Opinions of Sat, 17 Feb 20183
Edudzi writes: Government must stop playing political games with foreign investors
The Constitution of Ghana permits the Government of Ghana to look for foreign investment.
To this end, the Framers of the Constitution provided that anytime Government intends to enter any agreement with any foreign entity that has economic or business interest, the agreement must be subject to prior parliamentary approval or ratification before it can have any legal effect.
So starting from the Faroe Atlantic decision, the Supreme Court has said that in view of the fact that the Power Purchase Agreement was not ratified by Parliament, no legal liabilities will flow from it.
This view of the Supreme Court in construing Article 181(5) was applied in the case of Balkan Energy in respect of another Power Purchase Agreement that did not receive parliamentary approval or ratification.
The Supreme Court unanimously said that the requirements of parliamentary approval or ratification is to ensure probity, transparency and accountability as stated in the Preamble to the Constitution.
Hence, the Supreme Court in the subsequent decisions in Waterville and Isofoton ordered that payments made in respect of contracts or agreement made in contravention of Article 181(5) of the Constitution must be refunded except without interest.
That has been the posturing of the Supreme Court in dealing with such investment cases.
This posturing of the Supreme Court has been criticized by Lawyers and investors as very dangerous and unduly harsh against the innocent investor.
These agreements are signed by Government officials, who should know about the laws of Ghana.
The investor should not be the one to be made to suffer for the conduct of the public officer in failing to take the Agreement to Parliament for ratification.
It is important to emphasize that there is something called "sanctity of contracts", which enjoins parties to a contract to act in accordance with same or observe the terms of the Agreement.
Such that failure to observe the terms of that contract has always resulted in damages against the offending party.
From 2017, the current administration under the Presidency of H.E Nana Addo Danquah Akuffo Addo has decided to criminalize or input criminality into agreements signed by the previous administration headed by then President John Mahama.
One of such agreement is the Ameri transaction.
In the midst of the dumsor or energy crisis that resurfaced from 2007 when the water levels in the Akosombo dam went so low.
The Kuffour administration initiated the Bui Dam project with Chinese facility to be paid partly with our cocoa.
That project was continued and completed by the Mills-Mahama administration without cancellation or renegotiation threats. That project is now generating about 250-300 megawatts at an estimated cost of $700m.
Around 2014-2015, in order to fix the crippling power crisis, Government of Ghana decided to fix the problem on an emergency basis.
Based on this emergency situation, Government of Ghana went for the AMERI POWER PROJECT.
Government officials from the Volta River Authority, Ministry of Power, Attorney General Department, Public Utilities Regulatory Commission, Energy Commission and the Environmental Protection Agency among many others helped in putting the BOOT Agreement with the Ameri together to generate 250 megawatts emergency power plants to fix the dumsor problem.
Ameri was to build, operate, transfer of a 250 megawatts emergency power plants for the Government of Ghana through VRA.
Events under the transaction.
On the issue of the cost of the equipment.
•The agreement with AMERI is a Build, Own, Operate and Transfer (BOOT) agreement and not an outright purchase of generating plants.
• The Government of Ghana has not made ANY PAYMENTS to AMERI and will not be making any payments for the cost of the equipment.
• Per the agreement with AMERI, the Government of Ghana through the Volta River Authority (VRA) will only make payments to Ameri for power produced and supplied to the VRA just like any other Independent Power Producer (IPP).
This is how the due diligence was done on the Ameri Power Plants.
• The Government of Ghana has an agreement with AMERI Energy.
• His Royal Highness, Sheikh Ahmed Dalmook Al-Maktoum, Member of the Ruling family of Dubai is the Chairman of Ameri Energy.
• The Bank of Ghana before establishing the Standby LC conducted its own due diligence on AMERI Energy.
• The American firm, JP Morgan also independently conducted its own due diligence before confirming the Standby LC for the project.
• Government of Ghana represented by the Ministry of Power and the Attorney General’s Department also conducted due diligence on AMERI Energy and reviewed strenuously the project agreement before submitting to Parliament.
• Parliament, upon receipt of relevant documentation on the project and the agreement, also scrutinized and reviewed the agreement before approving it at the Committee Level unanimously and later by the House.
Government of Ghana through VRA only pays Ameri for electricity generated and given to VRA and transmitted to ECG.
So VRA won't pay Ameri unless they have vetted and approved of payment of power actually supplied.
Also remember that Government of Ghana did not pay outright for the plants.
Government could not buy it outright because there was no such funds available to do that immediately.
Remember that the Ameri plants were deployed within 90 days, the shortest emergency power plants deployment in Ghana.
An emergency power plants deployment.
Extensive due diligence was done by both external and internal organizations.
From the reputed JP Morgan Chase to Price Water House and others.
The tariff was independently approved by the Public Utilities Regulatory Commission.
Energy Commission gave the necessary statutory approvals.
The NPP Ranking Member of the Mines and Energy Committee of Parliament, Hon KT Hammond, on the floor of the house did not show any disapproval when Hon Yieleh Chereh move the motion for the adoption of the Committee Report on the transaction.
The entire house approved it without objections.
The Supreme Court in the various decision in Faroe Altantic, Balkan Energy, Waterville among others held that the requirements of parliamentary approval for power purchase agreement within the meaning of international business transactions under Article 181(5) of the Constitution is to promote accountability, probity, transparency and due diligence.
Minister has signed the agreement, Parliament has the responsibility to independently conduct its own due diligence among others.
Same was done.
Parliament is always presumed to have acted right unless it is established that Parliament acted unconstitutional.
Before Parliament adopted and approved it? Parliament subsequently had the responsibility to independently review it.
Parliament had the power to reject the entire transaction.
Parliament satisfied itself that everything was right and approved it at the Committee and the House.
It is instructive to note that that the Ameri transaction was subsequently ratified by the Public Procurement Authority Board pursuant to the Public Procurement Act as amended.
This is an agreement that has received the most vetting by statutory institutions.
Notwithstanding the fact that the Agreement was ratified by Parliament without objection(s), the current Parliament pursuant to a motion filed by NPP MP, Hon KT Hammond, to have the Ameri transaction varied or reviewed by Parliament.
Based on this motion, the Speaker of Parliament referred the matter to a Select Committee of Parliament to deal with it.
The question is, does Parliament have the constitutional authority to do deal with an agreement that it is not a party to?
Can Parliament review or set aside or abrogate an agreement it is not a party to?
To resolve this question, I need to first establish who are the parties to this agreement?
The answer to this question is readily apparent on the face of the Agreement.
It is strictly between the Government of Ghana represented by the Minister of Power and AMERI without more.
Parliament of Ghana is not a party to the Agreement.
The role of Parliament as provided for by the Constitution is found in Article 181(5) of the Constitution.
It is only in respect of RATIFICATION.
Has the Agreement been ratified?
The answer is in the affirmative.
When Parliament has ratified the Agreement, it's role has ended.
It has become functus officio.
If you are not a party to an agreement, can you abrogate, review or set aside?
The answer is a big NO.
Basic contract law will tell you that it is only the parties to the Agreement that can terminate, review or set it aside.
In exceptional circumstances, where third party rights are reserved,it must be so done expressly.
I am fortified in this proposition by the decision of the Supreme Court.
The Supreme Court had this to say, "I cannot see any direct role for parliament in the termination of the agreement in this case after it has approved the same. Any undue interference with the operation of the contract will damage the commercial image of the government to the detriment of the public interest.
The purpose of requiring parliamentary approval of agreements or measures of critical national importance has been held by this court to be to ensure transparency, openness and parliamentary consent in the national interest, but this court has never attributed an overbreadth role to parliament in such matters beyond the parameters of the particular matter in regard to which such parliamentary approval is required.
See Attorney-General v Faroe Atlantic Co. Ltd. (2005-2006) SC GLR 271, Amidu (No. 2) v A-G, Isofoton S A & Forson (No. 1) [2013-2014] 1 SCGLR 167, Klomega (No. 2) v A-G & Ghana Ports and Harbours Authority & Ors. (2013-2014) 1 SCGLR 581.
It must be emphasized that when parliamentary approval is given under article 268(1) the agreement in question remains an executive act and not the act of the legislature."Atuguba JSC concurring opinion in the case of John Ndebugre v Attorney General & Aksa Energy.
From the above Supreme Court decision, Parliament has no business to look into the Agreement again.
As the respected Supreme Court Justice, Atuguba admonished in the case cited supra, "Any undue interference with the operation of the contract will damage the commercial image of the government to the detriment of the public interest."
That is to say any undue interference will DAMAGE the commercial image of the government.
Clearly, Parliament is acting unconstitutional in this needless and reckless interference with the Agreement and will have no legal effect on the Agreement.
It is important that Government of Ghana stop hiding behind Parliament for mischief.
It is not good for the image of the country.
It is curious to note that Government of Ghana has stopped paying Ameri contrary to the terms of the Agreement.
This is clearly contrary to the expressed terms of the Agreement and law.
Government of Ghana is setting itself up for serious damages should Ameri proceed to International Arbitration.
Interestingly enough, Government of Ghana is not alleging any breach of statutes or the Constitution.
Purely on unfounded allegations of fraud or corruption?The proof is on Government of Ghana and it is proof beyond reasonable doubt.
Political games fuel by perception cannot stand any legal scrutiny based on strict proof.
It is even dead on arrival.
I am worried for the Energy Minister, Boakye Agyarko, who took that reckless decision to suspend payment to Ameri without seeking any legal opinion from the Attorney General.
Should Government of Ghana be made to pay damages from his reckless conduct, he must be made to pay it personally or be charged for causing financial loss to the State.
Do you know that after suspending the payment, Government now writes to the Attorney General for legal opinion on the suspension.
The Legal opinion from the Attorney General Department should be worrying to Boakye Agyarko, any administration can use it to prosecute him for causing financial loss to the State.
He took the decision before seeking legal opinion.
The State started incurring liabilities from that time of the suspension.
Interestingly enough, the Attorney General legal opinion is to the effect that the suspension is without legal basis.
In fact, the legal opinion further stated that by failing to pay Ameri, Government of Ghana has breached the Agreement.
Once, the Attorney General has stated that Government of Ghana has breached the Agreement, Ameri can simply move the equipment to another country and sue the Government of Ghana for damages.
Would Boakye Agyarko pay for the damages? No, the taxpayers money, as we say in Ghana.
Who is really advising Government officials?
I pray that any future administration examine this.
Government officials think they can operate with emotions and feelings.
As a State official, always ask, by what authority, am I acting?It will save you future troubles.
As at October 2017, Government of Ghana had no evidence of corruption or fraud against Ameri meanwhile, it has taken a decision to suspend payment to it.
Government is now fishing for the fraud or corruption. It is a terrible commentary on our emotional democracy.
The fraud should have existed before the transaction and not after.
I have seen officials under the current administration going abroad looking for investors.
At the same time, they are recklessly abusing the rights reserved under legitimately signed agreements.
On one front Government of Ghana harassing investors from Middle East and at the same time going back to them begging for more investment in their country what kind of hypocrisy is that?
The President of Imani Ghana, a respected think tank, Franklin Cudjoe rightly observed on Citifm current affairs political show, "The best way to deal with the Ameri contract is to sit with the Ameri company and ask for reduction.
The Ameri contract is so watertight that you will end up losing if you attempt going to court."
My Lecturer at the Faculty of Law, University of Ghana, during our International Investment Law class, would always say that international investment must always be protected against political interference.
Political interference has the potential of destroying not only the reputation of the government of the day but the image of the country.
That explains the existence of Bilateral Investment Treaties. Now, this is where I have a problem with the double standards of this administration.
As late as December 2017 under the Presidency of Nana Addo, JP Morgan Chase wanted to know whether to extend the standby LC made in respect of the transaction.
Bank of Ghana responded to JP Morgan Chase to go ahead and confirm the standby LC which was done on the 2nd January 2018.
In fact, Bank of Ghana in December 2017 okayed the Ameri transaction.
So as I write this article, the standby has been extended.
The danger is that Ameri can start drawing the standby LC because Government of Ghana has defaulted in paying them.
The greatest risk is now Ghana.
The commercial image of Ghana is going down because going forward, every foreign investor will require a guaranteed LC because another Government will try to interfere with their investments.
It increases the cost of doing business by the country.Our commercial image as a country will have no currency.
The conduct of this administration is not helpful.
I have seen how Yoofi Grant is trying hard to get investment into Ghana but where is the assurance that tomorrow, another government won't act in this reckless manner.
We must guard against it.
Curiously, the Vice President, Dr Bawumia is billed to travel to Gulf states in March looking for foreign investment into our energy, health, railway and education sectors.
At the time, you your administration is playing dirty political games with Ameri?
What is the principle here?
If I was not done by me, it is evil and bad.
What is the assurance that another administration based on your conduct not deal in the same manner, you are dealing with Ameri?
We must always resolve to respect the SANCTITY OF ALL CONTRACTS devoid of political gamesmanship.
It is not good for the forward march of Ghana.
But for the power from the Ameri plants, Ghana will still be in dumsor.
God bless our homeland Ghana.