TERPKER UNDER PRESSURE OVER $250M DIVERTED CASH

Posted on: www.dailyguideghana.com

By William Yaw Owusu 

Thursday, May 12, 2016

The brouhaha surrounding the revelation by the New Patriotic Party (NPP) vice presidential candidate for the November general election, Dr. Mahamudu Bawumia, that Finance Minister Seth Terkper supervised illegal diversion of $250 million into a private bank in flagrant breach of the law, is not likely to die anytime soon.

This is because more people, particularly members of the opposition political parties, are backing Dr. Bawumia’s call for the minister to resign and also for a full parliamentary enquiry into the matter.

The $250 million, being proceed from Ghana’s $1 billion Eurobond, was lodged at the UBA Bank and Mr. Terpker has admitted that the funds were transferred to the private bank on behalf of the Ghana Infrastructure Investment Fund (GIIF) to invest in treasury bills, but insisted that he broke no 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 the 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.

The latest to speak out is Joseph Cudjoe, NPP Member of Parliament (MP) for Effia in the Western Region, who has asked the finance minister to “come again” in his attempt to justify the dodgy deal.

The MP said in a statement that an analysis of the emerging issues would make Ghanaians to understand “how scandalous the transaction can become when probed for more information.”

Mr Joseph Cudjoe noted, “At 10.75%, the $250 million will cost Ghana Government $26.9 million a year in interest cost payable to external lenders. In cedi terms, this interest cost is GH¢102 million.

“UBA exchanges the dollar deposit into cedis at GH¢3.8 to the dollar and realises GH¢950 million and buys government T-Bills at 22% with this amount. 

Interest cost to government is GH¢209 million a year payable to UBA, unless of course, UBA was just instructed to purchase T-Bills on behalf of GIIF in which case the interest amount becomes payable to GIIF.”

Mr. Cudjoe further said, “Add the interest cost to both scenarios then total interest cost to government is GH$301million in a year - a lot of money!”

He added, “Assuming GIIF/government invested the dollars with UBA at even 5% per annum in dollar terms, then inflow to government/GIIF by way of interest received is $12.5 million. In cedis, this amounts to GH¢47.5 million.”

Analyzing further, the MP said, “Subtract interest received by government from interest paid if the $225 million were placed with UBA in dollars, you get over GH¢253.5 million in net interest outflow from the government.

“So assuming the dollars were invested at 5% with UBA, there is a net financial loss to the state of GH¢253.5 million implied in this move by the minister of finance.”

He asked, “At what interest rate did the GIIF/government place the $250 million with UBA Bank? How does that rate compare with the T-Bill rate?”

Mr Cudjoe queried, “What financial instrument was used to place the $250m with the UBA? Call Account? Fixed deposit? If fixed deposit, in what currency units were the funds placed with UBA? Dollars or Cedis?” adding, “Was the money lent (invested) at UBA or was just deposited into GIIF account with UBA and then the bank instructed to buy T-Bills for GIIF?”

The MP observed, “Indeed, besides the legal issues involved, this transaction by the minister of finance sounds so scandalous to me from government financial management viewpoint that I think we must vigorously pursue Dr. Bawumia's call for parliamentary enquiry regarding this transaction.”

He said Ghanaians need to know “the hidden ‘corruption’ and or state financial management inefficiencies and incompetence in this transaction.”

More Agitations

Currently, some business and financial analysts have labeled 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.”