Former Water Resources, Works and Housing Minister Collins Dauda and four others have been slapped with fresh charges in the Saglemi Housing case.
The accused persons were dragged to the Accra High Court for causing financial loss to the state in the $200 million Saglemi Affordable Housing project.
The four others are Alhaji Dauda’s successor, Kwaku Agyeman-Mensah; the Chief Director at the Ministry, Alhaji Ziblim Yakubu; the Executive Chairman of Construtora OAS Ghana Limited, Andrew Clocanas; and a Director of Ridge Management Solutions DWC-LLC (RMS), Nouvi Tetteh Angelo.
The latest charge sheet is replacing the previous 52 charges against the accused persons.
A Principal State Attorney, Hilda Craig, informed the court of the latest development on Tuesday, January 24.
“The prosecution has, as of this morning (Tuesday), filed a fresh charge sheet. This charge sheet, as we indicated to the court some time ago, is to replace what is currently before you,” she said.
While Alhaji Collins Dauda and three others were present, Alhaji Zeblim Yakutia, the third accused, was absent due to ill health.
The court is yet to take their pleas on the new charges.
Facts before the court
In August 2012, the then President, John Dramani Mahama, granted executive approval to the Housing Ministry to construct 5,000 affordable housing units, known as the Saglemi Affordable Housing Project.
To be executed by Construtora OAS Ltd, the housing units were to be sold to workers through mortgage arrangements provided by the then Ghana Home Loans Company.
The project was funded by Credit Suisse following parliamentary approval.
A facility agreement was signed on January 4 2013, to release $200 million to fund the construction of the 5,000 housing units.
On that same day (January 4 2013), the then Housing Minister Alhaji Dauda is said to have signed the EPC agreement with Construtora OAS, represented by Clocanas, the fourth accused in the case.
The prosecutor said the project was to be executed in four phases on 2,172 acres of land at a contract price of $200 million, including consultancy services.
An Escrow Management Agreement, a condition precedent to the facility’s release to the borrower, was also signed under the facility and the EPC agreements.
This agreement was between the Finance Ministry (borrower), the MWRWH (account holder), the Bank of Ghana (account holding bank) and Construtora OAS (contractor).
“The purpose of this agreement was to ensure that the $200 million facility would be properly applied towards the development of the 5,000 housing units,” the Attorney General’s lawyer said.
Per the agreements, payments were to be effected only when specific works had been duly executed, verified and certified by the consultants of the project, Architectural and Engineering Services Ltd (AESL).
However, the EPC agreement provided an advance payment of 40% of the contract price to the contractor within five working days of receipt of the facility in the Escrow Account.
The advance payment was to be applied towards specific works set out in the contract, with the remaining amount paid to the contractor based on the fulfilment of specific milestones.
“The contractor was required under the agreement to set out the details of the achieved project milestones, which had to be verified and certified by the consultants before receiving payment,” the prosecutor said.
The prosecution said on January 9 2013, Credit Suisse disbursed an amount of $198,450,000, approximately the said $200 million of fees and transaction expenses, into the Escrow Account.
On February 27 of that same year, $80 million representing 40% of the contract, was transferred to Construtora OAS as advance payment.
The contractor, however, failed to apply the amount toward the purpose for which the payment was made.
On February 27 2014, the first accused, who had assumed office as the new minister without any parliamentary approval, is said to have reviewed the original EPC and signed the First and Restated Agreement with Construtora OAS, represented by its Executive Chairman, the fourth accused.
In the process, he changed the scope of work and applied all of the $200 million approved by Parliament to construct 5,000 housing units.
The prosecution said this new agreement required the contractor to execute the project in three phases over 1,272 acres whilst the $200 million was now to be applied towards the execution of only the first phase of the project comprising just about 1502 housing units.
This new agreement was contrary to the executive and parliamentary approvals and the Facility and Escrow Management Agreements.
On April 15 2013, AESL signed a contract with Vito Hugo-Coordenacaoe Gestao De Projectos (VHM), subcontracting their consultancy services under the EPC Agreement to the company for $5,000,000 over 24 months.
This was the amount provided under the EPC Agreement for consultancy services to construct the 5000 housing units.
Under the agreement between AESL and VHM, a maximum of $2,000,000 is to be paid to AESL, while not more than $2,987,750, was paid to VHM for their services. This contract also provided for a 40% advance payment.
In April 2015, while the AESL and the VHM were still providing consultancy services under the contract, Dauda entered another contract for consultancy services with Ridge Management Solutions DWC-LLC (RMS), represented by its director and majority shareholder, the fifth accused, Nouvi Tettey Angelo, for a period of three months at a contract sum on $5.6 million.
According to the prosecution, this was at a time RMS was not registered in Ghana as a company.
Once again, the sector minister was required to make an advance payment of 40% of the contract sum. This contract was completely outside the EPC Agreement.
Investigations revealed that the fifth accused, the majority shareholder of RMS, is also a Director of VHM Ghana Limited.
In August 2016, the second accused entered into yet another consultancy agreement with RMS, this time for what was referred to as ‘marketing implementation services’ for a sum of $2,502,198.00.
Again, the ministry was required to make an advance payment of 40% of the contract sum.
Per these facts, all this while, the AESL and the VHM were purportedly performing the same consultancy services for the project, their consultancy agreements having been extended at various times by the second and third accused persons.
On December 21 2016, the third accused, Alhaji Ziblim Yakubu, reviewed the First and Restated Agreement without recourse to Parliament and signed the Second and Restated Agreement.
According to the suit, this led to a further reduction in the scope of works to 1,412 housing units at a revised contract price of $181,018,000.00 and extended the completion period of the contract to July 31 2017, without any basis.
Between March 2014 and January 2015, an amount of $46,131,153.41 was paid to the contractor, Construtora OAS, whilst $3,386,916.08 was paid to AESL and VHM when no works had been duly executed by the contractor.
These payments were authorized and approved by the first and third accused without any evidence of specific project milestones achieved by the contractor as required under the EPC Agreement.
Furthermore, according to the Attorney General, there was no justification for the appropriate use of the advance payment of $80 million earlier made.
Between June 2015 and January 2017, a further amount of $54,066,768.16 was paid to the project’s contractor when no works had been duly executed. This time too, there were no milestone reports supporting the payments.
Nonetheless, the second and third accused persons ordered the payments to be made.
Further payments were also made to the three consultants, AESL, VHM and RMS, far in excess of the $5,000,000 stated as consultancy fees in the original EPC Agreement without any evidence of work they had done.
The prosecution said there were no verification and certification of actual work done by the contractor as required under the EPC Agreement.
Even though a total amount of $196,428,891.66 has been spent on the Saglemi Affordable Housing Project, with the contractor having been paid $179,904,757.78, investigations revealed that the cost of works executed on the site, including consultancy services, is about $64,982,900.77.
Only 651.75 acres of land out of 2,172 acres of land made available by the sector ministry to the contractor for the project has been developed.
Investigations further revealed that only 668 housing units were completed by the contractor. These houses, the prosecution explained, are, however, not habitable.
Not a single house under the project has been sold, and the facility remains unpaid, resulting in huge financial loss to the state.