Posted by: rumnet | January 22, 2010

VODAFONE DEAL – Did Kufuor Defraud Ghana?

Article published in the January 2010 edition of TheADVOCATE:

There is no doubt that during his tenure as the president of Ghana, Mr. J. A. Kufuor strove to invigorate the country’s economy and make life worth living for the average Ghanaian. However, basking in his wealth creation and property owning mantra, he struck deals that were inimical to the health of the economy and injurious to the welfare of Ghanaians. One of such deals was the still-born loan that was traced to the address of a hair dressing saloon in England.
However, the deal that elicited the most controversy was the under-the-counter sale of Ghana Telecom (GT) to Vodafone. Both government and party (New Patriotic Party) apparatchiks did well to counter and pour cold water onto the suspicions and criticisms of the deal by some minority parties and independent economic analysts. Yet emerging credible information indicate that former president Kufuor succumbed to arm twisting tactics by the British government to shortchange Ghana in the sale of GT.
Since the deal borders on national interest and security, the story is better told in the sources own narration: Africawatch, a pan African monthly news magazine, published by GMS publications in the USA ,gives the details, as reported by Rosemary Atiemo.
The government of Ghana’s former President John Agyekum Kufuor that ruled the West African nation from 2001 to 2008 is alleged to have engaged in dubious practices and such charges are eroding the reputation of the former President and taking the seen off his legacy. The way and manner ex-President Kufour gave away Ghana Telecommunication Company Limited (GT) to Vodafone UK and how he allowed himself to be used by the British government against the national interests of his own country will no doubt be the most significant negative marks on his legacy.
The Vodafone papers which Africawatch has seen show that the British government leaned heavily on former President John Agyekum Kufuor to ignore – in fact break- Ghanaian divestiture laws and give 70% of Ghana Telecom stake to Vodafone even though Vodafone had been eliminated in the very first round of the bidding process.

If it was not for the British government’s intervention and Kufuor’s willingness to disregard the laws of Ghana in order to please London, Vodafone would not have landed the 70% stake in GT. And now David Veen, a Briton, is the chief executive officer of Vodafone Ghana.

Vodafone got the controversial 70% stake in GT by the grace of the British government, according to papers made available by Vodafone to the Ministerial Review Committee set up in May by the government of President John Atta Mills to look into the contentious 2008 acquisition of GT by the British telecom giant.

The British government used its officials in its High Commission in Accra – especially Deputy High Commissioner Menna Rawlings and James Cribb, head of UK Trade and Investment at the Foreign and Commonwealth Office in London – to wring the deal out of Kufuor.

The latest information is that the Atta Mills’ government has also come under pressure from the British government not to abrogate the Vodafone deal.

There is no evidence to suggest that Kufuor took any bribe as some people are likely to conclude. What is, however, clear from the Vodafone papers is that the former President so readily capitulated to the pressure from London and handed out Ghana’s prized jewel to Vodafone on a silver plate and in the process trampled over the laws of Ghana at will, even though there was a better deal from Telkom South Africa (SA). Such dubious deal making borders on corruption.

Part of the British cajoling came in the form of “international development aid” (some would say “bribe”) given to Ghana’s National Insurance Scheme to abolish healthcare fees for pregnant women. In London, British overseas development officials are now touting the aid to Ghana as an example of how British assistance helps poor people in development countries.

That, in fact, is all well and good but it came at a hefty price in the form of then-President of Ghana, John Kufuor (according to the Vodafone papers) doing a somersault to accommodate British interests while making his own country’s laws redundant, in effect saying: “to hell with Ghanaian divestiture laws, 70% of GT will be British by any means necessary”!

Therefore, the announcement on November 2 by the British Serious Fraud Squad (SFO) that it had contacted Vodafone about its controversial GT acquisition and that the SFO was monitoring allegations made in Ghana about “irregularities” in the GT deal and “bribery of Ghanaian officials”, with a view of launching a criminal investigation if the allegations were proved, will now amount to nothing.
British national interests were at stake in the GT-Vodafone deal and from experience the British government robustly shields such companies from censure at home if their alleged irregular activities abroad serve the British national interests, even though Sections 108 and 109 of the UK’s Anti-Terrorism, Crime, and Security Act of 2001 mandate the SFO to prosecute erring companies.
The most egregious example of this was the Tony Blair government’s stoppage of an SFO investigation into a multi-billion-dollar “slush fund” set up in Saudi Arabia by the British armaments production company, BAE Systems. Blair’s government stopped the investigations, citing British national interests.
On November 2, Richard Alderman, the director of SFO, was reported to have contacted Vodafone’s head of legal affairs, Stephen Scott to alert the Company that if anything substantive came out of their monitoring of the allegations in Ghana, the SFO would launch an investigation against Vodafone. But from the revelations in the Vodafone papers given to the Ministerial Review Committee in Accra, the SFO threats appear to be just academic.

The Shenanigans
From the Vodafone papers, the following is what actually happened before GT became Vodafone.
In mid-2007, the government of Ghana embarked on the divestiture of 66.67% of its stake in the Ghana Telecom and appointed Ecobank Development Co-orperation (EDC), a member of the Ecobank Group as the Transaction Advisors (TA). The contract with EDC was for six months.

The formal process started with the publication of an advertisement in the London based weekly magazine, The Economist, on June 30, 2007, requesting expression of interest from bidders.
Seventeen companies responded to the request for the submission of a proposal and EDC (the Transaction Advisors) shortlisted six of them. Vodafone’s bid was among the eleven rejected!
Having lost such bids, multinational companies are known to run to their home governments and ask them to use their weight and power to lean on government of small countries, such as Ghana to scuttle whatever due process is in place in those countries – and this is exactly what happened in the Kufuor Vodafone case.

After the first round, Kufuor’s government, having come under pressure and perhaps inducements such as the British aid to the National Insurance Scheme, formally granted “a period of exclusivity” up to December 30, 2007 so it could deal with the proposals from the six shortlisted bidders.

But Kufuor himself and some of his ministers and officials used the period of exclusivity to engage in secret negotiations (starting from November 2007 and ending in May 2008) with British government officials and Vodafone to overturn the legal public bidding process that had eliminated Vodafone from the contest. A July 4, 2008 letter by then – Minister of Communication, Dr. Benjamin Aggrey Ntim to Kufuor and a Ministry of Communication brief on July 7, 2008 to Parliament, refers to the “period of exclusivity”, but not the shenanigans that went on during the is period.

Thus Aggrey Ntim did not tell parliament the truth when he told the House on August 12, 2008 that Vodafone expressed interest in GT “in February, 2008”. It was four months back in November 2007!

Secret Negotiations
It was after the technical evaluation stage that the shenanigans really blossomed. On November 9, 2007, during the “period of exclusivity, President Kufuor, all by himself – according to Annex 1 of the Vodafone papers titled “Meetings between Government of Ghana and Vodafone Group between November 2007 and May 2008” – met a Vodafone team in Accra, made up of British government officials (Meena Rawlings and James Cribb) and Vodafone executives (Arun Sarin, the Vodafone CEO, Gavin Darby and Herbert Osei-Baidoo) to begin secret negotiations that ended up diverting 70% of GT shares to Vodafone and the national Fibre Optic network as well. All at a cheaper price than what the South African telecom giant, Telkom SA was offering to the government.

After discussions on March 3-4, 2008, Telkom SA sent an offer with 100% “enterprise value” of US$1.21bn. This represented an equity value of $658m for 66.67% of the GT stake and a net debt of $230m.

But the secret negotiations between Kufuor and Vodafone continued in London on March 9, 2008 when Kufour visited the British capital. On that occasion, according to the Vodafone papers, Kufour, again all by himself, met a crack Vodafone team comprising Arun Sarin, Gavin Darby, Mathew Kirk and Herbert Osei-Baidoo. The secret negotiations continued in Accra on March 19, 2008 and this time, Kufour’s place was taken by the communications minister, Dr. Benjamin Aggrey Ntim, supported by Kwaku Ofosu-Adarkwa, Chief Director MoC, and Vickie Bright, Deputy Minister in the Office of the President. Representing Vodafone were Simon Murray, Warren Finegold and Peter Nelson.

There were some more matters to discuss, so on April 6, 2008, Kufuor and D. K. Osei, Secretary to the President, met in London with another top Vodafone team made up of Arun Sarin, Simon Murray, Paul Donovan, Gavin Darby, Mathew Kirk and Herbert Osei-Baidoo.

The secret negotiations then moved to Accra again on May 2, 2008 and this time the Ghanaian side was full of superstars: President Kufour himself was there, as well as D. K. Osei, Anthony Akoto-Osei, then-Finance Minister, Dr. Benjamin Aggrey Ntim and Kwaku Ofosu-Adarkwa. Attending for Vodafone were Gavin Darby, Mathew Kirk and Herbert Osei-Baidoo.

On May 13, 2008, Telkom SA improved its offer and informed Kufuor’s office and the Ministry of Communications that it had valued 100% of GT purchase price of $947m for a 66.69% equity stake. SA Telkom also indicated that its “business plan also envisages a capital spending of $1.334bn over 10 years. This value exceeds any previous offer submitted by potential investors”.
The last of the secret negotiations that Kufour presided over took place in Accra, from May 14-15, 2008. With him were D. K. Osei, Kwadwo Mpiani (Kufuor’s chief of staff), Anthony Akoto-Osei and Dr. Benjamin Aggrey Ntim. They faced a three-man Vodafone team headed by Gavin Darby, Mathew Kirk and Herbert Osei-Baidoo.

On May 15, Vodafone submitted an offer of $900m for 70% shares in GT and the fibre optic assets. This represented 100% “enterprise value” of $1.286bn. This valuation was far lower than what Telkom SA had offered for 66.67% of the GT stake.

There were clearly still some rough edges to smooth over, concerning the favoured Vodafone offer, so another meeting was called in Accra on June 3, 2008 held in the conference room of the Ministry of Communications.

In attendance for Ghana were: Dr. Benjamin Aggrey Ntim; Vickie Bright; Issah Yahaya, Director in the Ministry of Communications, Dr. Sam Mensah, technical advisor of the Ministry of Finance and Economic Planning; Mrs. Abena Asafu-Adjei, Director in the Legal Department of the National Communications Authority, and William Halm, Chief State Attorney in the Attorney General’s Department.

Representing Vodafone were: Dave Hagedorn, M & A executive; Tom Jeffery, Senior Manager; Monica Tanase, Technical Executive; Alex Deacon, Executive Solicitor; Mark Banes, Consultant, Norton Rose; Oliver Stacey, partner, Thomas Koehrer, Director, UBS; and Elikem Kuenyehia, partner, Oxford & Beaumont Solicitors.

According to the minutes of the meeting made available by Vodafone to Atta Mills’ Ministerial Committee, the meeting was opened by Dr. Benjamin Aggrey Ntim in his capacity as the Minister of Communications.

He “acknowledged that the meeting was continuing from earlier negotiations held with higher authority (a reference to the secret negotiations with Kufuor), and therefore, the meeting was to provide information reflecting the views of the constituting institutions involved with the privatization exercise”.
According to the minutes, Dr. Aggrey Ntim “called on the meeting to endeavour to find a way to implement decisions already reached. The minister (also) informed (the meeting) that the Ministry of Communications was co-ordinating the exercise and the government had agreed (to) Vodafone purchasing 70% of GT, including the transfer of (the) Optical Fibre Backbone to GT”.

Thus, Aggrey Ntim said “the work of the meeting was therefore, not to engage in negotiations but to draw the Sale and Purchase Agreement (SPA) and also, consider what measures would be required to transfer the national optic fibre backbone to GT”.

Interestingly, instead of the government bringing up the agenda for the meeting, “the minister (Aggrey Ntim) presented the agenda for the meting as provided by Vodafone”. Even the acknowledgement of the Vodafone offer of May 15, 2008 was written in London by Vodafone for Finance Minister, Akoto Osei to sign and return and he signed and returned it the next day.

Were MPs Bribed?
No wonder when the Vodafone deal was announced, there was a huge public outcry and protest. Some members of Parliament walked out when the deal was put before Parliament and the then opposition NDC party (which is now in government) organized a demonstration led by Prof. John Atta Mills, the current President of Ghana. He promised to set up a committee to review the deal if elected to power.

One document in the Vodafone papers presented to the Ministerial Review Committee dated July 23, 2009 detailing the meetings that were held between them and other parties to secure the deal and the Chronology of Events in the EDC report of January 2008, uncannily agree that President Kufuor, the British government and Vodafone determined that GT must be divested to Vodafone during the “period of exclusivity” of the public bidding process – and this was clearly in breach of Ghana’s law.

In essence, the British government decided that it would not tolerate or respect the outcome of the formal process by EDC, the Transaction Advisors, appointed by Kufuor’s government or any other bids such as the higher bid offered by Telkom S. A. As subsequent events showed, nothing was allowed to stand in the way or frustrate the divestiture of GT to Vodafone, which incidentally did not qualify from the group stage of the bidding process to the second stage.

This set in motion the flouting of statutory obligations by ministries, departments and agencies of the Ghanaian government that had roles to play in effecting the divestiture of GT to Vodafone, leading to the subversion of Ghanaian laws and even the Constitution of Ghana itself.

One parliamentarian of Kufour’s then ruling NPP, P. C. Appiah-Ofori, alleged that NPP MPs were given bribes of $5,000 each to ensure the approval of the Vodafone deal by Parliament. They simply used their majority in Parliament to rubber stamp what was patently an illegal deal.

Both Dr. Aggrey Ntim and Kwadwo Mpiani gave evidence to the Ministerial Review Committee and said no minutes were taken during the negotiations between Kufuor on one side and the British government and Vodafone on the other side. Therefore, there are no records on what informed the terms of the sale, including the US$900m price for the “Enlarged GT Group”.

Deliberately Breaking The Law

Vodafone offer was accompanied by 27 conditions which were used to produce the Sale Purchase Agreement (SPA).

Until this point, the people of Ghana had not been told of any “Enlarged GT Group” and offers submitted by the official bidders was for 66.67% of GT “as is”, not 70% of any “Enlarged GT Group”. On May 16, 2008, Dr. Akoto Osei signed, accepting Vodafone’s offer in flagrant destregard of Ghanaian divestiture laws.

According to the laws of Ghana, the divestiture of state interest in a statutory corporation or corporate body incorporated under the Companies Act is governed by the Divestiture of State Interest (DSI) Act, which defines the role government institutions play in the divestiture process.

or the President himself – is responsible for the transfer of the divested shares to the purchaser. Section 2 of the DSI Act established the Divestiture Implementation Committee (DIC) as “the agency of the government for the implementation of government policies in respect of divestiture programs”. The DIC – not the office of the President

In the Vodafone case, the divestiture of the government’s 70% share of the “Enlarged GT Group” was not undertaken by the DIC, even though it is clear from various documents made available to the Ministerial Review Committee that both Kufour and Vodafone International Holding B. V. (the Dutch arm of Vodafone which handled the deal) were aware of the full mandate of DIC over the implementation process.

Yet Kufour and Vodafone ignored the DIC Act and its due processes and negotiated the agreement that led to the divestiture of 70% share of GT. After the ratification of the Sale and Purchase Agreement by Parliament, Kufour’s office, however, got the DIC’s acting chairman and executive secretary to sign, as required by the DIC Act, for the transfer of the 70% shares to Vodafone. But the DIC had no hand in the negotiations that led to the sale.

In effect, in the eyes of the laws of Ghana, the secret negotiations by Kufuor, the British government and Vodafone during the “period of exclusivity” is an illegal act, undertaken to defraud the Ghanaian people of the telecom assets.

On top of this, the Kufuor deal gave Vodafone a free ride on the 3G license in Ghana. On October 24, 2008 the National Communication Authority (NCA) developed its 3G allocation plan and defined the terms and conditions for 3G licenses, indicating that the “licenses shall be subject to NCA Act 524 and LI 1917”. Among the terms was that “3G licenses shall be paid for in full”.

On November 10, 2008, Vodafone wrote to the Ministry of Communication (MoCs) “seeking clarification on the payment of the 3G license fee demanded by the NCA”. ON November 11, 2008, the MoCs wrote to Vodafone informing it that “GT’s 3G license payment was included in the $28.5m in favour of Vodafone.
Meanwhile there is no mention of 3G license in the Vodafone-GT Sales and Purchase Agreement and the license fee had not been determined at the time Parliament approved the sale. “This is a serous matter that merits a criminal investigation”, say critics of the deal.

Beware the Intercepts
This bending backwards by Kufuor and his officials to accommodate British national interests over Ghana’s own national interests failed to recognize the national security implications involved in giving such strategic national assets as telecoms to a foreign concern. It is a given that the big powers especially the US, UK, Canada and Australia using their Echelon Project established in 1945, can now use sophisticated devices to intercept telephone calls, faxes, emails, and other communications worldwide for their national security use and purposes.
But the job for these foreign countries is made easier if countries- such as Ghana- continue to hand over their vital national communication assets to Western multinational telecom giants who are known to cooperate with intelligence agencies, therefore, making intercepts of government communications much, much easier.


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