Okudzeto, Gabby Trade ‘Blows’

Posted on: www.dailyguideghana.com

By William Yaw Owusu

Monday August 29, 2011.
Deputy Minister of Information Samuel Okudzeto Ablakwa and Danquah Institute (DI) Chief Executive, Gabby Asare Otchere-Darko were at each other’s throat over the latter’s comment that those facilitating the $3billion Chinese loan are guaranteed $30milliom in the deal.

As a result, Mr. Okudzeto issued a statement demanding “an immediate substantiation or a retraction and apology from the NPP’s Gabby Okyere Darko [sic]”.

According the deputy minister, Gabby had said in an interview on Joy Fm on the eve of Thursday 25th August, 2011 that ‘some people who arranged it (the loan) will have access to $30 million when the $3billion loan is approved by Parliament”.

Mr. Okudzeto further said Gabby “impugned corruption” when he made the remarks.
However, Gabby is adamant and is not ready to retract or offer any apology for his comment.

He said “to help achieve a fuller appreciation of the issues, I wish to begin by drawing Government’s attention back to August 3, 2010, when Parliament gave approval to the $1.5 billion STX Suppliers’ Credit Facility.”

He said that the $1.5 billion facility stipulated expressly in Clause 14.2 FEES, the following: (a) The Government shall pay to the Supplier a Facility Fee of 0.75% of the Facility; (b) the Government shall pay to the Supplier a Management Fee of 0.50% of the Facility; (c) the Facility Fee and the Management Fee shall form part of the first disbursement of the Facility.”

He said the sub-paragraph of 14.3 INSURANCE PREMIUM, stated: “(a) the Government shall pay to the Supplier of the Facility for the purpose of arranging political risk insurance cover for the Facility (The Insurance Premium); (b) the Insurance Premium shall form part of the first disbursement of the Facility.

“These put the total amount of stipulated fees for that $1.5 billion transaction at $20 billion and the insurance premium at about $265 million,” adding “but, there was an important provision that the two fees shall only be paid to the supplier (STX E&C (Ghana) Ltd) at the point of first disbursement.”

On the face of the STX agreement, Gabby said the ‘arranger’ was STX, the ‘supplier’ adding “a similar provision is provided in this $3 billion credit line from China and it is surprising that my reference to it has caused such consternation within Government circles.”

The DI boss said the Government’s statement demanding an apology and retraction was generous enough to include the details of Clause 11 of Section 4 of the Master Facility Agreement (MFA) of $3 billion between the Republic of Ghana (as borrower) and the China Development Bank Corporation (as lender).

“What that paragraph states unequivocally, however, is that the fees to be paid for the arrangement, management or, whatever, for the facility add up to 1.25% of the total facility of $3 billion. It is this that translates into $37.5 million and it is this also that the agreement demands must be paid upfront even before any agreement for disbursement is concluded”, he contended.

On top of that, Gabby said every cost and expense incurred by the China Development Bank in the transaction shall be borne by Ghana saying “Clause 15 COSTS AND EXPENSES, demands of the Ghana Government, the Borrower, to promptly on demand pay to the Lender the amount of all costs and expenses (including legal fees) reasonably incurred by the Lender in connection with any Eligible Project, and the negotiation, preparation, printing and execution of: (15.1.1) this Agreement and any other documents referred to in this Agreement, up to a maximum amount agreed by the parties and approved by the Borrower’s Parliament; and (15.1.2) any other Finance Document executed after the Execution Date, including each Subsidiary Agreement.”

He said rather than Government demanding that he should be willing to name those people and give all Ghanaians the evidence, the government “should be, instead, explain to Ghanaians the purpose of those two specific fees stated in the MFA. It is instructively odd that the two fees, the ‘Up-front Fee’ of 0.25% and the ‘Commitment Fee’ of 1%, are the only material words that have not been defined in the Definitions and Interpretation Section of the MFA.”