News:
July 17, 2014
The Minority Members of Parliament say they have nothing to do with a loan facility being discussed by government to stock 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 support vehicles and ammunitions and a host of other logistics that will re-tool Ghana’s army to partake efficiently in the United Nations peacekeeping operations in South Sudan and Mali where there is a lot of turmoil.
The AG per a letter dated April 1, 2014 and addressed to the Finance Minister, Seth Terkper, cautioned that the provision of the loan did not follow the norm in financing agreements where the lender scrutinizes the activities of the borrower to ensure that the proceeds of the loan are used solely for the purpose for which the funds facility was released.
“The provisions of this clause raises concern, especially so where the agreement provides in Clause 3(1) and (2) that the facility is for specific purpose and for any other matters agreed between the parties,” the AG said, arguing strongly that “any other matters” in the above clause is very difficult to ascertain in the circumstances.
Nonetheless the Majority side thought otherwise and went ahead to approve the loan.
The Minority on Tuesday demonstrated its aversion for terms of the loan and further abstained from the votes that culminated in okaying the loan facility.
The ranking member of the Finance Committee and NPP MP for Old Tafo, said he strongly disagreed with terms of the $300 million loan facility which he said was not in the interest of Ghana.
He gave instances of some ‘loopholes’ which resulted in the loan agreement led to its approval being suspended during the first meeting of the second session of the House, just for the document to be forwarded again to Parliament with the Attorney-General corroborating the fears of the Minority.
“Mr. Speaker, how can one entity be the arranger, lender and facility agent and be paid a whooping sum of $5.5million?” he asked.
He asserted that the management fee of $6 million was on a very high side and could not be value for money, especially at a time that the country is in an economy crisis.
Dr Akoto Osei further raised questions about $20 million of the loan being allocated for the supply of fuel for the operations of the military in Ghana, while the money is meant for peace-keeping abroad.
He also noted that the allocation of $20 million for the training of the military, including feeding, medical screenings, vehicle maintenance and administration, is also too much.
Member of the Finance Committee Dr. Mark Assibey Yeboah adding his voice to the debate of the loan agreement described the loan facility as “fraudulent.” and “chop money” for someone and his friends.
He noted that VTB who are the lenders and facility agents are charging the country management fees for managing their own portfolios.
“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.
“If you put the two together [upfront and management fees] that is $11.5million.This loan looks very fraudulent”. He stressed.
MP for Akuapem North, William Ofori Boafo, who was a Deputy Minister for Defence in the Kuffour Administration, said that Ghana Armed Forces are already established in countries like, Liberia, DR Congo, Lebanon and Cote d’Ivoire, and hence there was no urgent need to provide further financial support to them. He said instead the government should raise money from its resources to finance United Nations peace-keeping in South Sudan, Somalia and Mali which are new conflict areas.
But the Chairman of Parliament’s Finance Committee, James Avedzi, stated that due diligence had been done on the loan agreement adding that it is in the best interest of Ghana to access this loan.
Explaining further, Hon. Avedzi noted 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; with a profit of over $100 million being made.
The National Democratic Congress (NDC) Member of Parliament for Awutu-Senya West, Hanna Tetteh and NDC MP for Garu, Dominic Azumah, urged their colleagues on the majority side to vote for the loan because it will serve the best interest of the Ghana Armed Forces.
At the end of the debate, the Majority side voted for the deal while the minority abstained.
Kwadwo Anim/Ghanamps.gov.gh