Flashback! Dr. Benjamin Kumbuor (Minister of the Interior), Representative of STX Korea, President John Evans Atta Mills, Alban Bagbin (Minister of Water Resources, Works and Housing) and Dr. Kwabena Adjie (NDC Chairman)at STX Housing project sod-cutting ceremony at the Tesano Police Training Depot, Accra on January 27, 2011.
Posted on: www.dailyguideghana.com
A Feature by William Yaw Owusu
Saturday January 6, 2012.
On Friday, December 30, 2011, Ghanaians were hit hard with the news that the National Democratic Congress (NDC) government was on the verge of abrogating the controversial multi-billion housing deal between the Government of Ghana and STX Engineering & Construction Limited of South Korea.
This was disclosed by Vice President John Dramani Mahama when he interacted with the Parliamentary Press Corp in Accra.
The project would have seen the construction of 200,000 houses in Ghana in five (5) years, estimated at $10billion. In August 2010, parliament approved an initial off-take agreement for 30,000 housing units for the security agencies at a proportionate cost of $1.5 billion amid protest from the opposition New Patriotic party (NPP).
A 12-member government delegation led by then Minister of Water Resources Works and Housing signed the STX Housing Project deal in 2009.
The deal – hailed by some as the best thing ever to happen to Ghana – collapsed because of persistent boardroom wrangling between the Ghanaian and Korean partners of STX Engineering & Construction Ghana Limited, the local subsidiary of STX Korea.
Observers also attributed the collapse of the deal to the ineffective and haphazard manner in which the government handled the whole issue.
President Mills’ Propaganda
When President John Evans Atta Mills cut the sod on Thursday January 27, 2011 (nearly a year ago) at the Tesano Police Training Depot for the commencement of the STX project, the impression was created that the NDC government was more concerned about the welfare of the security agencies, particularly the police, than its political opponents.
President Mills had said at the sod cutting ceremony packed with NDC supporters that the STX Housing Project was tied to the ruling party’s 2008 manifesto commitment to expand infrastructure, and added that the venture was a legacy that history would not be able to write.
“This is a significant turning point in the history of our dear country. This is the change we promised and government intends to leave a strong and positive legacy and the completion of this project will be a legacy that history will not be able to write,” he said.
The rhetoric and propaganda associated with the project appeared to have overwhelmed the Koreans, who were of the view that the project was a national assignment and that it should never be used for propaganda purposes as the NDC did until the whole thing fell flat in their faces.
DAILY GUIDE’S investigation has shown that at all material times, it is the Vice President’s office that has been handling issues concerning the STX Housing Project.
President Mills had probably predicted the demise of the company when during his state of the nation address in 2010, he said the Vice President had travelled to Seoul, Korea, to ‘nail the coffin’ of STX.
Korean Concerns
The Koreans were said to be pulling out of the STX deal because they were persistently frustrated by attempts by the government to allegedly make them ‘irrelevant’ in the whole project.
Both the Koreans and their Ghanaian counterparts, led by Bernard Kwabena Asamoah – the man credited for introducing the Koreans to the NDC government – remained tightlipped on the raging issues even though a source told DAILY GUIDE “we (Koreans) got to know about the sovereign guarantee in the newspapers”.
“We have tried our best to get to President Mills directly for him to know what is happening but to no avail. Anytime we make the effort they tell us to rather deal with the Vice President’s Office instead,” the source claimed.
“We realize that our message to the President is being edited at the middle level that is why we are trying to reach him directly but our attempts have failed so far because we are always told to discuss issues with his deputies.”
The source said, “We have even arranged for STX Chairman worldwide to meet President Mills one on one on the stalemate, but to no avail.”
At a point, it was even rumoured that government delegated Haruna Iddrisu, the Minister of Communications, to negotiate with the Koreans when the sector Minister, Alban Bagbin and his deputies Dr. Mustapha Ahmed and Hannah Bissiw, were always available.
Corruption Leads
Failure of the government to stamp its authority on the project has left many wondering about what really went into the preparation in terms of financial commitments.
There have been trips abroad, particularly to Korea, by countless number of government officials including Ministers of State. There have also been project site preparation among others and nobody seems to tell the people of Ghana how much has been spent.
According to sources, the consulting architectural concept design allegedly prepared by a Professor at the Kwame Nkrumah University of Science and Technology (KNUST), on the orders of B.K. Asamoah, cost the company about 21 million dollars, when the Koreans claimed they could do it for only 5 million dollars.
The Koreans were said to have raised serious objection to the procurement of building materials from Western Forms in the United States, which they (Koreans) claimed could last for 30 years when under the agreement, the project’s lifespan was only years (5) years.
As a result, the Koreans distanced themselves from all transactions, including contracting of loans and guarantees and land title agreements allegedly being entered into by STX Engineering & Construction Company Ghana Limited through B.K Asamoah.
It was said that whenever the issue of cost was raised, the employer (Government of Ghana) did not find any fault with it and asked the Koreans to forget about it because it was ‘normal’.
The Koreans also complained that the sovereign guarantee issued by the Ghana Government to STX to enable it to raise a loan was allegedly given to B.K. Asamoah, the CEO of STX Engineering and Construction Ghana Limited, to source for funding in financial market without reference to the Koreans, and contrary to the agreement.
This was the reason why the Sovereign Guarantee was reported be going round several countries in search for cash to start the project.
The countries the money was sought from included the United Kingdom and Switzerland, the USA and Mexico. It was later sighted in Nigeria, where it was moving from one bank to the other in search of a new lease of life.
Furthermore, the insurance on the loan, according to DAILY GUIDE sources, was paid even though not a pesewa was sourced in terms of funding for the project.
STX had promised to bring the money from Korea, as captured in the agreement, but once that was not done, the government backed the local partner to look elsewhere for cash, contrary to the agreement.
There were rumours that a son of a powerful Minister in the Mills administration was hobnobbing with a party in the STX deal to benefit from the $300 million insurance fund, and had formed an insurance brokerage to facilitate the transfer of cash even though the company had not sourced for funds for the project.
Minister of Water Resources Works and Housing, Alban Bagbin, allegedly travelled abroad several times, including the United States and Mexico, to push for alternative sources of funding for the project.
Mistrust
The mistrust between the partners became intense as the wrangling lingered and on August 18, 2011, the Koreans announced that they had fired B.K Asamoah as its local CEO.
Their reason was that B.K. Asamoah had allegedly diluted the shares to his advantage, without recourse to the Korean partners. As a result they sued the beleaguered CEO and others, including the Registrar-General, for allowing the transfer of the shares.
The Fast Track High Court presided over by Justice N.M.C. Abodakpi however adjourned proceedings sine die because the processes to get the case heard were not completed.
At a point, B.K. Asamoah was alleged to have been chased out of his private residence on the Spintex road by his landlady over the non-payment of rent.
Additionally, he was said to have issued dud cheques to Rana Motors for payment of vehicles purchased for the company’s use and the foregone developments appeared to have given a clue as to what the financial situation of the company currently was.
But B.K. Asamoah sharply rebutted media reports and argued that he was still at post. He subsequently proceeded to the Commercial Court to file a suit against the Korean partners, and sought reliefs that would have ensured that the Koreans were sacked from the entire project.
However, the court presided over by Justice Gertrude Torkornoo dismissed B.K. Asamoah’s application on ‘procedural grounds’ and awarded GH¢ 3,000 as cost against the applicant.
The judge had held that B.K. Asamoah could only sue under the Company Code 217 if the partner had been involved in an illegal conduct, but the plaintiff had failed to prove the Koreans did.
In the course of the trial, B.K. Asamoah had indicated he was ready to pay off his Korean counterparts in a form of a settlement package. The court therefore allowed the partners time to settle the terms and report to it.
Observers were of the view that if indeed B.K. Asamoah had followed due process to acquire the shares of his counterparts, then he had no business offering to pay off the Koreans.
The End Of B.K Asamoah?
It is clear B.K. Asamoah will never let go his ‘brainchild’ if the government decides to go ahead with the project by sidelining the partners.
As far as DAILY GUIDE is concerned, the beleaguered CEO registered the national housing concept in his name. This means that the project touted by the NDC as one of its flagship project does not belong to the self-acclaimed social democrats after all.
Documents stumbled on by DAILY GUIDE indicated that the Ghana National Housing Project belonged solely to B.K. Asamoah. The certificate of registration issued to him by the Copyright Office and signed by the Acting Copyright Administrator on April 26, 2011 cited the title of work as “The Ghana National Housing Project” and name of author as Bernard Kwabena Asamoah.
The copyright claimant is G.K. Airports Company Limited, the company that entered into a joint venture agreement with STX Korea to construct 200,000 housing units at the cost of $1,525,443,468 ($1.52billion) across the country, starting with 30,000 houses for the security services.
The Bagbin Factor
The Minister of Water Resources, Works and Housing, Alban Bagbin, was always prepared to slam any media organization that attempted to dissect problems confronted by the partners in the execution of the project.
After pretending that all was well with the project, it was Mr. Bagbin who first made an about-turn on December 22, 2011, announcing that the government was likely to disengage from the controversial project.
Mr. Bagbin, who persistently went publicly debunking media reports that the deal was collapsing, had to eat humble pie when he said on Christmas eve that proceeding with the project without the current partners was a possibility.
When he was asked earlier about additional sources of funding for the project, he simply said, “the money is available so it is not an issue of funding. I won’t disclose the source of additional funding but the money is coming into our account at the Bank of Ghana.”
He continued, “there is no difficulty in sourcing funds. Funds have been sourced and the Ministry of Finance and Economic Planning can confirm that money is available.”
Mr. Bagbin added that since the Bank of Ghana issued sovereign guarantee to cover the project, there was mad rush by banks to provide financial support for the project.
Using the Police As Propaganda Tool
From the onset, it was clear that the propaganda that characterized the introduction of the project was making it impossible for the project to succeed and it gave sceptics the opportunity to claim vindication.
For instance, when the police hierarchy, led by the Inspector-General of Police (IGP), Mr. Paul Tawiah Quaye, commandeered innocent policemen to besiege the Parliament House to offer support for the passage of the STX deal, it became apparent that something had gone amiss.
GREDA Factor
As the negotiation was going on with the Koreans, the Ghana Real Estates Developer’s Association (GREDA) entered the fray to ask the government to allow them to bid for the project since according to them, they had the capacity to construct the housing units.
They came with a proposal to build the 300,000 houses over the same period, at the cost of $7 billion – clearly $3 billion cheaper and 100,000 more houses than the Koreans were offering to do.
Threats to GREDA
In the ensuing debate, Joy FM broadcast a news item to the effect that GREDA might have withdrawn its petition to Parliament on the STX housing deal because its executives were threatened with death.
The news item landed the station’s then news editor, Ato Kwamena Dadzie, in trouble when the police tried to charge him for causing fear and panic under Section 208 of the Criminal Code but after a public uproar, particularly in the media, Ato’s charges were dropped by the police.
Stakeholders’ Queries
Danquah Institute (DI), IMANI-Ghana – all data and policy analysis groups – together with some political parties, particularly the NPP, voiced their concerns about the inappropriateness of the deal.
DI for instance raised red flag over the implementation of the project because of what it calls “the government’s ambiguity, changes and re-arrangements with sources of funding of the project”.
The Minority Caucus even boycotted the approval of the agreement, citing a writ filed in the Supreme Court by James Kwabena Bonfeh aka Kabila, a former CPP National Youth Organizer, praying the court to place perpetual injunction on Parliament from considering the agreement.
Unfolding Drama
Even before Parliament agreed to the deal, the President had directed that the multi-billion dollar deal before the house be withdrawn for further review by a joint ministerial committee, and it gave the Minority the leeway to claim that their opposition to the deal was justified.
After a closed-door meeting between officials of STX and Vice President Mahama, as well as some top government officials including ministers of state in Accra, the deal could not be signed, confirming the opposition’s fears that there was more to the whole deal than Ghanaians were being told.
Almost three hours after the media had set up their equipment in the well-decorated conference room at the presidency, then Deputy Minister of Information, James Agyenim-Boateng, accompanied by John Jinapor, spokesperson for Mr. Mahama, and Stanislav Xoese Dogbe, a presidential aide, appeared and announced the cancellation of the programme.
Agyenim-Boateng had attributed the cancellation to “legal issues that could not be resolved immediately at the last meeting before the ceremony”.
“Certain legal issues cropped up at the eleventh hour and under the circumstances, we were compelled to cancel the signing until we receive advice from the Attorney-General’s Department, where we have referred the issues to,” the Deputy Information Minister had told journalists.
Key Observation
A cursory look at STX magazines published in 2011 positively highlighted the Ghana project alongside other projects across the world. However, while there are clearly stated time lines for all STX projects across the world, there was none for the projects in Ghana, sparking fears that there was no seriousness attached to the project.
Conclusion
To quote the Vice President: “The way things are going I don’t see how that project will go on. The wrangling is getting worse rather than getting better so I don’t see how that project will go forward.” This shows clearly that the STX project is dead.
Also the fact that President Mills had said “the venture is a legacy that history will not be able to write”, indeed proves that the Mills-led NDC government is writing another chapter of history when it comes to failed promises.
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