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October 14, 2009 | Business & Finance

'Committee on Vodafone overstepped its remit'

Communications Minister, Haruna Iddrisu
Communications Minister, Haruna Iddrisu


The ministerial committee set up to investigate the sale of Ghana Telecom (GT) to Vodafone has described the ratification of the sale by Parliament as "unconstitutional."

However, the government says the committee overstepped its remit in expressing an opin-ion on the constitutionality or otherwise of the transaction.

A statement signed by Mr Haruna lddrisu, the Minister of Communications, and issued in Accra Tuesday, said it did not lie within the powers of the Executive or the Ministry of Communications to make such a pronouncement, especially since there was a matter pending before the Supreme Court on the same subject.

The statement said the government would continue to uphold the rule of law and respect the separation of powers principle under the 1992 Constitution, since such a declaration or pronouncement on the constitutionality of international agreements was the exclusive preserve of the Supreme Court of Ghana.

The government, the statement said would formally state its official position on the review report within a fortnight and make relevant aspects of the report public after careful examination and after it had received the advice of the Attorney-General and Minister for Justice.

In its review report on the GT sale transaction released last Monday, the ministerial committee, advised the government to consider renegotiating the sale and purchase agreement (SPA), with particular reference to the compliance Or otherwise of the SPA to the laws of Ghana.

That compliance, it said, must take into consideration the NCA Regulations and the Internal Revenue Act 592, value for money, the need to retain the national fibre optic as a strategic national asset, among others.

"The SPA was negotiated in an inelegant manner by the Government-of Ghana (GoG); the GoG gave everything and took nothing in the context of the inequalities in bargaining power that were allowed to prevail. This should never be allowed to happen again in this country," the report of the committee stated.

It further stated that GT was valued more by the transaction advisors and could have fetched a price much higher than the SPA price of $900 million for 70 per cent of the enlarged GT group.

The report said the quoted price, through a series of complicated financial arrangements, led the state to eventually realise only $266.57 million from the projected $900 million in the SPA.

According to the report, the value of GT was estimated at $1,286 million, with Vodafone acquiring 70 per cent at the cost of $900 million.

It mentioned the $228 million shareholders loan backstop funding amount, the $63 million Escrow amount for settling specific liabilities, $187 million equivalent to GH¢20,500 statutory debts to be capitalised, as well as $40 million end-of-service benefits (ESBs), among others.

The report also found that $40 million was set aside for employee restructuring costs payable in equal amounts in 2009 and 2010, "As of May 2009, SI•.6'million in employee restructuring expenditures was 'being claimed for payment by Vodafone," the report stated.

"The transaction was basically a sale of assets. All that 'cash free debt free' meant was that the debts of GT were retired from the proceeds of the transaction and the available cash. The Government of Ghana did not get value for money from the sale," it said.

The inter-ministerial review committee was constituted by the government on May 18, 2009 to provide it with investigative analysis, as well as findings, conclusions and recommendations, on numerous controversial issues surrounding the privatization of GT.

It was chaired by Mr Justice Emmanuel Akwei Addo, a retired Justice of the Appeal Court, and made up of representatives of the ministries of Justice, Finance and Communications and the Office of the Auditor-General.

The terms of reference of the committee covered the examination of all the issues relating to the management and finances of the GT from the tenure of Telenor/Telecom Management Partners (TMP) up until the sale of 70 per cent share of GT to Vodafone.






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