The Special Prosecutor described the petition as ‘opportunistic and populist’ and said his Office had already commenced work on the matter and Parliament has agreed to furnish his office with documents in the deal which was widely publicized by the media as far back as September 11, 2020.
STRANEK-Africa petitioned the office of the Special Prosecutor to probe the Agyapa Royalties deal after noting that the deal is shrouded in illegality.
The petition dated September 22, 2020, signed by Nii Tettey Tetteh, Executive Director had requested the Office of the Special Prosecutor for an investigation into the Agyapa deal, seeking among other things an investigation into “How much are Mr. Otchere Darko and Mr. Ken Ofori Atta benefiting from this deal?”
The group was also calling on the Special Prosecutor, Martin Amidu to investigate whether “President Akufo-Addo and/or Mr. Ken Ofori Atta influenced the selection of the Legal Advisors and Transaction Advisors?”
The petition was turned down by the Special Prosecutor who said it contained mere speculation which does not warrant the use of public funds in pursuing.
The petition made claims that “The Special Purpose Vehicle lacks transparency as it was incorporated in a tax haven country, causing matters of corporate governance to be clouded in secrecy and making it difficult to provide proper oversight of the company. Mortgaging Ghana’s future mineral royalties in perpetuity runs contrary to the interest of the people of Ghana and Ghana stands to lose billions of dollars in revenue as a consequence of this deal.”
It also claimed that the agreement makes it impossible for a future government to replace managers of Agyapa Royalties Ltd, adding that the asset is grossly undervalued per the current valuation.
“The deal is embroiled in a conflict of interest issues and raises serious ethical concerns on what seems to be a classic case of family and friends’ transaction”, the petition claimed.
It was, therefore, seeking investigations into why a sovereign entity (Agyapa Royalties Ltd.) was incorporated in a tax haven “which is globally known for lack of transparency?”
“It is prudent that your outfit investigates how the value of the royalties being ceded to Agyapa Royalties was calculated and which entity did the evaluation. The owners of the Agyapa Royalties must be disclosed to the general public including their credentials and the shareholding structure.”
It concluded that “the Agyapa deal is shrouded in illegality, secrecy, and issues of conflict of interest, and is inimical to the interest of the good people of Ghana. The deal raises serious concerns which demand your urgent attention.”
But Amidu turned down the petition, stating that his Office has already commenced work into the deal and has requested documents from Parliament and other public institutions.
More to know about Agyapa deal
Two years ago, the Parliament of Ghana passed the Minerals Income Investment Fund Act 2018 which establishes the Fund to manage the equity interests of Ghana in mining companies, and receive royalties on behalf of the government.
The fund is supposed to manage and invest these royalties and revenue from equities for higher returns for the benefit of the country.
The law allows the fund to establish Special Purpose Vehicles (SPVs) to use for the appropriate investments. Last month, the government introduced an amendment to the act to ensure that the SPVs have unfettered independence.
The approval will enable the country to use a special purpose vehicle, Agyapa Royalties Limited to secure about $1 billion to finance large infrastructural projects.
In line with that, Agyapa, which will operate as an independent private sector entity, will be able to raise funds from the capital market, both locally and internationally, as an alternative to the conventional debt capital market transactions.
The funds, which are expected to be raised from the Ghana Stock Exchange (GSE) and the London Stock Exchange (LSE), will be a long-term capital, without a corresponding increase in Ghana’s total debt stock and hence without a public debt repayment obligation.
Some said the deals are valued for money whiles others referred to it that it’s a stinking and corrupt deal by the government where appointees of the New Patriotic Party (NPP) are engaged to do.
The Agyapa Royalties deal is part of the current government’s strategy to beat the long-standing problem of lack of capital for developmental projects.
Over the years, the government under different Executive presidencies have tried to look for money by going to the IMF, the capital market, or the international bond market.
These three main sources of capital are expensive. Interest rates on the bond markets are generally high and because the tenure is short, Ghana risks falling into high debt distress.
IMF loans have become unpopular because they usually come with restrictions. Coronavirus seems to have made loans on the capital market unattractive.
And with Ghana’s current poor credit rating and the effects of the pandemic, the government needs access to cheaper sources of capital.
A deal like the Agyapa Royalties agreement, therefore, is among the strategies governments across the world have adopted to raise money on the global financial market. It involves securitising future flows of revenue with proceeds from the extractive sector.
The controversy over the Agyapa Royalties deal started on August 14, 2020, when the Majority Members of Parliament secured the numbers to pass the agreement.
Although, the Minority staged a walked out over the deal but it was finally passed.
The government in July 2020 introduced an amendment to the Act to ensure that the SPVs that the Fund would establish to manage investments get unrestricted independence.
On the back of the amendment and the original provisions of the act, the Minerals Income Investment Fund set up an offshore limited liability company known as Agyapa Royalties Limited (previously Asaase Royalties Limited).
The Agyapa Royalties Ltd is incorporated in Bailieick of Jersey in the UK, a tax haven. It has been incorporated in a tax haven to cut out the associated high tax charges to the returns that will accrue to the state from the investments.
Agyapa Royalties Limited is registered in Ghana as an external company.
Operations of Agyapa Royalties
Agyapa Royalties Limited will trade shares on the Ghana Stock Exchange and the London Stock Exchange for the private market.
Mineral Income Investment Fund will remain the majority shareholder.
ARL will raise between $500 million and $750 million for the government to use for developmental initiatives – the government has revealed the four key areas of investment will be education expenditure, primary capital, health, and infrastructural development.
Future resources from gold royalties will go to ARL shareholders instead of the Mineral Investment Fund and for that matter government. Essentially, the government is mortgaging expected royalties from gold in exchange for about $500 million – $750 million from ARL.
Attorney General speaks on Agyapa deal
Recently the Attorney-General described the inability of the state to review or evaluate the effectiveness of the Agyapa Royalties deal in the future as “unconscionable”.
The deal to the Finance Minister, the Attorney General stated that the payments in respect of the agreement will be made in US dollars which violates the Bank of Ghana Act, 2016 (Act 918) which mandates that transactions be made in the currency unit of Ghana which is the cedi or its equivalent.
According to her, the manner of the deal agreed “freezes anything legal including judicial orders and decisions. In effect, no court can pronounce on any part of the agreement as being illegal, unconscionable, null, and void or on any matter before the court which may or is likely to affect any part of the agreement.”
“This will amount to executive interference of the powers of the judiciary, which is a violation of the concept of separation of powers as provided under the Constitution of Ghana. Therefore, the executive arm of government cannot enter into an agreement that curtails the independence of both the Legislature and the Judiciary.”