A leaked report of the Judgment Debt Commission is accusing the erstwhile Kufour administration of engaging in needless “feet-dragging” in the payment of a legitimate judgment debt due construction firm Construction pioneers(CP) leading to the figure ballooning from some 27million euros to 162 million euros.
According to the Commission “A review of the GoG’s role in the resolution of the CP saga between 2001 and 2008 shows that as at 18th October 2002, the total outstanding claim of CP against the State had been computed at DM 55, 092,544.65 and GHc2, 747,165.78, which is the total equivalent of Euro 27, 547,272(€27, 547,272).”
However, “as of 28th February 2009, the ICC awarded claim in favour of CP in addition to undisputed but unpaid Certificates had been computed at Euro 162, 609,600.89 (€162, 609,600.89), which was accruing interest at the rate of €12, 787.19 a day”.
Thus to the commission if the Kufour administration was minded to settle the debt as of 2002 when it stood at some 27 million euros it would not have ballooned to 162million as of 2009.
Most of the feet-dragging “in payment and hence the astronomical increase in the debt of both this CP issue and indeed other judgment debts” have, in the Commission’s view, “contributed to the eventual high bill in foreign exchange terms for the State”.
This they attribute to the distrust between incumbent governments and their predecessors “Most current political incumbents are completely distrustful of the intentions of their predecessors in such matters as contracts that, they cannot see their way out of the debts partially or fully either technically or professionally.”
In the opinion of this Commission, if there is no satisfactory evidence that can stand up in court, politicians must learn; “to cut the losses and count the gains”. “All Governments; past, present and possibly future ones, need to watch this unhealthy practice carefully and put a stop to it”.
The cost to the country of “this pettiness is too high”. In the long run, it continues “nothing by way of even a small fraction of the debt is reduced. It is rather increased through compounding accrued interest on principal and on loss of profit through effluxion of time to the hurt of the State”.
The commission was particularly worried about the NPP government’s failure to pay especially when earlier “ incumbent Attorney-General and Minister of Justice Hon Paapa Owusu Ankomah, had admitted that the Government had a bad case in the dispute with CP.
His successor Hon Joe Ghartey also held the same view and strongly urged the then Government to arrange an immediate payment of the outstanding debt.” So also had the then”Minister for Roads and Transport Dr. Richard Anane added his voice to the immediate payment to CP of this over-hanging debt”. These debts were, however, not paid until there was a change of government in January 2009.
The report however commended the former attorney general Betty Mould Iddrissu for negotiating down the 163million euros to 94 million euros “This decision by the then Attorney-General and Minister of Justice Betty Mould-Iddrisu, which recommended and insisted that the awards which she had managed to negotiate downwards from about 163 million Euros (€163 million) to 94 million Euros (€94 million) should be satisfied and paid by the State was, in the opinion of this Commission, one of the best decisions that could be taken in the interest of the State.
The negotiated settlement agreement brokered by Betty Mould-Iddrisu required that the negotiated amount of €94 million be paid quarterly to CP.
The Commission subpoenaed the Central Bank (BoG) to testify on the payments so far made to CP as a result of the negotiated settlement.
The Officer who represented the Bank of Ghana at the Commission was Mr. Eric K. Hammond who said he was a Chief Manager at the Bank.
He presented documents to the Commission on all payments made to CP arising from the negotiated settlement and the dates of payment. The schedule was as follows:-
11th June 2008————————–£7, 350,882.81
30th October 2009———————-€7, 000,000.00
21st December 2009——————-€6, 980,178.18
15th April 2010————————–€9, 400,000.00
2nd July 2010—————————–€9, 260,000.00
20th October 2010———————-€9, 120,000.00
2nd February 2011———————-€8, 980,000.00
1st April 2011—————————-€8, 840,000.00
5th July 2011—————————–€8, 700,000.00
1st November 2011——————-€16, 980,000.00
TOTAL EURO PAYMENT €85, 260,178.98
POUND PAYMENT £7, 350,882.81
The above schedule shows that by the 1st of November 2011, the whole negotiated amount of Ninety-four million Euros (€94 million) had been paid to CP.
Another Arbitration initiated by CP
Meanwhile, a memorandum that the former Solicitor General at the Attorney-General’s Department, Mrs. Ama Abuakwaa Gaisie submitted to the Commission indicated that the two final instalment payments of the negotiated sum were suspended in 2012 due to the hearings into the said payments by the Public Accounts Committee (PAC) of Parliament. The memo was, however silent on the balance left.
The memo disclosed further that, “as a result of the failure by Government to pay the last two instalments following the suspension due to the PAC hearings, CP, after several reminders, initiated arbitration pursuant to clause 9 of the Settlement Agreement, claiming the outstanding sums plus interest”.
The Commission was told that this post-settlement arbitration was settled after Cabinet gave its approval for the payment of the two remaining instalments plus interest however; the Ministry of Finance had not as yet paid this sum to bring the CP matter to a close.
The Commission was also notified of another debt in Belgium as a result of enforcement proceedings initiated by CP in Belgium. It is believed that amount remains outstanding and continues to attract interest. And insisted that “It will be in the interest of the State if urgent steps are taken to verify this disclosure and pay all outstanding debts arising from the disputes between CP and the State to bring to a halt the galloping interest rates that these outstanding debts are attracting”.
To arrest such situations, Government and Public officials should themselves begin to initiate agreements on behalf of the State and learn to expunge all inimical clauses which can creep into agreements to wreck economic havoc on the State. Such agreements must always receive the blessings of the Attorney-General’s Office, which is the legal brain of Government.
The cost in interest charges which arise from unnecessary delays due largely to political reasons in settling judgment debts, costs the country quite dearly. The many years of excessive time lag on these CP payments without any reduction but rather appreciation in the amounts payable, was quite expensive to Ghana eventually for, as the saying goes; “one cannot dither while Rome burns”.
This Commission therefore recommends that if the Attorney-General has reason to believe that political decisions increase unnecessarily the cost to the State significantly, the cases must be discontinued to save costs. However, if verifiable evidence could be adduced to support the alleged fraud, then action should be instituted to prosecute the offenders under SMCD 140.
This Commission is of the view that GHA as an autonomous body with a Board should be signing all road contracts for and on behalf of Government so that an independent Engineer who is not an employee of Government is appointed as the Engineer to supervise the projects. The Ministry of Roads would only be a policy making body supervising the activities of the GHA. This will remove any political stain or clout on such contracts.
The Commission therefore strongly recommended that, for this and many other instances that came to light, the Chief Executive of the GHA should be made to sign all road contracts for and on behalf of Government or the State while the Project Engineer is selected from an independent Private Firm which could be held accountable or liable and sued for any infringement
Commission also recommended strongly that Parliamentary approval is necessary for such contracts to ensure that excesses are minimized and other laws of the land strictly adhered to. Again, since the tax exemptions inserted in the agreements were unlawful, the legally exigible taxes must be deducted from the balance due CP, if any.
The Company called Construction Pioneers or CP for short began operating in Ghana as Carl Ploetner Engineering Construction Company in 1976. CP as Carl-Ploetner was awarded a couple of road building contracts when it started its operations in the country in 1976 by the then National Redemption Council (NRC) Government.
However, in 1979 whilst those contracts were on-going, the larger ‘CP-Bremen’ went into liquidation.
Consequently, the then Government of Ghana under the Supreme Military Council (SMC), took steps to protect the interest of the State by terminating all contracts that had been awarded to the Company.
When the Armed Forces Revolutionary Council (AFRC) took over the reins of government from the SMC in a coup d’etat in 1979, it absolved the Company CP-Bremen of any wrong doing in its operations in Ghana and thus allowed it to operate in the country in the name of Bernhard Ploetner.
With this reprieve, Bernhard Ploetner later incorporated and registered Construction Pioneers as an External Company under Ghana’s Company Code [Act 179]. The AFRC then re-instated the old CP-Bremen contracts and awarded them to the new Company.
When by 1993 the Government was finding it difficult to make payments to CP for work done, the Company initiated a number of Arbitral proceedings against the State to enforce payment at the International Chamber of Commerce (ICC) in London, which was the forum provided for in the Contracts. This was in 1994.
The cash-strapped Ghanaian Government was thus put under extreme pressure with several cases filed before the Arbitral Tribunal against the State. The proceedings before the ICC were however later discontinued for an amicable out-of-court settlement in Ghana.
Among the settlements that they agreed to do was that CP would be given three separate contracts to compensate them for the claim that they were making and that the previous contracts they were doing at the time would be cancelled.
The previous contract that led to the 1994 dispute was in respect of the Accra City Roads Project (ACRP), which was later on taken over by the Department of Urban Roads (DUR).
However, the settlement did not take place until two years later on 5th December 1996. The three contracts that the Government entered into with CP were; Biriwa – Takoradi Road overlay, Yamoransa – Assin Praso Road together with a bridge and then the Akim Oda – Nkawkaw Road through Abirem to Akwatia.
These three projects later ended in various disputes between the Government of Ghana and CP at the ICC held in London.
While these disputes over the three projects were pending before the ICC, the new government in 2001 again awarded a fourth project to CP for the construction of Obuasi Town Roads.
|Disclaimer: Opinions expressed here are those of the writers and do not reflect those of Peacefmonline.com. Peacefmonline.com accepts no responsibility legal or otherwise for their accuracy of content. Please report any inappropriate content to us, and we will evaluate it as a matter of priority.|