Agyapa Deal Sinks …Minority Calls For Probe

Minority Leader Haruna Iddrisu has served notice that  a future National Democratic Congress (NDC) led government shall never honour the terms of the Agyapa Royalties deal if the doubts of the Minority are not cleared and transparency made bare.

He insists that Ghana’s royalty rights has been grossly undervalued at $1 Billion and that “the worth of our gold revenue and their projects needs a further thorough probe by independent economic transaction advisors for us to appreciate that they [the Akufo-Addo administration] are not ripping this country off.”

Below are excerpts of the press statement: “The Agreements seek to mortgage Ghana’s future mineral royalties and long term national assets in perpetuity without any regard to its implication on future national revenue streams. Through this transaction, the Akufo Addo government intends to use a Special Purpose Vehicle (SPV), Agyapa Royalties, incorporated as an offshore company in Jersey, in the Channel Islands, a known tax haven, in exchange for an upfront amount of ¢500 million, under the Mineral Development Fund Act, 2018 (Act 978) and its amendment Act, which strangely, was yet to be assented to by the President in accordance with article 106 of the 1992 Constitution to make it law. The Government of Ghana will own 51 per cent of the shares of the company and remaining 49 per cent floated on the London Stock Exchange.

“Let me state emphatically, that Members of Parliament had less than 4 hours to scrutinize these agreements, and ascertain the extent to which they would enhance the welfare of the people of Ghana and in particular its ramifications on national revenue into the future. Paradoxically, the Akufo Addo-government claims to have used two years to prepare these agreements and yet, the people’s representatives in Parliament were required to peruse and approve same in less than four hours.

THE MINORITY’S POSITION

Ladies and gentlemen, the Minority in Parliament would like to state unequivocally that a future NDC government will not honour the terms of this unconscionable agreement as described by the current Attorney-General.

Pursuant to this, we wish to state as follows:

1. a) The NDC is of the strong view that the decision to mortgage Ghana’s future mineral royalties in perpetuity is grossly inimical to the interest of the people of Ghana and runs contrary to the constitutional imperative that governmental power is exercised for the welfare of the people of Ghana. This deal fails to enhance public welfare. Our analysis shows clearly that Ghana stands to lose billions of United States Dollars in revenue as a consequence of this illegal transaction. This is because annual gold royalties from the mining sector amount to about ¢200 Million on the average. It makes no economic sense, therefore, to mortgage these receivables to an opaque Special Purpose Vehicle (SPV) in exchange for an upfront amount of just ¢500 million.
2. b) To ensure the deal meets best international practices, the Minority demanded that Parliament be furnished with periodic reports on the activities of the SPV in the spirit of accountability and transparency. These legitimate demands were vehemently opposed by the government and the majority side in parliament.
3. c) Minority’s specific concerns on the offshore entity (Agyapa Royalties)
4. The incorporation of Agyapa as an offshore company in Jersey, in the Channel Islands, a known tax haven, is worrying. Tax havens are generally known for their lack of transparency in matters of corporate governance such as disclosure of the beneficial ownership of the shares of companies.
5. Tax havens are susceptible to money-laundering and thus elevate the risk of Ghana being listed as a money-laundering jurisdiction by international bodies such as the European Union and the United Nations.

iii. Ghanaians will recall that in May 2020, the European Union placed Ghana on its Anti-Money Laundering List (AML) but deferred the implementation date to October 1, 2020 due to the Covid-19 pandemic. By setting up a sovereign wealth fund in a tax haven, the Government of the NPP significantly elevates the risk of Ghana being considered as a money-laundering jurisdiction. This is because individuals and businesses use tax havens such as Jersey to hide their income and wealth so as to avoid payment of taxes and general regulatory scrutiny of their business deals.

1. The European Union, the OECD and the United Nations use evidence of these offshore deals to rate countries on the effectiveness of their anti-money laundering regimes, including laws, regulations, policies, and other governmental actions.
2. d) Minority’s concerns on off-budget transaction. The deal is intended to monetize gold royalties to fund the Budget and ought to have been reflected in the Budget Statements tabled for approval and subsequently enacted in the various Appropriation Acts for the 2020 Fiscal Year. The deal did not reflect in the Budget Statement for the 2020 Fiscal Year.

 

1. e) In reviewing the 2020 Substantive and Supplementary Budgets, the Government did not disclose any of the following fiscal measures to Parliament.

 

1. That the MIIF will substantively replace the Mineral Development Fund (MDF) from 2020, as the Government noted;

 

1. There was no policy on how current MDF beneficiaries, including traditional authorities, will continue to get their share of mineral royalties; and

 

iii. There were no explicit provisions in Financing (or borrowing) and Public Debt in the Budgets from 2020 onwards, besides the International Monetary Fund (IMF) COVID Loan.

 

2020. The Government showed the mineral (gold) monetization “explicitly” in December 2019 as a potential source of financing the Budget in the IMF Article IV Report—but did not do so in the 2019 Budget approved by Parliament in the same December 2020.

 

1. In March 2020, in applying for the IMF COVID-19 Loan (approved in May 2020), GOG took the opposite step in excluding the minerals (gold) royalty monetization from the financing sources.

 

2020. The Government also excluded mineral royalty monetization from its COVID-19 Statements to Parliament in March and May as well as Supplementary Budget in July 2020.

 

1. f) Minority’s Concerns on Family and Friends transaction. This transaction is yet another classical case of family and friends transaction. The good people of this country need to know the following. Ghanaians are demanding answers.

 

1. We need to know the procurement processes used in selecting Africa Legal Associates (ALA) as legal advisors. ALA is owned by Gabby Otchere Darko, the cousin of both President Akufo-Addo and Ken Ofori Atta, the Finance Minister.

 

1. We also need to know the cost of the transaction and how much has been paid to the lawyers, and brokers including Gabby’s company.

 

iii. We need to know whether the amount of money paid to Gabby’s company was at arm’s length.

 

1. Considering Gabby’s relationship with the finance minister and the president we also need to satisfy ourselves that he did not use his influence with decision makers to secure this lucrative deal.

 

1. Why the choice of Kofi Osafo Marfo, son of Senior Minister, Yaw Osafo Marfo? Was he subjected to a credible international competitive selection process?

 

1. What considerations went into determining the remuneration for Mr. Osafo Mafo’s son? Did his father (the senior minister) influence the selection process? Ghanaians deserve to know.

 

vii. Why is he, together with other board members guaranteed employment for the foreseeable future irrespective of their output?

 

1. g) Minority’s concerns on conflict of Interest.