The GYEEDA report is out! The 164-page report should be read in its entirety by anyone who seeks to understand why the country remains impoverished in spite of its abundant natural resources and talented human capital. For those who are too busy to read the entire report, I recommend reading the 17-page executive summary, which is an excellent overview of the findings. If your busy schedule cannot accommodate either the full report or the executive summary, then this 4-page summary is for you. In addition, I offer some ideas on additional actions that must be taken in paragraphs 20 and 21.
Undoubtedly GYEEDA is Ghana's ENRON! It represents a sophisticated scheme to siphon gargantuan funds from the national treasury to a few politically connected individuals. While the report has clearly exposes the rot at GYEEDA and those politically connected individuals, it is my opinion that the report falls short of pursuing the issues to identify those in the political arena who masterminded and facilitated the scheme. As with Woyome, the rot could not have occurred without the knowledge and participation of those politicians we elect and put in charge of the national purse.
The report clearly shows that serious crimes have been committed. At a minimum, the following laws have been violated
- Article 181, 252 (3) 1992 Constitution,
- Financial Administration Act,
- District Assemblies Common Fund Act, 1994 (Act 455),
- Public Procurement Act, 2003 (Act 663),
- Criminal Code, Part III (various crimes including embezzlement, forgery, willful loss to the state, fraud, etc.).
In the 4-year period, spanning 2009 to 2012, GYEEDA received GH¢949,661,017 from five unauthorized sources (District Assembly Common Fund, GETFUND, NHIS, Ministry of Finance and Economic Planning and Communication Service Tax) to fund its unspecified and ill-defined projects/activities (sometimes called modules).
Funding for GYEEDA has grown at an alarming and unsustainable rate. For instance, in 2009, total funding was GH¢115,260,000. This grew to GH¢157,341,000 in 2010. By 2011, it had increased to GH¢228,015,437. In the election year 2012, the funding surged to GH¢449,044,580.
Not only was the GH¢949,661,017 allocated to GYEEDA in 2008-2012 not accounted for, by way of audited (or even unaudited) financial statements, indeed by June 2013, GYEEDA also owed an additional GH¢259,000,000. Thus, total spending by GYEEDA in this 4-year period exceed GH¢1,000,000,000.
Of the GH¢259, 000,000 alleged debt, GH¢122,000,000 (47%) is supposed to be owed to Better Ghana Management Service Limited (BGMS). According to the report, not only did all the management team members of GYEEDA resist the BGMS engagement, it also turns out that GYEEDA is paying an astronomical, almost unbelievable and unreasonable, financing cost of about 100% per month or 1,200% per annum on this debt.
Like Enron, GYEEDA's business model is to engage in related-party transactions with so called service providers (SP) that allow it to transfer national resources to these related-parties for little or no value received.
By design, SPs for GYEEDA projects were heavily skewed in favor of the following related parties:
- Roland Agambire
- Joseph Agyapong
- Seidu Agongo
- AGAMS Group of companies including (Rlg, Craftpro and Asongtaba) owned by Roland Agambire)
- Better Ghana Management Service Limited (BGMS)
The report provides evidence of individuals owning in excess of eight GYEEDA contracts at a time with aggregate contract values in excess of GH¢150,000,000.
The typical modus operandi is for these related-parties to generate unsolicited bid, with lop-sided terms, which invariably was approved by GYEEDA's management or in some cases by invincible, albeit highly placed, political hands.
Once the contract was executed, the funds were released to the related parties even before they did any work. In fact, they almost always failed to deliver value for money. This is, of course, not surprising as the engagements were designed to siphon money to these related-parties. Delivering value was never part of the contract.
Quiet apart from these sweetheart contracts that GYEEDA signed with these related-parties, GYEEDA also financed these parties by granting them interest free loans.
- For instance, several MOUs, especially those in connection with AGAMS Group of companies, contain interest free loans granted and disbursed to the latter without recourse to Parliament as required by the Constitution and the Financial Administration Act.
- As of 30 June 2013, total loans advanced to the companies owned by Mr. Agambire stood at approximately GH¢50,000,000. Yet, curiously these companies assert that GYEEDA owes them about GH¢56,000,000.
- In consequence, GYEEDA had an outstanding debt to BGMS that carried financing cost of 1,200% per annum while GYEEDA made interest free loans to AGAMS.
To facilitate the ponzi scheme, GYEEDA hired a Director of Finance who knew nothing about finance or directing. This director of finance admitted that he lacked the training and experience to operate effectively as head of finance. In most cases, he was not aware of the amount and nature of disbursements. In the 4-year period, 2008-2012, no financial statement, budgets, or any financial reports have been prepared. GYEEDA had no internal controls and GYEEDA's accounts were never audited.
The absence of financial controls and oversight was not accidental. It was part of the scheme that enabled the fraudulent enterprise.
From 2009 to 2012, GYEEDA paid approximately GH¢786,000,000 to SPs in respect of so called contractual claims. Several of the contracts between GYEEDA and the SPs lack basic standard elements of contracts such as critical dates, deliverables, tenure, and key performance indicators. As a matter of law, it is charitable to refer to these agreements as contracts.
For very obvious reasons, the Office of the Attorney General and Minister of Justice was not included in the execution of many of these pseudo-contracts.
Contrary to the procurement act and any reasonable business model, GYEEDA's procurements were primarily supply driven. This means the procurement process commenced with an unsolicited proposal from a related SP, which invariably was approved without any serious project evaluation and competitive bidding. Thus, the procurement processes did not satisfy the requirements for the single source procurement or the tendering rules under the Public Procurement Act.
The report is clear that most of the contracts signed with the SPs are fraught with value leakages, commercial inefficiencies and waste. For instance, in one project to train dressmakers, the Master trainers, who supposedly trained the dressmakers are yet to be paid even though Asongtaba, the SP, has been paid GH¢43,390,000 for the service. Notwithstanding the ample evidence of non-delivery on the first contract, GYEEDA went ahead and expanded the dressmaking project.
The report documents other shocking revelations of financial malfeasance, cronyism, political patronage, embezzlement, fraud, ghost workers and SPs making windfall profits at the expense of the taxpayer (e.g., Zoomlion).
In light of the forgoing, the following preliminary questions need to be asked:
- What did the President know about GYEEDA's operations, considering that GYEEDA has received over GH¢1,000,000,000 in the last four years?
- What cabinet level decisions were made in respect of GYEEDA's operations?
- In light of the violations of the various laws, how did GYEEDA manage to pass the scrutiny of the Accountant-General Department as well as the Bank of Ghana?
- Under what authority did GYEEDA make interest free loans to various SPs, in clear violation of the Constitution?
- How could GYEEDA be funded to the tune of GH¢1,000,000,000 in the last four years without preparing a single budget or financial statement?
- How did GYEEDA's operations escape the audit eyes of the Auditor General?
- How much funding, if any, did the AGAMs Group of companies provide to the President in the 2012 election campaign? It is a matter of record that GYEEDA spent GH¢449,044,580 in 2012 and it is a reasonable request to know whether these funds were funneled into the President's election campaign.
- Under what authority were funds diverted from various restricted funds (e.g., DACF) to GYEEDA?
- Whether in light of these report, the administrators of these funds should not be interdicted and held accountable for violating their fiduciary duties?
- Under what authority did the minister of finance and economic planning (MOFEP) release funds to GYEEDA, rising to the tune of GH¢219,311,753 from the MOFEP alone in 2012?
In light of the seriousness of the potential crimes committed and the magnitude of the funds involved, it is also reasonable to demand the appointment of an independent prosecutor to investigate GYEEDA's activities and prosecute all officials implicated in this cesspool of financial shenanigans.