The IFC Albatross
That the matter of the IFC loan has become an albatross around the neck of government is no longer in doubt. The International Financial Consortium loan agreement for $1 billion was rammed through Parliament on the final day of the last meeting of the House.
SUSPICIONSSitting in my study and sifting through my mail and the day’s parliamentary documents as I do often in the evenings before retiring to bed, my eye caught on a document. It was a memo (pictured) from the Hon. Minister of Finance seeking parliamentary approval for an amount of $1 billion to be delivered in three tranches. The agreement was between the Government of Ghana and the IFC. It set my antenna tingling. Having been involved in endorsing a $100 million IFC loan facility for Ghana Telecom, I was very much aware that the IFC (International Finance Corporation) was a branch of the World Bank that dealt exclusively with lending to the private sector. It therefore looked out of place that the IFC will be making such a colossal credit advance to the Government of Ghana especially at a time that we had declared ourselves highly indebted and poor (HIPC). A closer look at the document revealed that we were not dealing with the International Finance Corporation, but with an unknown International Financial Consortium. The similarity of the abbreviation of the International Financial Consortium to the better known IFC was uncanny.
Reading further through the attached agreement, vague references to collaboration with UNOPS, a UN agency involved in procurement raised further suspicion. It was pretty obvious that someone was trying to bolster the credibility of the so-called International Financial Consortium by leaning on the reputation of well-known international institutions.
CHECKING OUT ‘IFC’The next day sharing coffee at the snack bar in Parliament House with colleague Minority MPs, Steve Akorli, Seidu Adamu and Moses Asaga, I asked them if they had seen the ‘IFC’ document. They responded virtually in unison and all started commenting about it. Apparently everybody had noticed the ‘strange’ loan agreement. After comparing notes, Akorli drew our attention further to the address of the ‘IFC’ which was supposed to be in a UBS building on the Cayman Islands. Again probably another attempt to create a psychological association with the well-known Union Bank of Switzerland (UBS).
A meeting of the NDC party’s Economic Committee was called. This committee brings together Minority Members of Parliament on the Finance Committee and non-Parliamentary members of the party with knowledge on matters related to the economy. They deliberated on the loan agreement and presented their conclusions to both the Party Executive Committee and the leadership of the Minority in Parliament. At a leadership meeting of the Minority, there was a contemplation of holding a press conference on the matter. It was however decided to hold on until more information was received from the government side in the deliberations of the Parliamentary Select Committee on Finance.
THE NDC PRESS CONFERENCEHaving just elected a new executive from our congress in April, there was still a lot of fine-tuning to do in respect of coordination between the party and the Minority group in Parliament. The party upon receipt of the report from the Economic Committee immediately fired away with a full-blown press conference. This immediately put the ‘IFC’ discussion on the national agenda. Radio talk shows and countless newspaper column inches were devoted to the matter of the loan. On hindsight, I believe the press conference by the party immediately polarized the debate into for and against, NPP vrs NDC. People were no longer looking at the merits of the arguments on both sides. It was just support for the loan if you were an NPP supporter and against the loan if you were NDC. The radio talk shows and phone-ins did not help matters. Pontification by callers totally at sea about the matter under discussion, and with not a clue about what a loan agreement should be, left the populace even more confused. A hastily arranged counter press conference by the NPP described the NDC with choice expletives and set the stage for a battle royal on the floor of Parliament.
PARLIAMENTARY FINANCE COMMITTEEWhile attention was focused outside in trading accusations on the airwaves and other media of mass communication, the finance committee and the leadership of both sides went through the grinding work of taking the loan through the various processes of discussion before arrival on the floor for debate. The Minority requested for a due diligence report on the consortium and also a list of the consortium members. The response was that the Governor of the Bank of Ghana had checked the group out and was satisfied that it was genuine. In an unprecedented move, the Governor of the Bank of Ghana and the Minister of Finance appeared together before the committee to defend the loan agreement. This jeopardized the independence of the Governor against the background of the new Bank of Ghana Bill which Parliament had painstakingly worked on and approved just a few months earlier.
Pressure from the Minority eventually coughed up CVs of three unremarkable and colourless individuals with no known pedigree in international finance. Meanwhile the Minority commissioned a check on the headquarters of Chemac Inc. in New Jersey, which was identified as the lead-company in the consortium. The resulting report described a run-down building and questioned why such a company should be in the lead of arranging such a loan facility for Ghana. The report concluded that if the ‘IFC’ had the capacity to raise loans, then it should rather be raising such a loan for Chemac Inc. to rehabilitate its headquarters.
A request by the Minority Leader to the Governor of the Bank of Ghana for a Dun and Bradstreet due diligence check on ‘IFC’ has remained unsatisfied to date even though the Governor responded that he was commissioning such a check. In the meantime the World Bank came out clearly to disown the ‘IFC.’ A terse press statement made it clear that the Bank had no knowledge and certainly no dealings with the International Financial Consortium.
There was a lot wrong with the loan agreement itself. A clause claiming commissions and other fees of $33 million to be paid upfront on the entire $1 billion out of the 1st tranche of $350 million was unacceptable. A clause requiring the provision of a sovereign guarantee by the Republic of Ghana sixty clear days before the loan was made available was found suspicious. The provision for a joint-venture company to be established by the Government of Ghana and the providers of the loan – the ‘IFC’ to execute projects under the fund was considered untenable. The Minority also disagreed with sweeping tax exemptions and unbridled repatriation rights in the loan agreement granted to the IFC joint-venture partners. The Minority also found incongruous the NPP Government’s haste to increase the external debt stock by nearly 20%, in the face of HIPC and the scathing criticism it had subjected the previous government to over the accumulation of a debt of $5.6 billion in the 19-year period of PNDC/NDC administration
THE DEBATEThe debate in Parliament was heated. The Senior Minister J.H. Mensah was at his filibustering best. He described the Minority as being shell-shocked at the size of the loan. He said the Minority NDC was afraid that if the NPP procured such a loan, the development projects which will be executed all over the country will ensure that the NDC remains in opposition for an awfully long time. MP for Biakoye and former Majority Leader Kwabena Adjei was in the forefront of the Minority attack. A well executed delivery ridiculing the CVs of the supposed members of the consortium and a graphic description of the headquarters of Chemac Inc. drew amusement and derision from the minority side and numerous points of order and interruptions from the majority.
House Speaker Ala Adjetey was very balanced and impartial in his handling of the house. He allowed sufficient latitude to the Minority to make its point. He also intervened several times to prevent fishing in irrelevancies by the Senior Minister and other speakers on the Majority side. He always promptly drew them to focus on the core issues of the debate, i.e. the credibility of the ‘IFC.’ Unfortunately the debate was truncated. The Speaker and the Leadership of Parliament were leaving that night on an official visit to the US Congress. Only three speakers were allowed on both sides, after which the Minister was asked to wind up. In the end the vote was taken and the Minority lost. While the Minority lost the vote on the floor of the house certainly in the court of public opinion, they had performed their constitutional duty as watchdogs of the people over government.
‘IFC’ AND THE PRESIDENTMany months have passed since the famous IFC debate in Parliament and Ghana is yet to see a single dollar from the deal. The President was quizzed during his recent press conference about the state of the ‘IFC’ loan. For persons with an expert eye, it was obvious that the President was getting doubtful himself about the loan. He skillfully left an escape route in his answer to the question. He said government had so far not found anything to necessitate a withdrawal from the agreement. This implies that there is a possibility of withdrawal under certain circumstances. He added that government in the entire transaction would uphold the supreme interest of the Ghanaian people. He also said that due diligence has been carried out “within the capacity of government.” Now having served in government before, I do know that the capacity to carry out such due diligence is virtually “zilch.” This is why government over the years has relied on the capacity of expert agencies like Dun and Bradstreet whenever there is a doubt.
WILL IT, OR WILL IT NOT COME?More and more the story of the IFC loan is beginning to sound like a fairy tale from the collection of Hans Christian Andersen. The Ghanaian Chronicle and its publisher Kofi Coomson have been relentless in pursuing the story. Many very well written pieces by Kofi Coomson (“at large”) are beginning to create despair in the ranks of government and on the Majority front bench. By the way, where is Kofi Coomson? A little bird says he is tied up in intellectual pursuit and is cranking up academic certificates to put to shame his ‘critics’ who have over the years made an issue of his supposed lack of academic credentials. It sure is beginning to show in his writing.
In many climes a debacle like the illusory ‘IFC’ loan would bring down a whole government. Not in our part of the world though. But if the ‘IFC’ deal backfires, the reputation of government and the majority will have been severely dented. In recent times I have heard NPP’s ‘serial callers’ to radio phone-in programmes singing a new tune. Their assertion is that even if the money does not come Ghana loses nothing. Such arrant nonsense! (Excuse my language).
Of course it does matter!
The numerous trips by the Governor, the Minister of Finance, the Senior Minister and other top officials to US, Germany and other international destinations in search of the money, their hotel bills, meals, per diem etc, the waste of parliamentary man-hours in vetting and debating a non-existent loan all represent a loss to the state. By a strict interpretation of the law, some people are probably candidates for the Fast Track Court on a charge of causing financial loss to the state. Even just the dent on Ghana’s reputation for going on such a wild goose chase is loss enough.
Will someone tell me? Did we issue the sovereign guarantee as was required in the agreement? Where is it at this very moment? Has it been discounted or is still in safe custody? These are questions that cry for answers while we look for ways to assist our government unload this albatross from around its neck either by securing the ‘IFC’ funds or doing a quick ‘Houdini.’