Minority to go to Supreme Court over $2.25 billion bond

General News of Saturday, 8 July 2017

Source: Graphic.com.gh

2017-07-08

Ato Forson11Minority Spokesperson on Finance, Cassiel Ato Forson

The Minority in Parliament has said it will go to the Supreme Court to seek an order to compel the Minister of Finance, Mr Ken Ofori-Atta, to furnish it with detailed information on the $2.25 billion bond.

It would also ask the Supreme Court for determination as to whether the bond issue constitutes an international economic business transaction for which reason it should come to Parliament.

The Minority Spokesperson on Finance, Mr Cassiel Ato Baah Forson, made this known at a press conference in Accra last Wednesday.

“We are also considering the option to go to the Supreme Court to ask for determination under Article 1815 as to whether this constitutes an international economic business transaction and for that matter it should come to Parliament.

“We are also going to the Supreme Court to require the minister to provide us with information under Article 21 (f) because we feel that the information that we asked is clearly of public importance that nobody can hide under the guise of crowd of sensitivity and then decide to run away from it”, he said.

Whistle blower

Mr Ato Baah Forson said the minority had already filed a whistle-blower arrangement with the Commission de Surveillance de Secteur Financier (CSSF) of Luxembourg.

He added that the reason was that the Minority realised that although the parent company of Franklin Templeton was registered in San Francisco, the company that purchased about 95 per cent of the bond was registered in Luxembourg.

That, he said, was to cover the jurisdiction needs of their complaints. Mr Ato Baah Forson explained that information on tradable bond was a public information everywhere in the world.

He said it was listed on the Ghana Stock Exchange, and indicated that the information could be found at the Central Securities Depository (CSD) of the Bank of Ghana.

“Only for us to be told now going forward information on tradable bond is now a sensitive information. We disagree with the minister and ask him to do the honourable thing by providing us with that information”, he said.

Minority Leader’s take

Speaking on the $2.25 billion bond, the Minority Leader, Mr Haruna Iddrisu, said the Minority in Parliament had some reservations with the answers provided by the Minister of Finance, Mr Ken Ofori-Atta, in Parliament in response to the half-hour motion that he (Minority Leader) filed.

For instance, he said, contrary to the impression created by Mr Ofori-Atta that the prospectus for the issuance of the said 2017 bond was entirely new, the notification document or prospectus he presented to Parliament was the same prospectus used by the previous National Democratic Congress (NDC) government in the issuance of its September 2016 bond which was based on an unfettered book-building approach.

He said it was worrying and conflicting that the government agreed to pay a premium on early redemption when the country was told that the 2017 bond issuance was made against the background of a better investment climate.

“We must, of necessity, point out that our research has revealed that, industry best practice frowns upon the same prospectus being used for the issuance of two ostensibly distinct and unique bonds”, he said.

Mr Iddrisu indicated that unlike previous domestic and foreign sovereign bonds, the 2017 bond issuance had callable obligations in the payment clauses.

He said the minister of finance was required to furnish the House with the participants of the bond, but the minister declined to heed to it.

Rather, he said, the minister responded that information on the participants of the bond was market-sensitive, and hence could not be made available in the public domain.

Contradictions

Mr Iddrisu said surprisingly, according to the documents presented to Parliament by the Minister of Finance, in the case of the $2.25 billion bond (GH¢9.7 billion), the order books amounted to only GH¢4,874,230,000.00 which was just about half of the total amount that was raised.

He said it was intriguing that all the financial institutions that basically appeared to be intermediaries for the major bidder, Franklin Templeton, offered the same rate of 19.7 per cent.

That, he said, suggested “a possible collusion among the participants to prevent keen, healthy and beneficial competition and hence artificially fixed the rate – another clear evidence of prior knowledge and insider trading in this whole transaction.”

He said contrary to the impression created by the Vice-President, Dr Mahamudu Bawumia, that the controversial $ 2.25 billion bond would be used to solely refinance existing domestic expensive bonds, “we were told by the finance minister that about GH¢1.1 billion had been used to finance the budget deficit”.

Consequential decisions

The Minority Leader said based on the sordid state of affairs, the Minority had resolved to continue to pursue its petition at the Securities and Exchange Commission (SEC) of the United States of America with renewed vigour.

“We can now reveal based on our investigations that though the parent company, Franklin Templeton, was registered in the United States of America, it would appear it used a subsidiary company registered in Luxembourg to purchase 95 per cent of the bonds. Hence to satisfy additional jurisdictional issues, based on this revelation, a group of minority MPs comprising Dr Dominic Ayine, Mr Samuel Okudzeto Ablakwa and Mr Isaac Adongo have filed a whistle-blower complaint with the regulator in

Luxembourg known as the Commission de Surveillance de Secteur Financier (CSSF) which has begun looking into the matter,” he said.

Energy sector

Mr Iddrisu condemned the government’s decision to issue a 15-year bond to settle what it described as outstanding debts in the energy sector.

He mentioned that the NDC government introduced the Energy Sector Levy Act 2015 (Act 899) which was meant to consolidate all the existing levies into a properly structured revenue stream flow to deal with the debt stock in a comprehensive manner.

He explained that based on detailed analyses conducted taking into account the upfront payment made, the entire debt stock was scheduled to be amortised over a period of three to five years.

Therefore, Mr Iddrisu said, it was shocking to hear of the New Patriotic Party (NPP) government planning to extend the repayment period over a 15-year period, through what they described as Energy Sector Bonds.

“The NDC is serving notice that we oppose the measure and should the majority use its numbers to have its way, we shall review this decision, God willing, upon assumption of office on January 7, 2021”, he said.

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