Discussion on the STX Korea $10 Billion deal

Hot-FM London-Global Discussion on the STX Korea $10 Billion deal.

By Kwaku A. Danso

Friends,

Let me give a short synopsis of the 3 and half hour global Radio debate today on HOT-FM London. I was in California and we had contributors from UK, US and Ghana. Don’t you love technology!

Incredible what dialogue can bring. Both NDC and NPP Ministers got a chance to dialogue on this radio talk show today!

I was awaken at 3 am here (instead of 4 am) and I am very impressed with the ability to arrange this meeting (Bravo Junior ), and the performance of all involved, especially Sam Opare and Steve Nyako, as well as Dr. Hanna Bissiw, NDC Deputy Minister for Works, Water and Housing, and Hon Kyei Mensah-Bonsu (Minority NPP leader), and Kwame Abogya who caught me unawares and threw some low blows at me but I did not react since I was just waking up (smile).

I was going to write a formal summary but this will do for now from my notebook, a habit I have, as time is very precious:

1. K. Danso – I had the misfortune of being the first to be introduced and interviewed, and I believe I did a lousy job (?) of introducing myself and GLU in between pulling one of the long telephone cords to a location downstairs so I won’t disturb my wife (the latter strategy was successful). I believe between the waking and sleeping worlds (where is Renee Descartes?) I did convey to the audience that my review indicated the contract was badly written, and that it was meant to secure the interest of Korea and not that of Ghana, and the cost factors were too much in favor of STX. I realize that I did not even say GLU forum but I accepted the tag of NGO by the Host, which I now realize is not a good term to use in Ghana these days. (In Ghana NGO means somebody bringing in money to them!).

2. Mr.(or Dr) Kwame Abogya – NDC Vice Chairman in London – Being the second to have the chance to speak, the man totally demolished my argument and said the contract was not a mere 2 pages and I should have read it in full and that there are detailed documents with prices, blue prints and designs contracted to his alma mater KNUST to give them jobs, etc. I found the guy a good salesman, but did not get to ask where we could get copies of the main contract, and I reminded him that I saw 4 pages and the last page was all signatures and the first was a title page. Kwame was good, and could sell anybody land in the Florida everglades! Sam Opare and Steve may be able to recall but I think I heard him when I was just turning my online service on that if the contracts were all there, a man with a PhD should be able to read them,, (Ooooch!! What a low blow).

3. Hon Dr. Hanna Bissiw, NDC Deputy Minister: – responding from her car outside a public function, said it was Ghana which approached Korea and not the other way around, in response to a question by the Host Junior Cato. (This contradicts the Korea.net website open announcement of December 9, 2009) – as quoted also in the GLU /UMC proposal presentation to Parliament on July 14,2009.

“The Korean government sent market exploration teams to DR Congo, Cameroon and Ghana and tried to build construction diplomacy by inviting high-level governmental officials. As a result, STX Group gained the right to participate in the 10 billion-dollar housing construction project.” (Korea.net, 2009, Dec.6)

She did a good job explaining the need for housing for the security forces and added that a previous effort to get Financing for housing by the NPP government has included a 17% risk insurance of some Eu 54 Million, and hence the need for Sovereign Guarantee to avoid this. She also explained how the NPP boycotted the final debate and final voting on the Agreement because the NPP members said they had to travel to their constituencies for their upcoming election of Candidate for the 2012 elections. On Value for Money argument, the Minister said the NPP had built some 3 Bedroom housing for $250,000 to rehabilitate the displaced security forces who used to live at the current Jubilee House Palace, and thus the NDC project was to build 4 Bedroom for far less, around $175,000. The Honorable Minister was convincing as a good politician would be, and spoke in good fluent and “humble” Twi language (smile). [Why in Twi? Don’t ask me! Junior Cato’s program].

4. Sam Opare (GLU) – Question 1: - asked the minister about previous government housing reported as incomplete.

RESPONSE by Hon Hanna: – NDC has voted some amount of money in 1997/98 for housing but the NPP on assumption of office ignored it.

Question 2: – 30,000 houses in 5 years implied building about 120 houses per week – can they deliver?

RESPONSE by Hon Hanna: – Yes, with technology, they had witnessed what the Chinese can do. This was an excellent point score, if anybody was counting.

Steve Nyako (GLU) Question 3 – does the Project Plan include Waste disposal, schools, shopping malls, etc.?

RESPONSE by Hon Hanna: – Yes, the housing will be build like “satellite communities” with underground sewage. Bravo!!

NOTE – This is Brilliant! However this writer will note that on Nov.11, 2009, a proposal was made to the CEO of the government’s [or per the Koreans, the President’s] Housing Bank and today no response from them for a 44% loan to value for development of such a community in Tema.

Question 4. – Is there a plan with the STX construction for modern amenities such as solar and underground sewage system?

RESPONSE by Hon Hanna: – Yes, the project will incorporate Central Sewage system Bio-Gas for energy, and many other modern state of the art technologies.

Question 5. – Are the lands ready for building with site plans, etc?

RESPONSE by Hon Hanna: – Site plans are all ready and ready to be deployed.

Question 6 – any provisions for possible failure to deliver?

RESPONSE by Hon Hanna: – Payments will start after year 5 – so if there is any problem with non-delivery or non-performance, it can be dealt with.

Question 7 – Loan Default guarantee?

RESPONSE by Hon Hanna: - All these have been worked out by the NDC group.

Sam Opare - Question 8 – How is the government going to pay the STX $1.5 Billion, or $10 Billion and then GREDA’s request for $7 Billion? What is the Plan?

RESPONSE by Hon Hanna: This is worked out by the government. [At this point the answer was not very clear]

Steve Nyako –Question 9 – Why couldn’t we plan to use part of the $10 Billion to clean up our slums in Accra and our cities?

RESPONSE by Hon Hanna: - This will be part of the project as the STX construction will be building communities. [This response was also not very clear].

Question 10 – Why couldn’t we raise the money ourselves?

RESPONSE by Hon Hanna:- Ghana’s credit rating is not that good and seem to have been dropped from the B+ rating that was used to raise previous international funding. She added that Ghana Home Loans which is owned by Dr. Addo Kufuor’s son, was able to raise a few million dollars to do home loans, but the Insurance is guaranteed by HFC Bank of Ghana’s Home Finance company (nor clear here). She also gave a counter argument that Ghanaians could have built the Jubilee House but it was given to an Indian company. [She did not go into why there was 50% or more cost over-runs approved or not approved by Parliament].

In conclusion I must say the Honorable Deputy Minister did a good job in representing their (NDC) side, judging the off-road interview.

5. Hon Kyei Mensah Bonsu – NPP Minority Leader – was the last to be called in from Ghana. He also gave a very impressive rebuttal of all what had been said earlier by the NDC side. This included the historical analysis of housing development in Ghana, from Nkrumah’s CPP time, to Dr. Busia, to Col. Acheampong’s Kaneshie Estates, to Kufuor’s affordable Housing. He said that Ghana had 3.8 million households but only 1.8 million houses. [This part was a little too fast for digestion] but he used these to underscore the fact that housing was in high demand in Ghana, but that the way the bill was rushed and documents presented indicated clandestine and possible questionable motives behind the whole deal. For example he said that for the size of the transaction the opposition was given 1 hour after presentation to discuss and approve it. The off-taker agreement of $1.5 Billion also for 30,000 homes also which average $50,000 per low income housing, the government did not give the opposition but 1 hour to discuss and approve it. The government side was unable to disclose details.

On the sovereign guarantee, he said for government to government transactions – this was normal and not for private transactions. He said during their meeting with the Korean Prime Minister the latter told them clearly that they should exercise all due caution since this was a transaction with a private company and not with his government. He said this raised a red flag immediately. The Foreign Minister also told them to waive the foreign government indemnity which Ghana could exercise in case of default. These, according to Hon. Kyei Mensah Bonsu, raised many flags that he felt should have been dealt with more caution.

Perhaps the greatest controversial bombshell for this writer is how he got to know about the STX transaction, when asked by the Host if he knew about all these beforehand. He said he met the Vice President John Mahama at the funeral of the later Dan Lartey and in a friendly manner the VP told him he wanted him to accompany him on an important “deal of national importance”. On blind faith he trusted the VP and accompanied him on the trip and it was not till they were in transit in Japan that he was told that it was a private deal with STX, and showed him the MOU.

After this there were about 6 to 8 calls from the listening audience to the Radio Station. With the exception of one call, all the calls were very critical of the government and the manner in which they handled the transaction. The first caller, Ama, was very passionate in her expression and it appears many Ghanaians overseas are very skeptical of the huge debt without much disclosure and prior discussion with the taxpaying public.

We thank the host Junior Cato and our colleagues from GLU Sam Opare and Steve Nyako for making this possible. There was a promise of a possible continuation at 9 pm London time on Wednesday. Please check with HOT-FM link: www.hotdigitalonline.com

For Ghana to move forward, our leaders should learn to dialogue and discuss issues of such importance and heavy debt burden on the people in public for a longer time before signing contracts. It becomes a disgrace for a nation of well educated people. Korean leadership had done their homework and knew their strategic interests. Ghanaian leadership should have done the same.

Cheers,

Dr. Kwaku A. Danso

President - Ghana Leadership Union (NGO) & Moderator-GLU Forum

Livermore, California, USA - East Legon, Accra, Ghana

http://groups.google.com/group/glu-ghana-leadership-forum?hl=en