The five-year lease agreement between the government and Gallen Limited over the controversial Gulf Stream GIII will finally expire at the end of this month.
Under the lease agreement, which was signed between Ghana and Gallen Limited in 1999 for the use of the aircraft, the government had the option to own the Gulf Stream after five years.
The government has decided to exercise its option of ownership over the aircraft by purchasing the lease for a regulatory price of $10m. By that action, the government now has the right to dispose of the aircraft, which is now grounded at the Air Force Station at the Burma Camp. In an interview, Mr Kwabena Agyepong, the Press Secretary to the President and Presidential Spokesman, said under the lease-hire purchase agreement, the Ghana government made a down payment of $2 million on the lease and committed itself to pay $1.5 million semi-annually over a five-year period.
The previous government transferred $16 million from Ghana's peacekeeping accounts at the Chase Manhattan Bank of New York into the account of the United Kingdom branch of Hong Kong Shanghai Banking Corporation (HSBC), acting on behalf of Gallen Limited, to serve as security.
Mr Agyepong explained that such security arrangement was done so that if the Ghana government missed the scheduled payments, Gallen Limited would deduct the money from the escrow account. He said such security deposit was made possible by a rather strange arrangement entered into by the previous government, which placed the security deposit outside the control of the Minister of Finance, an action which was in direct contravention of the country's financial administration regulation. Mr Agyapong explained that attempts by the government to opt out of the lease agreement were resisted by Gallen Limited, which had the right over the security deposit.
Since President J.A. Kufour assumed office in 2001, he has refused to use the aircraft because of his view that there were still a lot of unanswered questions about the processes of acquisition of the jet by the NDC government. Rather, the President directed that the aircraft should be disposed of as quickly as possible. Under the lease agreement, contrary to the norm, the government, which is the leaser, strangely agreed to the responsibility of selling the plane in case of the expiry or discontinuation of the agreement.
Thus Ghana, the leaser, is left with the burden of looking for a buyer for the aircraft. Mr Agyapong assured Ghanaians that in exercising the right to dispose of the Gulf Stream aircraft, due diligence would be taken to ensure that the financial interests of Ghana were fully safeguard. At a press conference held in Accra in May 2003, the Minister of Information, Nana Akomea, said it took some time for the government to come by the details of the deal, partly because the documents covering the transaction previous government.
According to him, during investigations conducted by the government, HSBC came up as owners of Gallen Limited and, therefore, the original owners of the jet, which has the capacity to carry only 11 passengers. The investigations further established that the previous government bought the jet from a company called Trans Air Trade of Switzerland and then sold it to HSBC and thereafter proceeded to lease the same aircraft from the same HSBC to whom it sold the aircraft.