Business News of Wednesday, 11 April 2018
The Member of Parliament for Bolgatanga Central, Mr Isaac Adongo, has accused the Finance Minister, Mr Ken Ofori Atta, of conflict of interest following the appointment of Databank Financial Services as transaction advisors to the ministry and the Bank of Ghana (BoG) in the issuance of government bonds.
In a release titled: ‘Databank must be withdrawn as TA to Ministry of Finance,’ he said industry watchers and well-meaning Ghanaians needed to be “concerned” about the development, “especially given the things that unfolded at the Ministry of Finance with regard to public bond issuance since the assumption into office of Mr Ofori-Atta.
“It lends credence to growing disquiet in the financial sector that family and friends are having a better part of government-related businesses, not track record, competence and clout,” he stated.
Speaking to the Graphic Business later in an interview to explain his call, he said the Minority would soon be organising a news conference to brief the country on its next line of action should the Ministry decide not to withdraw Databank as transaction advisors.
“On 26th March 2018, the government raised GH¢1.58 billion by issuing a three-year bond at a coupon rate of 16.5 per cent.
Contained in the issuance summary that was sent to investors was the list of institutions selected as joint book runners and deal-team for the Government of Ghana and the Bank of Ghana,” he noted.
Surprisingly, he said, among the institutions in that list was Databank, which had apparently replaced Strategic African Securities (SAS) as a book runner.
“It is disgusting to note that Databank, which is the baby of the current Finance Minister, is now a book runner at the Bank of Ghana (BoG).
This technically makes Databank Transaction Advisors to the Ministry of Finance for the issuance of bonds and government securities on behalf of Government of Ghana,” he explained.
“It is instructive to note that the presence of Databank in the Transactions Advisor team puts the Minister of Finance in a potential conflict of interest situation,” he mentioned.
Databank replaced SAS
The outspoken MP pointed out that in the past, Barclays Bank, Ghana, Standard Chartered Bank, Ghana and SAS used to be the book runners.
He said it was, therefore, interesting how SAS got removed from the list and replaced by Databank, given the relationship between the Finance Minister and Databank.
He also noted that the combination of Fidelity Bank and Databank as book runners looked a bit lethal, given their association with recent events regarding bonds.
“One can easily recall that Fidelity Bank was a Transactions Advisor in the recently issued energy bond, which was largely a failure.
That bond issuance yielded only GH¢1.2 billion cash and a debt swap of GH¢3.5 billion. What this effectively meant was that after the Transaction Advisors failed to raise the needed funds, they just exchanged loan papers with bond papers.
But surprisingly, yet expectantly, the state spent GH¢177 million for this funny transaction,” he said.
“Also, the CHRAJ report on the $2.25 billion bond reveals that even ahead of the BoG issuance instructions, selected investors had prior information on the transaction.
This is a huge indictment on the book runners, which included Fidelity Bank,” he added.