch, Mr. Jim Anin, could help. Neither could the Ghanaian Mission in Washington DC. It dilly-dallied on the issue in a language couched in diplomatese when reached.
At the same time, the NDC North American branch led by New York Attorney Ebby Koney, which visited the New Jersey office of Chemac, representatives of the IFC, continued to warn NPP party insiders in the US to get the message to its leadership in Accra that it was playing with danger in dealing with the IFC.
In an interview with this reporter last August, Koney, Chairman of the NDC North American branch, warned that the Kufuor administration government ought to be very careful about how it handles this situation.
“There’s no way of verifying the claims of IFC and absolutely no way of verifying the source of their so-called $1 billion. Even if such money exists, which I doubt, it could come from Osama bin Laden or anybody. This is why we need to deal with reputable institutions and not trifle with the reputation and integrity of the country”, he cautioned.
“This is a national issue that the NPP need not politicise unduly”, he further added.
Koney is among the list of Ghanaians who feel the government had taken a wise decision in abrogating its agreement with the IFC. For one thing is clear. The nation has today been saved by President Kufuor’s decision, albeit late, not to jump knee-deep into a financial deal that could have dwarfed the problems facing the Tema Oil Refinery (TOR) and could have led to Tony’s Blair’s Britain withdrawing its credit facility to Ghana.
