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It has emerged that the suspended National Chairman of the New Patriotic Party (NPP) Paul Afoko made a whopping over half a million dollars for fronting as a “nominee director” for an offshore company involved in the building of the five-star luxury Kempinski hotel in Accra.

Leaked confidential documents from Panamanian law firm Mossack Fonseca show how the Kufuor administration committed Ghana to an agreement with a foreign company for the development and operation of a five-star luxury hotel in Accra before seeking parliamentary approval.

According to the leaked files, documents show that on 15 February 2006, the government of Ghana entered into a Memorandum of Understanding (MoU) for the development of the 300 000m² decommissioned Accra Racecourse site. Under former president John Kufuor, the Ghanaian government committed Cascade Development Company and its affiliates, the firm that constructed the Kempinski Hotel, to a preliminary outline plan to develop the site into a user complex. The site, once inhabited by squatters, would see development of a five-star hotel, along with an office building, residential buildings and a shopping mall.

Former chief of staff under the Kufuor administration, Kojo Mpiani, says he signed the MoU because the developers showed serious intent. The supporting agreement between the government and Cascade Development Company was given executive approval afterwards. Mpiani explains that the deal didn’t go through cabinet approval because the president had the power to approve such agreements if he was satisfied with the details after review, which explains why the support agreement sent to Parliament for approval was given executive approval.

The leaked confidential document from the office of the president dated 21 October 2008 says:

I refer to your request for executive approval on the above subject matter dated 14 October, 2008. His Excellency the President has given Executive approval for the support agreement between Government of Ghana and Cascade Development Company for the development of a five-star hotel at the Accra Race Course.

 
50-YEAR SUBLEASE

In the agreement, the government committed to sublease the land for 50 years. The agreement also required Cascade Development Company to manage the Accra International Conference Centre. The final agreement was signed on 11 January 2007. Article 181(5) of the Ghanaian Constitution says that parliamentary approval is required in respect of “international business transactions” which the state of Ghana is a party to. The parliamentary approval, however, was sought a year after the government signed an agreement with the Cascade Development Company. Chairman of the Parliamentary Select Committee on Finance, James Avedzi, whose party was in opposition during the period, says the government erred in signing the agreement before seeking parliamentary approval.

In the supporting agreement approved by Parliament, the government indemnified the Cascade Development Company and Gold Coast Resort International “from any liability to pay any tax on the income, profits, whether actual or accrued, earned or made by Cascade Development Company and its affiliates in respect of each sub-phase for a period of five years from the completion of such relevant sub-phase.” Avedzi says these exemptions were granted in line with government’s vision of making Ghana a preferred tourist destination.

Two months after the government of Ghana signed the MoU with the developers, Gold Coast Resorts International was incorporated, on 19 April 2006. It appointed Cascade Development Company. through its Ghana subsidiary, to develop the five-star hotel complex. Gold Coast Resorts is a web of offshore entities, with the largest shareholder of the company (45%) being Zakhem International SA, an entity registered in the tax haven of Luxembourg. At least two other shareholders of the Gold Coast Resorts – Bethana Investments Inc and Uridor Investments SA – were registered in Panama, another known tax haven. The government of Ghana, through the Ghana Tourist Board, owns 10% of Gold Coast Resorts.

The Panama Papers confirm that Afoko, a leading member of the NPP and close friend of Kufuor was a shareholder in Gold Coast Resorts International. However, he transferred his shares to Zakhem International on 15 July, 2009. The transfer value of the shares was $640,000. The reason for the transfer is unclear, but Mr. Afoko is believed to have played a lead role in negotiations on behalf of an offshore company and the government during the period the NPP was in power. Afoko declined to comment on the story. – Panama Papers

 
HOTEL MANAGER

The extent of the relationship between Afoko and Marwan Zakhem, a manager at Kempinski Hotel, are unclear, but Mossack Fonseca’s records show that Zakhem’s name appears on the register of directors and officers of Afoko’s oil firm, the West African Petroleum Company.

Afoko and Zakhem are shown in the documents as registered members of the company, which was registered in the British Virgin Islands. Zakhem had 250 shares, which were received on 13 January 2005. However he ceased to be a member of the company on 12 August 2010 and transferred his shares on the same date. Curiously, the Z2 Group Limited, which Zakhem is a director of, entered the register as member on 12 August 2010. In the leaked files, Zakhem is listed as a director GCC Resorts Limited, Zakhem Construction (Ghana) Limited and Cascade Development Company, the entity that constructed the five-star luxurious hotel. When officials of Kempinski Hotel were contacted, they too declined to comment, saying they only offer technical expertise to owners of the facility.

On 15 July 2009, two months after Afoko was allocated his shares, he transferred them to Zakhem International SA for $640,000. Files show, however, that Afoko is still a shareholder in the company. When the company files were updated by on 26 November, 2012 by Bryan Scatliffe, the assistant secretary for and on behalf of Mossack Fonseca, Afoko’s name was still on the list with 576,000 shares. – Panama Papers