Zain, Vodafone trapped

Illegal divestitures

It has now been confirmed that, the GT/Vodafone deal was not the only one struck without the participation of the Divestiture Implementation Committee (DIC), but that of Western Telesystems Ltd (Westel) suffered the same fate.

Celtel International, a subsidiary of Zain (formerly named the MTC Group) in 2007 signed an agreement to acquire 75% of Western Telesystems Ltd (Westel) from the Government of Ghana for USD 120 million.

By that deal Government of Ghana remains a shareholder in Westel with a 25% holding through the Ghana National Petroleum Corporation.

Zain followed through to roll out its 3.5G network in the country, with Managing Director, Chris Gabriel disclosing to President Mills at the Castle that Zain had invested over $420 million in Ghana since it acquired the Westel Shares.

All these have however been done on the backs of what appears to be an illegal divestiture procedure, since the entity entrusted with the responsibility of implementing government divestitures, the DIC, had been totally ignored in the whole divestiture process.

Highly placed sources at the DIC Secretariat confirmed to the Financial Intelligence (FI) that the Committee did not play any roles at all in the whole process.

The former Managing Director of Westel, Ursula Owusu said it was a sub-committee of the Ministry of Communication, together with officials of the Finance and Justice and the State Enterprises Commission that implemented the divestiture. She believes that since the shares were originally those of Ghana National Petroleum Corporation, and that it was not a complete acquisition that Zain did, there was no wrong doing in the sidelining of DIC.

When contacted, Zain Ghana said they have referred the enquiries to their Group legal Department in Kuwait for answers as to how they could have participated in the divestiture process knowing that the DIC was not involved in the sales.

…Vodafone, Gov’t were aware

Information available to the Financial Intelligence (FI) also suggests that both Vodafone and government may have been aware of the legal ramifications of the Ghana Telecom (GT) sale if it was done without the legally mandated body. They however chose to strike the deal without the (Divestiture Implementation Committee (DIC) until after Parliamentary approval before they brought it to the DIC to hand over. “When government has already transacted a business and you are asked to hand over, what you can do about it?” a source at the DIC quipped. Highly placed sources at the DIC secretariat confirmed to the FI that DIC was not involved at all in the whole divestiture process involving GT and Vodafone. According to these sources, the DIC was only used as a rubber stamp for the decision already ratified by Parliament when Vodafone insisted at the last minute that the DIC was brought into the picture otherwise they would not sign their side of the Sale and Purchase Agreement(SPA).

It has been confirmed also that although, the DIC was instructed by government to hand over the GT assets officially to Vodafone, after parliament’s ratification, the committee never saw the SPA on which the hand-over was being done.

“Till date, I have note seen the SPA between Government of Ghana and Vodafone, and when we asked for it at the hurriedly convened Committee meeting which effected the hand-over, we were told it was not available,” said one of the sources, adding, “we were asked to sign the hand-over papers, all the same. Naturally the DIC should have prepared the SAP after scrutinising the buyer’s business plan. But we do not have any documents of the sale here,” the source said.

At the time of the transactions the offer from Telkom South Africa who offered $947 million for 66.67 per Cent of the original GT shares with an additional $ 1.334 billion investment into the company over a ten year period.

But government decided to give out 70 per cent of an enlarged GT which included the National Fiber Optic Back-bone, being constructed with a $30 million Chinese Exim Bank loan and the fiber assets of Voltacom, for $ 900 million.

This is what makes many Ghanaians believe that government allowed Ghana to lose value-for-money when it did not use the right channel to execute the deal. Checks at the National Communication Authority (NPA) also revealed that the NCA was not part of the ministerial sub-committee which sold out GT to Vodafone. Currently, some members of the Convention People’s Party (CPP) are in court contesting the sale, and industry watchers are keen to see whether government would take any action on the SPA or wait till the determination of the court case.