Lawyer writes: Is government in the business of taking over company assets?

Last Thursday the 12th of July 2018 the High Court in Accra appointed the Registrar of Companies as the official liquidator of the Ghana Football Association (GFA) despite the fact that the company is solvent, limited by guarantee and incorporated under the Companies Act, 1963 (Act 179).

Although the AG has stated that “we don’t want to add rotten soup to fresh soup, we need to get it right…we can’t pretend we are running a good FA with all these things that are going on;” respectfully it is not for government to get the composition of a company right; particularly if you have 17 leadership members who remain completely untainted and unaccused and for the first time in over 10 years they had the chance to introduce monumental change at all levels, with the departure of the former President and Vice President of the GFA respectively.

It is for any company to rid itself of all those who stand accused (which the GFA did) and chart the way forward; working in consultation with the government, other stakeholders and consultants to win public confidence once more.

When government employees have been accused of dishonest acts, the government has brought them individually before a competent court of jurisdiction. Individuals from the Police Service, Cocoa Board, the Judiciary, Customs and Excise department, Immigration Service and Osu children’s home have all gone before a competent court of jurisdiction to be made personally liable; not the entire institution wound down or all members replaced.

Afterall, Ghana Football Association is a body corporate, which is an artificial legal entity, registered as a Private Company limited by Guarantee under the Companies Act 1963 (Act 179). Government of Ghana is not a member or director of the Ghana Football Association.  GFA is not a statutory body, state-owned enterprise, government ministry, agency or department.

GFA’s acts are not synonymous with the State nor does its very existence and functions give it an image intertwined with that of the state and the nation as a whole. GFA further paid its own staff until its accounts were frozen, then government stepped in and said they wanted to pay for the staff of GFA which in itself is unprecedented since GFA is not a statutory body, state-owned enterprise, government ministry, agency or department.

We shouldn’t forget that the government of Ghana through the Ministry of Youth and Sports signed a Cooperation Agreement with GFA which at Part 4 of Article 31 subsection 1 States that when government provides financial assistance to the GFA, it has the right to ensure good management and transparency only in respect of the grants or funds the Government has granted to the GFA. Aside from those specific funds, the Government has no authority whatsoever to manage the affairs of the GFA and has petitioned the court in order to extend its authority when it comes to managing the affairs of football in Ghana.

Furthermore, in cases where it has been suggested that a company was being used to perpetrate fraud, the court’s answer in Ghana has never been the dissolution of the company. Rather, the posture of the courts has been to “lift the veil of incorporation” in order to make individual officers behinds the company liable for the said fraud Re Darby; Ex parte Broughton [1911] 1 KB 95. This approach by the court has not been adopted by government or the judiciary in the GFA’s case.

In terms of law, there is also a general reluctance by the courts to wind up a company that is solvent as was stated in Billy v Kuwor 1991 1 GLR 522.

Although some members of the Executive Committee leadership team have been accused, at least 17 leadership team members remain untainted and unaccused and Article 19 (2)(c) of the 1992 Constitution states that every person accused of committing an offence is innocent of the crime until the crime is proved or he pleads guilty. It is also the duty of the court to make those who (individually) commit crimes accountable, not wind down an entire company whose remaining untainted leadership team can run the operation of that company.

The leadership team at the GFA is composed of at least at least 22 Executive Committee members, 17 of which remain completely untainted, unaccused and were in a perfect position to win back the public’s confidence following the resignation of the former president of the GFA. The 17 Executive Committee members had in 4 days since the resignation of their former President, consulted extensively in order to start mapping and introducing monumental structural changes in collaboration with all stakeholders and key international consultants.

I know personally that the remaining Executive Committee members that are not implicated in the scandal had begun to put forward a restructuring timetable and roadmap to be handled by the management of GFA in consultation with other groups and stakeholders; an organizational development and stakeholder relations plan; compliance and legal risk management system; regulatory and policy reforms and a plan to overhaul the corporate governance of the organization at all levels.

Yet the judiciary in Ghana is starting the process of winding down a solvent company that is capable of being run by that remaining Executive leadership team.

The Attorney General, in her own ex parte submission in court alleged that the GFA had become the de facto property of one man, which is the past president of the GFA. She further alleged that he had rewritten the rules of the organization. If that’s the case, then why not allow a leadership team of at least 17 untainted Executive Committee members to lead and turn the company around, which is standard company policy.

Afterall the GFA is made up of clubs most of which are companies limited by shares. The referees are not members of the clubs, club officials by virtue of the principle of company law are separate and distinct from the clubs. It is, therefore, illegal to dissolve an association just because of the conduct of some individuals who are not by themselves members of the association.

The Government argued in court on the 12th of July 2018 that public interest considerations mandate the government to act and petition the court for the liquidation of the GFA.

The court has a duty to ensure that in the absence of any other remedy it will be just and equitable that the company should be wound up and shall make a winding-up order unless it is of the opinion, both that some other remedy is available to the government and that they acted unreasonably in seeking to have the company wound up instead of pursuing that other remedy.

There was another remedy available to government and the court and that remedy has been expressed by the GFA, namely that the remaining 17 untainted Executive Committee members could introduce monumental structural changes and overhaul corporate governance at all levels of the GFA. Government, in consultation with various stakeholders, could have published a set of reforms that the remaining untainted leadership team at the GFA could implement whilst working with all stakeholders, which is what happens when companies continue following the removal of tainted elements.

Furthermore, the government of Ghana made the unprecedented offer of offering to pay all GFA staff salaries two days before the court’s 12thof July 2018 ruling. In my opinion, government offered to pay the salaries of GFA staff because they know that legally, the GFA is an autonomous legal entity that is not heavily reliant on financial or logistical support from the government. GFA further pays its own staff and government wanted to start paying the salaries to show that GFA was not autonomous.

Although the national football teams were pre-financed by the state in order to play matches (particularly abroad); the Ghana Football Association paid back the monies to the Ministry of Youth and Sports when GFA was reimbursed by FIFA each year.  GFA was mostly run with finances from its members and grants from FIFA, CAF and WAFU.

Government could have easily not taken this matter to court, especially after the resignation of the former President of the GFA and the fact that at least 17 members of the leadership team at the GFA remained untainted. Government could have for instance firmly stipulated their requirements to GFA’s remaining leadership team that remain completely untainted.

Furthermore, illegality of any sort first needs to be proven by a court of law and individual members made accountable, not an entire company wound down.

Article 19 (2)(c) of the 1992 Constitution states that every person accused of committing an offence is innocent of the crime until the crime is proved or he pleads guilty. It is also the duty of the court to make those who (individually) commit crimes accountable, not wind down an entire company whose remaining untainted leadership team can run the operation of that company.

Writer; Ms. Amanda Akuokor Clinton