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04.01.2012 Critics

Down Memory Lane: How Kufur & Co caused Ghana trillions of cedis

By Dailypost News
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PRESS STATEMENT BY THE ATTORNEY GENERAL IN RESPONSE TO THE MINORITY STATEMENT ON JUDGMENT DEBTS AS CONTAINED IN THE 2010 BUDGET

On December 16, 2009, the NPP Minority in Parliament at a press conference issued what it termed the first in a series of press statements on the “Constitutional, Legal and Governance Issues Arising out of the 2010 Budget”. The press conference was addressed by the former Attorney General, Honourable Joe Ghartey, and MP.

In the statement that was read out by the Member of Parliament, he sought to show that the Honourable Minister of Finance was wrong in attributing the huge judgment debts that Professor Mills' Government has been saddled with, to bad governance and bad management over the past eight years.

I wish to state that in the nature of Governance, judgment debts will always be an issue once people have valid claims against government. It is the prudent and responsible management of those debts which is the core principle in the statement made by the Minister for Finance.

In the first place, the Honourable Joe Ghartey misconstrued the substance of the statements made by the Honourable Minister of Finance, which were quoted from Paragraphs 85 and 86 of the budget statement.

In those Paragraphs, the Honourable Minister did not blame any political party for creating the judgment debts.

Some of those debts, he said, dated back to the independence period. The Honourable Minister's main point was that, irrespective of how these judgment debts arose, they have been badly managed over the past eight years.

In Paragraph 86 of the Budget Statement, the Honourable Minister stated that:

“The quantum of these court judgment debts increased substantially over the past eight years due to bad governance. In situations where the local and foreign courts had ruled that payment should be effected, Government was adamant. This resulted in astronomical compounded interests, loss of profits claims and damages which we are now compelled to pay.”

So there were situations where the courts had ruled that Government should make certain payments and yet the NPP for political and other reasons refused to pay those amounts.

The first example is the CP case which Honourable Joe Ghartey claimed was tainted with fraud. However he had to admit that foreign arbitral tribunals held the NPP government liable for abrogating four contracts the company was executing. The NPP Government refused to settle payment until CP obtained an enforcement order of the arbitral award and the NPP Government were forced to settle to the tune of 4 million pounds. As I speak to you now there is an amount of US $581, 333.00 and 50, 778.37 Pounds Sterling which is outstanding in respect of legal fees for our foreign solicitors handling this matter.

In response to Honourable Ghartey's statement, one has to state that bad governance when you refuse to pay and manage judgment debts awarded against a government.

Let's also take the case of Calf Cocoa v Attorney General to which Honourable Joe Ghartey referred. Calf Cocoa is a joint venture company incorporated by a Chinese nominated partner and Caridem Development Corporation.

That case arose simply because NPP Government refused to honour a contractual agreement between the Government of Ghana and Calf Cocoa for the payment of the sum of US$1,800,000.00 as working capital, after the construction of the cocoa processing factory. When it became clear, after the exchange of correspondence, that the NPP Government did not intend to pay the sum, Calf Cocoa took the matter to court.

What happened in court? In addition to the amount of US$1,800,000.00 claimed by the company, the Government of Ghana was ordered to pay an additional sum of US$1,750,000.00 towards rehabilitating the factory, together with interest.

In delivering the statement of the Minority in Parliament, Honourable Joe Ghartey was very selective indeed in choosing what to quote from the judgment on the case.

The judge who sat on the case was so outraged by the conduct of the officers and Ministers under the NPP Government that this was what she had to say:

“It is sad to say the least that Public Officials who are entrusted with the public good and who are expected to act in utmost good faith will so create a situation which will result in creating financial loss situations in the country.”

This quotation was in direct reference to the two Ministers of Finance under the NPP Government and some high ranking public officers by whose conduct the Government has had to pay unnecessary damages.

Even the Statesman Newspaper (whose political inclination I do not need to emphasize here) had cause to severely criticize the NPP government in its July 24 2007 issue for deliberately frustrating the establishment of this company. This is a 10,000-tonne Chinese-Ghanaian plant which would have created jobs for Ghana. A classic example of bad governance.

Let us take the case of Rockshell v Attorney General, again, a matter that came up under Honourable Joe Ghartey's watch.

It is true the genesis of this matter was in the 1980s. However, Rockshell sued when the NPP came to power.

When Rockshell applied to take summary judgment in court, Joe Ghartey, as the Attorney General, filed nothing in court to oppose it.

The result was that instead of taking judgment on a figure before calculating interest, Rockshell calculated compound interest on the figure claimed, took judgment on that and then got the court to award further interest on the resultant figure.

Even though the summary judgment was obtained in 2007 the NPP never paid a pesewa. When I assumed office in March, 2009 I was confronted with a debt of US$ 87 million. With some difficult negotiation I have managed to reduce it to US$35,000,000 and government is paying over a period of time.

City and Country Waste Limited (CCWL) is another case that the NPP refers to as payment to NDC cronies, and I think it is time to lay this matter to rest once and for all.

In 1997 the AMA signed a waste management agreement with CCWL. AMA also signed another agreement with Groupe Chagnon to supply waste management equipment to AMA, which was assigned to CCWL for use on terms. This agreement was operated for a period of 2 years until July 2001 when the NPP Government came to power and abrogated it, seized the trucks and other waste management equipment even though they had not been fully paid for, and sold them at rock bottom prices to third parties.

During the period that the contract was in operation, AMA made some payments to CCWL. However, at the time that the contract was cancelled by the NPP government AMA owed CCWL more than US$10,000,000.00.

CCWL made a claim for the debt bent over backwards to try and settle the matter amicably with AMA and the Ministry of Local Government, and, when they refused to pay, sued AMA in court.

Even though the High Court took the view that the processes through which the contract was awarded did not comply with the Local Government Law, it still went ahead and made an award to CCWL in the sum of over US$12,000,000.00 inclusive of interests and all.

The simple reason the judge gave was that AMA could not use the services of CCWL for about two years without complaining and then refuse to pay for those services, particularly when it was clear from the evidence that CCWL was not to blame for the defect in procedure for the award of the contract.

AMA appealed to the Court of Appeal and lost. It then appealed to the Supreme Court.

In a judgment delivered by the Supreme Court in February 2008 the Supreme did not only agree with the High Court and Court of Appeal, but further awarded to CCWL interest from July 2001 until the date of the final payment of the judgment debt.

The judgment debt as we speak now to close to U$29,000,000.00 at a time that the cedi was nearly as strong as the US dollar. If the matter had been settled even after the judgment of the High Court or the Court of Appeal this kind of debt would have been avoided. This is another case of bad governance.

It is completely disingenuous for Honourable Joe Ghartey to mislead Ghanaians that because the Supreme Court held that the procedure used to award the contract was inconsistent with the Local Government Law, an award made by that same Court, the highest in the land, should be disregarded.

It is the same court which, in spite of that ordered AMA to pay to CCWL the whole judgment debt and interest.

It is this irresponsible and vindictive conduct that engendered the comments of the Honourable Minister of Finance in the first place. So now instead of about US$10,000,000.00 which AMA and the Ministry of Local Government could have settled for in 2001, Government now has to pay US$ 29,000,000.00.

Fortunately, I have negotiated the judgment debt down drastically and the Ministry of Finance has been making scheduled payments.

Again, my office is at the moment grappling with a claim of GHc 6,073, 472.39 or over 6 billion old Cedis arising out of the abrogation by the NPP Government of a contract with an automobile company to supply the Ministry for Local Government with Galloper vehicles.

It is inexcusable that a judgment delivered in favour of this same Automobile company in 2003 in the sum of GHc 50,279.96 is allowed to grow interest to more than 6 million Ghana Cedis.

The previous Government retainer for a foreign solicitor in an arbitration involving the State and a foreign investor and agree to pay 100,000 Pounds Sterling is another case of bad governance. By March 2009 when I assumed office Government had made payments of almost 1.5 million Pounds Sterling to the foreign lawyers handling this matter. I have through negotiations with the firm stopped making these

payments.
With all due respect to Honourable Joe Ghartey and the NPP, it is these matters that were of most concern to the Minister of Finance and the Government in general when he made the statement in Parliament.

These are matters that will continue to engage the attention of Professor Mills Government in its quest to manage prudently the limited resources of this country and give the people of Ghana value for money.

While we welcome criticism from our opponents, we take the view that in this particular instance, both Joe Ghartey and the NPP got it wrong.

I as the Attorney General agree with the Honourable Minister of Finance when he stated that during the 8 years of the NPP Government, it did not manage the country's judgment debts prudently and this has increased Government's liabilities.

I thank you for your attention and wish all Ghanaians and the media practitioners a blessed festive season.

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