Posted on: www.dailyguideghana.com
By William Yaw Owusu
Wednesday, May 11, 2016
The New Patriotic Party (NPP) vice
presidential candidate for the November general election is calling on the
Finance Minister, Seth Terkper, to resign following his illegal diversion of
$250 million into a private bank in flagrant breach of the law.
Dr Bawumia has asked for a parliamentary
inquiry into the circumstances leading to the transfer of the $250 million of
proceeds from Ghana’s $1 billion Eurobond to a private bank.
However, the finance minister has
since parried the resignation call over the dodgy transaction, saying he had
not broken any law.
The Eurobond was borrowed at an all-high
interest rate of 10.75% but the $250 million ended up at UBA which in turn used
the funds to purchase treasury bills by lending to government at an interest
rate of more than 20%.
Dr Bawumia broke the news when
he delivered a public lecture at the Accra Polytechnic on “Youth Unemployment:
Causes and Solutions” last Friday and said the transaction should be reversed
without delay.
He said that “The funds were
ostensibly transferred to or ‘placed’ at UBA on behalf of the Ghana
Infrastructure Investment Fund (GIIF). The instruction to the Bank of Ghana for
the transfer of these funds came from the Ministry of Finance, headed by
Terkper.”
Terkper Adamant
However, the finance minister,
even though conceded that the money had been transferred from the Bank of Ghana
account, the ministry had not breached the bank’s regulations and went ahead to
justify the transaction as a normal practice, saying that public funds did not
only reside in the Bank of Ghana and that they are all accounted for as part of
public funds.
According to the minister,
Section 5 of the GIIF Act provides for sources of money for the Fund, which
include a portion of the ABFA from the oil revenue and moneys raised and
borrowed from the capital market, adding that the Bond proceeds were given as
seed money to the GIIF.
He added that “the Fund was
mandated to invest in, purchase and realise any investment of any kind and is
not to be comingled with government funds,” saying that the Fund was set up as
a sovereign wealth Fund and is statutory just like DACF, GETFund and NHIA, and
is by law operationally independent.
Bawumia Sad
“The minister of finance
responded to my allegation. The minister’s response basically confirmed what I
had revealed. There is no denial that the $250 million was placed at UBA and
secondly, there is no denial that the funds were also used to purchase treasury
bills. Unfortunately, the minister of finance however sought to defend this
transaction as normal practice,” Dr Bawumia said yesterday in a follow-up
statement to the minister’s Monday press conference.
He said, “The response of the minister
in terms of the arguments he has advanced to defend this transaction saddens
me. It confirms to me that those in charge of managing our finances do not
really know what they are doing.”
He said emphatically that the
transaction was in violation of Section 53 of the Bank of Ghana Act 2002 (Act
612) which relates to the holding of state foreign exchange.
Bank Of Ghana Act
The erudite economist said, “It
should be noted that under the law, the foreign exchange that was deposited at
the UBA belongs to the state and should be part of Ghana’s foreign exchange reserves.
“By moving the foreign exchange
to UBA, the transaction takes the funds out of Ghana’s foreign exchange
reserves. What the minister has done, contrary to the law, is to outsource the
management of Ghana’s foreign exchange reserves (which is the preserve of the
Bank of Ghana) to a private bank.”
“The minister also mentioned the DACF, NHIA
and GETFund as examples of statutory funds like GIIF. At the same time he
claims the GIIF is a sovereign wealth fund. This is basically comparing apples
with oranges.
The proper comparison should have been with the Petroleum Fund
which is kept at the Bank of Ghana under the Petroleum Revenue Management Act,
consistent with the Bank of Ghana Act.”
Reckless Debt Management
He said the government had been
reckless in the management of national resources, wondering, “How do you go and
borrow money for 10.75% (US dollar) and give it to someone to lend it to you at
over 20% (GH¢)?” adding, “in effect you are paying over 30%.
“Assuming stable exchange rates,
Ghana will be paying additional interest of at least $50 million a year on this
transaction. It is really reckless.”
Idle Funds
Dr Bawumia said the government’s
claim that the funds were idle was untenable, asking, “Why do you borrow funds
and pay interest on it if you do not have use for them at the moment?
“It is clear that the GIIF does
not have a portfolio of projects ready to invest in and it is weird to allocate
a whopping sum of $250 million to them at this time. Is the minister aware that
the country owes N-Gas some $100 million? What about other contractors who are
owed money by the government? How can you owe so much, have so much to do and
yet claim to have ‘idle’ borrowed funds?”
Lack Of Reading
Dr Bawumia reiterated his
position that NDC government officials do not appear to read before making
statements, saying, “First of all, if the minister had taken his time to read
the Bank of Ghana Act (unless he is pretending not to have read it), he would
have found out that this transaction is in violation of the BoG Act.”
More Agitation
Some business and financial
analysts have labelled the transaction as a fraud being perpetrated on Ghanaians
by the NDC government.
“It is clearly create, loot and
share on another level. The annual interest rate the $250m illegally lodged
inside that Nigerian bank (UBA) will be $50m, which is 20% of the principal;
and this is not going to the BoG,” one analyst said.
Another expert remarked, “This
was a common scam in Nigeria, which the EFCC is now ordering the banks to pay
the interests accrued to the Federal Bank.
The NDC government has brought this 419 to Ghana.”
No Parliamentary Approval
The transaction does not appear
to have passed through Parliament for approval as required, making many
conclude that $50m was to be siphoned before putting the principal back at the
central bank.
“This was supposed to be a neat scam, with a cool
$50m chop to be creamed off. This is what Ghanaians must know,” another analyst
noted.
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