The Minority’s Brouhaha, Conflict of Interest and the US$2.25billion bond Issue, Is there a case really?

A complaint was filed at the Commission on Human Rights and Administrative Justice (CHRAJ) by one Mr Yaw Brogya Gyenfi on April 25th, 2017. The substantive allegation was to the effect that Finance Minister Mr Ken Ofori-Atta in issuing government’s US$2.25billion bond, put himself in a position where his personal interest conflicted or potentially conflicted with the performance of his office functions, contravening Article 284 of the Constitution.

CHRAJ investigated the matter and on 29th December 2017, made its findings public (http://bit.ly/2Dx3NRi). The Commission found some procedural and statutory breaches indicative of potential conflict of interest, and accordingly directed the following 4-point steps to be taken:

By the Finance Minister

  1. Take urgent and verifiable steps to ensure that all officials involved in the issuance of bonds at the Ministry, Bank of Ghana, Joint Book Runners (JBR) comply with the processes and procedures for issuing bonds;

  2. As a matter of urgency, make regulations, or rules or guidelines published in the Gazette, to regulate the format of and criteria for the auctions and the procedures for participation, bidding, and allocation in auctions in relation to the issuance of securities in the domestic market;

  3. Take steps to prevent primary dealers who are also bookrunners/transaction advisors from gaining unfair advantage because of their dual roles as primary dealers and bookrunners/transaction advisors;

By Parliament

  1. Implement section 56 of the Public Financial Management Act, 921 of 2016 in the shortest possible time. Section 56(1) of the PFMA states as follows: “The terms and conditions of all government borrowing shall be laid before Parliament and shall not come into operation unless the terms and conditions are approved by a resolution of Parliament in accordance with article 181 of the Constitution”.

However, the Minority in a press conference said that US$2.25billion bond issuance did not follow due process, violated statutory guidelines and was done in bad faith. They thus called for the resignation of the Finance Minister. Though they rehashed most of the earlier findings by CHRAJ, they also questioned the modus operandi used by CHRAJ in the investigation of the substantive matter of conflict of interest. For instance, they argue that:

  1. CHRAJ’s heavy reliance on Franklin Templeton’s website (FT bought 95% of the bond) to arrive at a conclusion was insufficient. They believe a “better option would have been the US and EU official securities bodies since another petition is pending before these bodies;

  2. Several ex-officials or possibly current staffers of Databank Group are now deeply involved in government business including bond issuance. The Minority stated categorically that the Finance Minister has about 16 ex-Databank employees firmly embedded in the Ministry of Finance and some of its agencies;

The Minority also demanded that:

  1. The Government and its agencies (Flagstaff House, BOG, Securities and Exchange Commission (SEC), Public Services Commission (PSC), Head of Civil Service etc take steps to curtail or eliminate the grip of Enterprise and Databank groups on government business;

  2. CHRAJ continues to follow leads they present in their statements;

  3. Parliament revisits the issue of its mandate in relation to making public, all the terms and conditions for this particular Bond Issuance to close the chapter on the matter.

The Minority also threatened to invoke a motion of censorship on the Finance Minister to remove him from office in accordance with article 82 of the Constitution, if the President fails to do himself.

Download Minority’s full statement here: http://bit.ly/2nucJwy