Minority washes hands off ‘fraudulent’ military loan

• Posted on July 16, 2014July 16, 2014
• by Nana Kwesi Coomson
• Comment

The Minority Members of Parliament say they have washed their hands off a loan facility being negotiated by government to equip the Ghana Armed Forces.

The loan facility totaling 300 million dollars is to be provided by VTB Capital plc of London and will be used to finance the procurement of equipment including air assets and other logistics that will equip Ghana’s military to participate effectively in the United Nations peace support operations in South Sudan and Mali.

There was drama on the floor of Parliament, Tuesday, with the Minority denouncing the terms of the loan and subsequently abstaining from the votes that eventually led to the approval of the loan facility.

Member of the Finance Committee Dr. Mark Assibey Yeboah minced no words in describing the loan facility as “fraudulent.”

“The cost of borrowing does not make any sense under current international credit conditions. We are confronted with upfront fees of $5.5 million and management fees of $6million,” he said.

According to him, the lenders are charging the country management fees for managing their own portfolios.

“If you put the two together [upfront and management fees] that is $11.5million. Without mincing words that is chop money for somebody and his friends.

“This facility is a fraud being perpetrated on the Ghanaian people. I will not be part of this. We will not be part of this.

“We will not be part of a loan that looks very fraudulent; the terms are exorbitant and the majority think because they have the numbers they can go ahead,” Asibey charged on the floor of Parliament.

LEGAL OPINION
Prior to bringing the loan facility to Parliament, the Attorney General was consulted to give her legal opinion on the loan.

Per a letter addressed to the Ministry of Finance, a copy of which was intercepted by Joy News, the AG advised the Finance Ministry to review the interest on the loan.

The interest rate on the loan was one of a number of concerns the AG had on the loan facility and advised that the concerns be addressed. The letter authored by Amma Gaisie Solicitor General, asked the Finance Ministry to proceed to the Debt Management Division of the Ministry of Finance to seek appropriate advice.

Gaisie also raised concerns about the inability of the lenders to monitor the activities for which the loan was contracted.

But James Avedzi, Chairman of the Finance Committee in Parliament said the Majority in Parliament disagree with the opinion of the Attorney General.

He said the loan agreement has been with the committee for four months and they have done a thorough job on it, insisting due diligence has been done.

He explained that loan agreement is just a pre-financing facility to fund military equipment under the United Nations Peace Keeping programme.

He pointed out that the country will spend  $300million on the military equipment and will be paid an amount of $446 million in return by the United Nations, adding a profit of over $100 million will be made from the arrangement.

The Foreign and Defence Ministers Hannah Tetteh and Mark Woyongo respectively have meanwhile mounted a strong defence for the loan.

On the floor of Parliament Hannah Tetteh claimed “some people do not want soldiers to be equipped” and urged her colleagues to “act responsibly to equip the military.”

By: Nathan Gadugah