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01.03.2005 Business & Finance

NPP Goes For Another “Scam” Financial Transaction!

By Palaver

——United Rail (International) Ltd is the “scam” company ——Ghana Railway Company is the “scam” victim (Palaver) -- In our lead story last week Tuesday, we reported that the Kufuor administration is, once again, about to enter into a deal with a company, this time too, in the UK like the CNTCI, described as “bogus and fraudulent” (apologies Osagyefo Dr. Kwame Nkrumah) and similar to the “IFC” and “CNTCI” financial debacles of 2003 and 2004.

The UK Company involved is the United Rail (International) Limited and the Ghanaian state-owned victim company of the likely fraud is the Ghana Railway Company Limited.

In a swift rebuff to our lead story, Minister of Ports, Harbours and Railways, Professor Christopher Ameyaw-Ekumfi, arranged a media interaction ('Ghana Palaver' was not invited) at which he berated 'Ghana Palaver' and stated that United Rail (the alleged Ghanaian registered company owned 100% by United Rail (International) of the UK), had not been given the contract yet and that nothing binds the NPP Government to take them at all costs (credit 'Chronicle' of Wednesday, March 23, 2005).

It will be recalled that Professor Christopher Ameyaw-Ekumfi was one of the four Ministers who were involved in the “CNTCI” debacle.

“After the negotiations, we can change the company if we feel they cannot deliver”, the Minister is reported to have told the assembled journalists.

The Minister also stated that at the end of the negotiations, the Ministry will seek parliamentary approval before the project takes off and that he was certain the negotiations would be over at the end of April and the Ministry would settle on the company, which would take the Ghana Railway Company.

The Minister named the company with which the NPP Government is negotiating as United Rail Company, a limited liability company incorporated in Ghana, which is a wholly owned subsidiary of United Rail (International) Limited registered in the UK with company number 05066976.

According to the Minister, confirming 'Ghana Palaver's story of last week Tuesday, it is a newly formed company registered specifically for the operations of railways in Ghana and that the shareholders and associates bring to Ghana Railways a wealth of expertise, experience and knowledge.

But 'Ghana Palaver' has not been to sleep since our last publication and especially since Minister Christopher Ameyaw-Ekumfi's media encounter riposte. Our source with London Underground, a Chartered Accountant who is also an Investment and Risk Appraisal Analyst, has gone into the matter in great detail and reported as follows.

UNITED RAIL (INTERNATIONAL) LIMITED

United Rail (International) Limited was incorporated in the UK on March 8, 2004. Its registered office is c/o Philip Brown & Co, 46 Blandford Street, London W1U 7HT.

The Companies House in the UK is proposing to strike off the company from the books for non-compliance with the Companies Act 1985 because it has no Directors, it has no Secretary, and it has no place of business.

Directors and Secretaries

On incorporation on March 8, 2004, the Directors and Secretaries for United Rail (International) Limited were Waterlow Nominee Ltd (Directors) and Waterlow Secretaries Ltd (Secretary), both of whom resigned on June 11, 2004. The company therefore has no officers for the UK Government to deal with.

Waterlow Nominee Limited

The sole director of Waterlow Nominee Ltd is one John Alexander Stuart Davis. The Secretary is Dunstana Adeshola Davis, and the shareholders are Dunstana Adeshola Davis and John Alexander Stuart Davis.

Waterlow Nominee Ltd. was the Director of United Rail (International) Ltd.

Waterlow Secretaries Limited

Waterlow Secretaries Ltd was incorporated on April 10, 1992. Its current address is 6-8 (6-14?) Underwood Street, London N1 7JQ.

This address is also linked to Wilmington Group Plc, which has among its subsidiary companies Waterlow Legal & Secretarial Services.

The object of this company is to help individuals incorporate companies and hide their identities for a fee and also help them to obtain legalised documents in order to obtain foreign contracts and to operate in offshore countries.

The directors of Waterlow Secretaries Ltd. are Gary Philip Wilde of Philip Brown & Co, 46 Blandford Street, London W1U 7HT (yes, you guessed right, the very same address as United Rail (International) Ltd), and one Dunstana Adeshola Davis of 20 Northcote Road, Croydon, Surrey CR0 2HT, who is also the sole shareholder.

Waterlow Secretaries Ltd was the Secretary to United Rail (International) Ltd.

Though Waterlow Secretaries & Legal Services is part of the Wilmington Group Plc, it is not the same as Waterlow Secretaries Ltd, which resigned from United Rail (International) Ltd as Secretary on 11th June 2004.

Financial Standing of the two “Waterlow” Companies

At the time United Rail (International) Ltd was incorporated, its director and secretary, Waterlow Nominee Ltd and Waterlow Secretaries Ltd, had unpaid called up shares of £2. The company has been dormant since its incorporation.

Shareholders of United Rail (International) Ltd

According to Minister Christopher Ameyaw-Ekumfi, Holdtrade UK Ltd holds 50% of United Rail (International) Ltd's shares, and the other 50% is held by Trackbed Ltd.

But Trackbed is not a registered company in the UK. A company previously called Trackbed Consolidated Ltd was dissolved on October 19, 2004.

Holdtrade is the Ghana representative of Clayton Equipment and their mandate is selling their equipment to Ghanaian companies through them. They therefore cannot hold themselves (Holdtrade) as an associate company.

Holdtrade UK Ltd has some trade links with Holdtrade Gmbh in Dusseldorf, Germany, but not financial.

Holdtrade UK Ltd has an associate company called Holdtrade Mining Ltd. It has 40% shares with 40% being owned by Oscar Rettenmund and the 20% held by Frank Randolph Roberts.

The net assets of Holdtrade Mining Ltd as at December 31, 2003 (latest accounts) was £8,216. On the other hand, Holdtrade (UK) Ltd is equally a small company which is exempted from statutory audit. A company is exempted from statutory audit if its turnover is not more than £0.6 million, its balance sheet total does not exceed £0.8 million and its number of staff is not more than 50.

The Suspected Fraud

United Rail (International) Ltd was purposely incorporated to engage in deals abroad while maintaining the anonymity of the persons behind the company. Even if the veil of incorporation is lifted, there is currently no officer or director who can be held liable for any fraudulent deals that the company might have engaged in.

United Rail (International) Ltd used a company formation company to incorporate because the persons behind it knew that in a few months' time, the officers would resign and they could carry on doing business illegally without people getting to know until a due diligence is conducted.

The UK rail industry is made up of many names and United Rail (International) Ltd is not one of them. A company that was incorporated in 2004 cannot claim to have “decades of experience” in running railways and therefore has no credibility to manage large projects such as the Ghana Railway Company.

Was United Rail (Int) Ltd set up as a Special Purpose Vehicle (SPV)?

It is normal practice for a consortium to bid to undertake large projects and facilitate the financing of such a project – ring fencing the project. This is the trend in many Public Private Partnerships and Private Finance Initiatives.

But it would be strange for the NPP Government to be setting up a Single Purpose Vehicle for any financial transaction, because it is this type of legal vehicle that the NDC Government used to purchase the Gulfstream Presidential Jet aircraft about which the NPP Government shouted itself hoarse as a fraud and unheard of.

The main aim of such a consortium is to utilise the specialist skills, which each member of the consortium has and to make it easier for the SPV to raise funds for the project.

If United Rail (International) Ltd were an SPV, then one would expect the sponsoring companies to be financially sound and have the backing of financiers to undertake the project and therefore guarantee their bond guarantee required for the bidding process.

The key questions to be asked on this aspect of the deal include the following:

(i) Did United Rail (International) Ltd provide the bond guarantee for US$250,000 that the Ghana Government demanded?

(ii) If yes, which financial institution provided the guarantee?

(iii) If the funds were raised internally, where did the monies come from, since the two companies that established United Rail (International) Ltd had only £2 net worth on their balance sheets and the company is currently dormant?

If United Rail (International) gets the go-ahead, it is very unlikely that they would be able to meet the performance target set out in the bid as they have no track record of railway management in the UK as they claim.

The Government would be incurring huge expenses without getting any value for money and any investment made in the railway might never be recouped.

If the company should default and fail to perform, the Government might not be able to recover monies lost, as there is no director to be held liable.

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