Let’s “cure” Agyapa deal, not “kill it” – Ofori-Atta

Source The Ghana Report

Finance Minister Ken Ofori-Atta has expressed the government’s resolve to press on with the controversial $1bn Agyapa deal.

Mr Ofori-Atta believes the deal holds value for Ghana and should not be dropped but reviewed to be accepted by all.

For him, the Agyapa deal, which involves monetisation of the country’s mineral royalties and listing via a special purpose company, is the way to go.

“It is good because that is how you raise resources,” he said at a press briefing on Thursday, 12 May 2022, ahead of the African Development Bank 2022 Annual General Meeting scheduled in Ghana.

“The question is the process of doing that. If we have a problem with the process, let’s articulate it, let’s cure it, but let us not drop something that would be good for us and reduce our debt exposure,” he proposed.

The government shelved the deal after critics punched loopholes in the plans to leverage Ghana’s mineral resources for development finance.

Some Civil Society Organisations (CSOs) and the minority in Parliament called for the deal’s cancellation.

It was after former Special Prosecutor Martin Amidu described the transaction as a conduit for corruption.

However, Mr Ofori-Atta insists, “my mind is still there”.

He added that he was aware that “the President has mentioned something about that”.

He hopes Parliament would accept a revised package after it was withdrawn for reconsideration.

The company is expected to list on the London Stock Exchange and the Ghana Stock Exchange and float 49% shares.

But the new proposals have not convinced the Minority in Parliament to accept the deal.

Even before the substantive debate, NDC MP Rockson- Dafeamekpor, a member of the Committee on Constitutional, Legal and Parliamentary Affairs, seems to have shot it down.

In his opinion: “It is not economically prudent for the government to take our mineral royalties that will rake in nearly $200million every year to collateralise that for 15 years and then in return get $500million from the stock exchange in London”.

“It doesn’t make sense,” he pointed out.

“If the regular inflow of revenue can give us $200million, there is a lot we can do with that. $200 multiplied by 15 years comes to about how much?

“We are vehemently opposed to the structure of the agreement. We don’t want our mineral royalties collateralised in any form,” he told Joy News.

The Agyapa deal

On 14 August 2020, Parliament approved the Agyapa Minerals Royalties Investment Agreement and four related documents to allow for the monetisation of Ghana’s future gold royalties.

In the deal, 75.6% of royalties of at least 16 gold mining companies will go into Agyapa Royalties Ltd.

The company will list on the London Stock Exchange and the Ghana Stock Exchange and float 49% shares valued at $1bn.

It hopes to get investors to buy shares while Agyapa Ltd collects gold royalties from future mineral resources to pay dividends to shareholders.

Agyapa Royalties Ltd is also incorporated in a tax haven, British channel island, Jersey, where companies don’t pay corporate tax. It means the company will enjoy considerable tax reliefs.

But a wave of red flags raised by the 22 civil society organisations and the minority in Parliament compelled the government to hasten with caution.

The voices against the deal raised concerns about potential value for money, the registration of the company in a tax haven, as well as the lack of consultation as the minority walked out on the deal on the day the majority passed it.

With the minority raising hell while the CSOs threatened legal action, the government suspended the implementation of the deal when the Special Prosecutor’s Office stepped in to probe the deal on suspicion of allegations of corruption.

The former Special Prosecutor Martin Amidu, in a letter dated September 10, made a formal request to parliament to provide all the information regarding the approval of the deal by the House.

This compelled the government to temporarily suspend the deal.

Almost two months after his request, Mr Amidu, in a 64-page document, raised questions about the processes leading to the selection of transaction advisors for the Agyapa deal, which he described as “opaque”.

What Amidu’s report said

  1. The Special Prosecutor’s work on the Agyapa deal was not an investigation. It is an audit to ensure the agreement complied with the law. The difference is that an investigation would suggest criminality.
  2. The appointment of the Transaction Advisor in the Agyapa deal should have been brought to parliament for approval because it is an international economic transaction. It is international because the government engaged a South African firm, IMARA Corporate Finance Limited (Pty), as a Transaction Advisor.
  3. In selecting the transaction advisor, the company had to get a local partner. IMARA selected Databank, but Special Prosecutor says this is a “decoy”.
  4. The report wants to know how Databank is being paid as a local partner. He said this arrangement is “opaque”, which raises “reasonable suspicion of bid-rigging, and corruption activity, including the potential for illicit financial flows and money laundering.”
  5. There is a zero-chance that the advice given by the Transaction Advisor would be neutral and impartial because of individual interests at the Ministry of Finance and IMARA/Databank.
  6. Chief Director of the Ministry of Finance should have signed the agreement, not the Deputy Minister of Finance, Charles Adu Boahen. This is because the Public Financial Management law gives the Chief Director that power to bind the Finance Ministry to an agreement.
  7. Several service providers and underwriters, including Africa Legal Associates, the legal firm owned by the president’s cousin Gabby Otchere Darko, may not have been chosen on merit. This is because they were not selected in accordance with the Public Procurement Authority.
  8. He believes the selection of the governing board members of the Minerals Income Investment Fund (MIIF) could not meet the litmus test of the prevention of corruption. The Chairman and the other Board members indicated “a real Likelihood of almost all of them being affected by partisan considerations” in the discharge of their duties.
  9. Parliament did not properly scrutinize the agreement, and this makes corruption attractive because “the risk is low”.
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