NDC Press Conference On CNT/CNTCI

PRESS CONFERENCE BY DR. NII JOSIAH ARYEH, NDC GENERAL SECRETARY - A RESPONSE TO THE PRESS CONFERENCE BY MR. YAW OSAFO-MAAFO, MINISTER OF FINANCE AND ECONOMIC PLANNING ON MATTERS RELATING TO THE CNT/CNTCI LOAN TUESDAY 8TH JUNE 2004 Ladies and Gentlemen of the Media: The NDC held a Press Conference on April 29, 2004, at which a number of issues relating to the CNT/CNTCI Loan approved by Parliament on April 13, 2004 were raised. Since then there have been many significant developments on the matter. Thanks to the CNT/CNTCI loan saga, a new coinage, documentation failure - an euphemism for incompetence and forgery, has even found its way into our political lexicon.

Last Thursday, June 3, 2004, Mr. Yaw Osafo Maafo, Minister for Finance and Economic Planning held a press conference ostensibly to respond to issues concerning the loan agreement. Having kept Ghanaians waiting impatiently for weeks to hear what the government had to say on the matter, the Minister's explanations were clearly an anti-climax. It was more of an attempt to throw dust into the eyes of the public than a serious and truthful explanation to the several questions begging for answers.

Tomorrow, Wednesday June 9, 2004, Parliament is expected to reconvene. As you are already aware, the NDC Minority has served notice of its intention to move a motion of rescission of the CNT/CNTCI loan in Parliament. While we do not wish to pre-empt the motion, we have considered it necessary to make some responses in the light of statements made by Minister Osafo Maafo concerning the press conference held by the NDC on April 29, 2004. 1. PARLIAMENTARY APPROVAL At his press conference, as if to shift blame on Parliament, Mr. Osafo Maafo gave a long recitation of the Parliamentary approval process which does not advance the debate in any way. The Finance Committee of Parliament may have had the loan documents for about a month, but the fact still remains that during that month, Parliament was on recess. Minister Osafo Maafo also made references to Honorable Moses Asaga's contribution during the parliamentary debate on the CNT/CNTCI loan and questioned whether I, as General Secretary of the NDC consulted our ranking member before the party's press conference of April 29, 2004 and if I did not, why not?

Our simple answer is that whether or not there was consultation between the NDC General Secretary and his ranking member, the wider NDC party outside parliament is entitled at any time to take a position that may run contrary to that of its Parliamentary caucus. The same is true of the NPP and indeed of every political party. I will support this statement with two recent examples. Some time in March 2004, NPP MPs were asked to approve under a certificate of urgency the Representation of the People (Amendment) Bill. Faced with public outcry, NPP General Secretary Dan Botwe came out boldly to state that the party outside Parliament did not agree with its Parliamentarians. He went further to align himself with the minority in opposing the Bill. To quote his exact words on radio, "the Bill is the work of the executive and the legislature, not of the Party".

Similarly, when the Kufuor administration ran into a hail of public protests following its attempt to impose a Procurement Committee on the Electoral Commission, Dan Botwe quickly distanced the NPP from the proposal and said the NPP Party leadership did not agree with the Kufuor led government.

In any case, why is it that today Minister Osafo Maafo is seeking refuge in the words of Honorable Moses Asaga? Is it to justify the incompetence of the NPP government? Even if our Members of Parliament were at fault for not scrutinizing the documents, it is the Kufuor government which must take ultimate responsibility as the originators of the CNT/CNTCI loan deal. 2. THE LENDERS i. After all the lengthy talk of Minister Osafo Maafo; it is still not clear who the Lenders are. From the investigative findings of the media, the labyrinthine corporate maze known as CNTCI looks like this:

The Directors of the Company are: (a) CNT (HK); and (b) Mr. Song Fuzai The shareholders of the Company with their shares are: (a) CNT (HK) - 50,000 shares; (b) Mr. Song Fuzai - 45,000 shares; (c) Liaoeh Petroleum Exploration Bureau - 1,000 shares; (d) China Railway Construction Corporation (CRCC) - 1,000 shares; (e) Shanghai Electric (Group) Corporation - 1,000 shares; (f) Jilin Province Electric Power Survey and Design Institute - 1,000 shares; (g) Beijing Hua Jian Lian Construction Engineers - 1,000 shares; (h) Mr. R. M. Edwards - 50,000 shares; (i) Mr. H. N. Fernando - 50,000 shares. In addition to these Chinese partners, there are also the following inter-connected USA, offshore and Grenadian Companies: (a) Columbus Newport has shares in Alberni United SA; (b) Alberni United has 50% shares in UCBT; (c) Columbus Newport and Alberni United SA through Messrs H. N. Fernando and R. Edwards have 50% shares in CNTCI; (d) Messrs H. N. Fernando and R. Edwards have shares in Alberni United SA; (e) Alberni United SA's shares have since August 2002 been transferred to Mr. R. Edwards; (f) Therefore Mr. R Edwards has 50% shares in UCBT; (g) Mr. R. Edwards has 50 shares in CNTCI; (h) Columbus Newport does not feature in CNTCI; (i) Mr. R. Edwards is the President and sole shareholder of Alberni United; (j) Mr. R. Edwards is the President of CNTCI; (k) Mr. R. Edwards is 50% shareholder of UCBT. Clearly, the whole CNTCI Corporate Maze revolves around one person - Mr. Rienzes Edwards.It is obvious from the corporate maze that CNTCI is R. Edwards and R. Edwards is CNTCI.

The frontpiece of the Loan Agreement says it is a "Loan Agreement for a Loan of US$300 million to the Republic of Ghana" with "Funds provided by CNT Group Holdings Limited and CNT Construction Investment Limited".

ii. Article 1, the 'Introduction', states that it is a Loan Agreement between the Republic of Ghana as borrower and "CNT Group (Holdings) Ltd., a company organized and existing under the laws of Hong Kong with its parent company being CNT Construction and Investment (CNTCI), a company registered under the laws of England....."

iii. Article 2.1.6, 'Definitions and Interpretations', defines "CNTCI" to mean "China New Techniques, Construction and Investment", incorporated under the laws of England and herein referred to as the Lender. Article

2.1.11

defines "Lender" to mean "CNT Construction Investment Limited". These are two different juridical persons. CNT Group (Holdings) Ltd. is not mentioned at all in Article 2.

iv. Under Article 12.6, "Notices", the address of the "Lender" is given as "CNT Construction Investment Limited, 150 Hammersmith Road, London W6 7JZ, United Kingdom". "CNT and Investment" is dropped. No address is given for CNT Group Holdings (Ltd.). The same address is given in Article

12.7.1.1 as the "domicilia citandi et executandi" for the service of legal process and forwarding notice of the "Lender".

v. Under Article 12.9 on "Determination Conclusive", witnesses for the Lender are to sign as witnesses for 'CNT Construction Investment Limited' and 'CNT Group (Holdings) Ltd'.

vi. In Annexure A, the "Sample/Draft Legal Opinion" to be issued by the Legal Counsel of the Ministry of Finance and Economic Planning of the Republic of Ghana, reference is made in paragraph 1 to "CNT Construction Investment Limited" as the "Lender".

vii. In the Memorandum of Understanding (MOU) of 12th November 2003, the address of CNT Group (Holdings) Ltd. (CNT) is given as Room 210 KCRC Hung Hom Building, 8 Cheong Wan Road, Hung Hom, Kowloon, Hong Kong.

viii. We are therefore not clear who the Lenders in the Loan Agreement are. Is it CNT Group (Holdings) Ltd. (CNT)? CNT Construction Investment (CNTCI), CNT Construction and Investment Limited, or all three? 3. CONTACT ADDRESS Ladies and Gentlemen of the Press: One address that runs through the loan documentation is 150 Hammersmith Road, London W6 7JZ. No address is given for CNT Group (Holdings) Ltd. in the loan agreement. However in the MOU of November 12, 2003, the address of CNT Group (Holdings) Ltd. is given as Room 210, Hung Hom Building, 8 Cheang Wan Rd. Hung Hom, Kowloon, Hong Kong. The address issue is important because under Article 5.1.1 the borrower is to make claims on the lender in order to access advances under the loan, and under article 12.7.1, 150 Hammersmith Road, London W6 7JZ is the "domicilia citandi et executandi" of the Lender.

Through the efforts of the various media houses, the following addresses have been identified as having been used or associated with the Lenders at one time or another:

Radio Gold (for CNTCI) Wish Hairdressing Saloon (for CNTCI) 150 Hammersmith Road London W6 7JZ United Kingdom Ghana Palaver (for CNTCI) 150 Hammersmith Road London W6 7JP United Kingdom Crusading Guide/ Joy FM (for CNTCI) Suit 3/A 24 Marlow House London W2 6HJ United Kingdom Crusading Guide (for CNTCI) 3303-3305 33rd Floors International Finance Centre One Central Hong Kong Crusading Guide/ Joy FM (for CNTCI) Flat 230 Latymer Court Hammersmith Road London W6 7JZ United Kingdom Gye Nyame Concorde/Joy FM Room 2A 2nd Floor China Supermarket 32-34 Tudor Street Riverside Cardiff CF11 6AH Wales Gye Nyame Concorde/MOU of 12th November 2003 CNT Group (Holdings) Limited Room 210 KCRC Hung Hom Building 8 Cheong Wan Road Hun Hom Kowloon Hong Kong Mr. Osafo Maafo took us through a very contorted route to arrive at what he calls the current address of the CNTCI. That contorted route is not stated in the loan agreement. Minister Osafo Maafo himself cautioned all and sundry at a press conference on May 13, 2004, that we should deal only with information contained in the documents he had presented to Parliament and nothing else. And as you are aware, in the documents made available to Parliament, the stated contact address 150, Hammersmith Road, London W6 7JZ leads to a hairdressing salon, "WISH HAIRDRESSING SALON". That is the fact. It is instructive to note that Minister Osafo Maafo told Ghanaians on the Friday, May 14, 2004, Joy FM Front Page programme that he had only that morning received a fax from CNTCI explaining that they had used this address until three months ago. Where is that fax and can the Minister make it available to the public? Osafo Maafo has admitted that CNTCI committed an error thrice by giving Ghanaians a hairdressing salon as their address for notices and service of legal processes. We are told the telephone/fax numbers are also "e-fax numbers," and that the "e-fax numbers are secure numbers that can only be accessed by a code. Minister Osafo Maafo claims he has been in constant touch with CNTCI. We, together with other Ghanaians have not been able to make contact with CNTCI either through this address at 150 Hammersmith Road, London, W6 7JZ, UK or through the telephone and fax numbers provided in the Loan Agreement pproved by Parliament. The Minister claims the NPP "Government has had no difficulty in contacting CNTCI," but why do we enter into an agreement under which it is only a few individuals within the NPP government who have the means of contacting the other party. What if the NPP is not in office? How does a successor NDC government in January 2005 contact the lenders if this loan agreement is to be enforceable? We have dwelt at length on the issue of addresses because confusing addresses and conflicting and confusing telephone and fax numbers are some of the basic features of international financial scams. 4. TRANSPARENCY Ladies and Gentlemen of the Press: While the real address and phone numbers of CNTCI remains a closely guarded national secret, Mr. Kweku Baako, the Managing Editor of Crusading Guide has had access to the secret code. According to him, while examining some documentation on CNTCI given to him by the Minister of Finance he came across a special phone number with which he was able to contact Mr. Edwards, the man at the centre of the scandal. Since then the Crusading Guide has put out information no one else has had access to; not even the Members of Parliament of the Republic of Ghana whose duty it was to consider and approve the loan. The Crusading Guide has made us aware of the existence of two critical letters whose disclosure would have put Parliament on enquiry. These are: a. Preliminary Letter of Offer dated 3rd December 2003 from CNTCI to Minister of Finance Yaw Osafo Maafo.

b. Preliminary Letter of Offer - Phase 01 dated December 15, 2003, from CNTCI to Minister of Finance Yaw Osafo Maafo.

c. Preliminary Letter of Offer - Phase 01 dated 3rd December 2003 This purported "Preliminary Letter of Offer "Phase 01 dated 3rd December 2003 was published in full in the 'Crusading Guide' of 25th - 31st May 2004.

It states inter alia as follows: a. The loan is to be secured against a Central Bank or Sovereign Guarantee;

b. The funds to be disbursed are to be controlled jointly by CNTCI's bankers UCBT and the Ministry of Finance;

c. The rate of interest will not exceed one per cent to be paid on 31st December of each year.

d. The financial assistance to be provided by CNTCI is on the understanding that the shareholder/partner companies of CNTCI, namely CRCC (China Railway Construction Corporation) would be the sole contractors for the projects to be financed by the Lenders.

These conditions are so critical and fundamental that they could be considered as part of the "fundamental obligations of the borrower" (that is, the Government of Ghana). Yet they are not part of the Loan Agreement and the letter itself was not part of the documentation submitted to Parliament.

Preliminary Letter of Offer - Phase 01 dated December 15, 2003

Extracts from this alleged letter were published in the Crusading Guide of 18th - 24th May 2004, and they included the following revealing conditions:

a) CNTCI's "financial assistance" is being given on the understanding that the Shareholder/Partner companies of CNTCI, namely China Railway Construction Corporation (CRCC) would be sole contractor for the project funded by the CNTCI;

b) CNTCI is offering "Financial Assistance", not a commercial loan or a bank loan and that since CNTCI was not a financial institution; the terms and conditions that apply to international money markets did not apply to them.

c) CNTCI is committed to provide financial assistance for the projects from its own cash flow resources beyond Phase 1 on similar terms and that the parties understand and accept that CNTCI is not a financial institution.

d) Financial assistance for Phase One (1) was going to come from CNTCI's own cash flow resources and not from Banks or the International Money Market.

Again these "understandings" are so critical and fundamental that we are at a loss as to why this letter was not among the documentation submitted to Parliament, and why these "understandings" are not incorporated in the Loan Agreement.

Yet again, if the CNTCI is so charitable, "providing financial assistance, not a commercial loan", then why is the company insisting on a 4% financial/management fee, which works out to US$12million, whenever this is payable?

The Crusading Guide Vol. 6 No.39 of 18th-24th May 2004, also revealed that since the story of the Loan Agreement broke, the CNTCI President, Mr. R. Edwards, had written to Finance Minister Yaw Osafo Maafo on May 12, 2004 to clarify certain aspects of the US$300 million Loan Agreement and authenticate/confirm the source and availability of the concessional funds for the projects envisaged under the agreement.

It will be necessary for this letter to be made available to Parliament as part of the general documentation on the Loan Agreement and to update members on the transaction. 5. SOVEREIGN GUARANTEE Ladies and Gentlemen: The Minister's Press Conference was the first time that Ghanaians learnt that the Lenders required a "Sovereign Guarantee" for the loan. The Loan agreement taken to Parliament did not mention any guarantee at all. The MOU of 12th November 2003 made reference to a Bank of Ghana guarantee. Our beef at the time was that as a Bank of Ghana guarantee, that undertaking should have been given by the Governor of the Bank of Ghana and not Ministers of State. We agree with the Minister that collateral securities are required for loans of a certain size. That was why we were really surprised when we did not see reference to any guarantee at all in the loan agreement, and the Bank of Ghana Guarantee mentioned in the MOU was neither made a part of the Loan Agreement nor was the MOU incorporated into the Loan Agreement by reference The Minister also stated that "it is not possible for people to discount Sovereign Guarantees when they are not avalised unless a first class international bank confirms the guarantee, which was not a condition for this loan". This is what the Minister of Finance is telling us, but listen to what the MOU of 12th November 2003 which he co-signed with Mr. Alan Kyeremanten states:

"The Parties further agree that CNT shall receive a Letter of Intent from the Bank of Ghana, specifying its ability and preparedness to issue a Guarantee in favor of CNT Construction Investments Ltd. up to the final amount referred to in paragraph 1. A draft format of the proposed Guarantee shall be attached and when executed, shall be subject to verification by a reputable European Bank."

So until last Thursday, confirmation by a first class international bank was a condition for this Loan, contrary to what the Finance Minister stated. We are yet to sight documentary evidence of the changed position as presented by the Minister.

The fact is that it appears that following the severe criticisms that the loan agreement has been subjected to, the Finance Minister has sought to re-negotiate some of the terms as if they were part of the original documentation that he sent to Parliament. Many of the positions he took at the Press Conference were neither reflected in the Loan Agreement nor in any of the supporting documentation.

We re-affirm our position that within the framework of the documentation submitted to Parliament, it was going to be possible for CNTCI to use Ghana's Guarantee to "shop for funds and disappear". Apart from Mr. Yaw Osafo Maafo's word, that still remains a possibility. 6. DISBURSEMENT/DRAW DOWN ARRANGEMENTS The Finance Minister states that final costs will depend on the final feasibility report which will be subject to Value for money Audit.

This assurance is however rendered nugatory by the provision in paragraph 6 of the MOU of 12th November 2003, which states that the specific values of each project shall be "mutually agreed upon between the parties".

The Minister also states that the arrangements specific to this loan account would be controlled jointly under the signatures of CNTCI and the Ministry of Finance and Economic Planning.

The first time we or any of our MPs knew of this was when we read about it in the "Crusading Guide" of 25th-31st May 2004 in the published letter from CNTCI to the Ministry of Finance and Economic Planning headed "Preliminary Letter of offer Phase 01 dated 3rd December 2003. 7. TYPE OF FACILITY The Minister also commented on the description of the transaction by the President of CNTCI in his Joy FM interview as a suppliers' credit and not a loan. Incredibly, the Minister of Finance stated in an answer to a question at the Press Conference that the terms "Loan Agreement" and "Suppliers Credit" could be used interchangeably.

The Minister's comment in his Press Statement is very misleading. His answer to the question is falsehood at its best. The truth is that whilst all suppliers' credits are Loan Agreements, not all Loan Agreements are Suppliers Credits. That is why they cannot be used interchangeably. The basic difference is this: With a loan, you take the money and you do with it as you wish. For projects of the type envisaged under this Agreement, a straightforward loan allows you to go for competitive bidding, so that you get value for money.

With Suppliers Credit, you are tied to the Lender of the money. He provides the goods, equipment and services at prices that he determines, even though it is possible to negotiate the prices. But because there is no competitor, he can adopt a "take it or leave it" attitude in which case the facility could be in jeopardy. 8. PROJECTS Touching on the projects to be financed by the loan, Minister Osafo Maafo expressed disappointment with top officials who "condemn people on matters which are easily verifiable by a little reading on the matter in question". Indeed, a little "better reading" of the statement read at the April 29, 2004 Press Conference would have made clear the concern of the NDC. The fact is that the government had put certain information in the public domain about those projects. The information was contrary to the information contained in the Memorandum on the loan agreement forwarded to Parliament. a) Accra-Tema Rail Line According to the "Executive Summary - Rail Project" that was submitted with the loan agreement to the Finance Committee, the Accra - Tema Rail Line is to be rehabilitated at a cost of US50million under the project. Presumably as provided for in the MOU, this is to be done by CNT/CRCC. Yet the Minister of Ports, Harbour and Railways had earlier announced that three companies not including CNT. CNTCI or CRCC had been short listed to undertake the Project (You will all find this in the Daily Graphic of Thursday, 1st April 2004). What is the explanation for this?

The same Minister has also stated in the "Executive Summary" that a US$5 million OPEC loan was expected to be approved by Parliament. Additionally, a Chinese Government loan of US50 Million was expected of which US$4.5million would be used to undertake the Project. This is a very befuddling situation and some further explanations and clarifications are required. b) Achimota - Nsawam Road According to the "Executive Summary - Road Project" submitted to the Finance Committee with the loan agreement, the Achimota-Nsawam-2-lane dual carriageway road is to be constructed using part of the loan proceeds of US$142,746,796 from CNT.

Yet President Kufuor in cutting the sod to mark the commencement of work on the same road project earlier had announced that the project cost of US$28 million (¢252 billion) was being supported by a Chinese Government interest free loan (You will find this in the Ghanaian Times of Tuesday, December 30, 2003).

Ghanaians still need some explanation for this apparent double counting. CONCLUSION Ladies and Gentlemen of the Press:There are too many questions yet to be answered about this loan agreement or suppliers credit or call it what you may. The identity or identities of the lenders, the intricate corporate maze known as the CNTCI, the conflicting and confusing addresses and telephone/fax numbers, the concealment of critical conditions of the agreement from the Loan Agreement and from the documentation submitted to Parliament including the issue of the Bank Guarantee and the sole-sourcing undertakings, all point to one thing. Something is wrong somewhere. Someone is not telling the truth to Ghanaians. Consequently, the NDC has taken the initiative by writing to Interpol seeking assistance to unravel the mystery. Coming so soon after the IFC debacle, we must as a country take precautions against those who may be out to take this country for a ride.

We shall pursue this request to Interpol and hope to receive support from the Ghana Office of the Interpol. It is the NDC's contribution to the fight against International fraudsters and corruption.

Finally Ladies and Gentlemen, let me restate on behalf of the NDC that our party is not seeking to thwart the efforts of the NPP to source funds from alternative sources to finance development projects in the country. However, we consider as despicable arguments by NPP spokespersons that it does not matter where money for our development comes from. It is an affront to the dignity of this country to suggest that we must encourage drug traffickers and criminal gangs because they will use their dirty money for national development. If that is the philosophy of the NPP government, why is the Narcotics Control Board spending precious time and resources chasing drug traffickers?

The NDC will not act in any way to discourage genuine investment in the country. God forbid. The NPP while in opposition traveled far and wide castigating the NDC government in an effort to discourage investors. In one particular instance, Dr. Jones Ofori-Atta a leading member of the NPP stood before a gathering of the Confederation of British Industry (CBI) in London to speak against investing in Ghana. We of the NDC, imbued with a high sense of nationalism, will never descend to that level.

We are certain that the CNT/CNTCI loan is a mirage and the NPP government now knows it. But after the IFC loan debacle, President Kufuor may be finding it difficult pulling out of the deal using the old propaganda that they are a listening government. This time the NPP has conveniently left open a window through which they are planning their escape from the CNTCI loan controversy.

According to Minister Osafo Maafo, the government will pursue the loan to its logical conclusion provided the lenders are still interested in doing business with Ghana. They are preparing our minds for the inevitable withdrawal from the loan transaction and we are observing closely.

Ghanaians can be certain we have not heard the last on this embarrassing loan affair.

We thank you for coming. May the Almighty Bless our Nation.