Dr Kwabena Duffour, former Finance Minister
As the NDC seeks to take the state hostage over what has now become known as ‘Agyapa gold royalties deal’, it has emerged that the processes for the establishment of a gold royalty company for Ghana were started by the previous NDC government.
As far back as 2010, when then Vice-President John Mahama was Head of the Economic Management Team, the NDC began the process to set up the gold royalty company.
Dr Kwabena Duffuor, who was the Finance Minister, in his 2010 Budget Statement, captured the need for the establishment of Ghana Gold Company (GCC), as a “National Vehicle” for the collection and management of mineral royalties due the state. The budget statement was delivered on November 18, 2010.
Subsequently, a Memorandum from the Finance Ministry, addressed to the Parliamentary Select Committee on Finance and Parliamentary Select Committee on Energy and Mines, read: “Currently, Ghana has shares and carried interests in a number of mining companies that enable Government to receive significant cash flows from royalties and dividends.
“The current increases in gold prices, increased demand for gold exposure by investors, and the appreciation in the equity interests in the gold mining companies present a unique opportunity for the Government to consider the monetisation of all or portion of its gold interests to deliver a significant capital sum to support the nation’s growth and development.”
According to the Memorandum, “beginning in fiscal year 2011, therefore, Government will commence discussions on the establishment of a national vehicle, the ‘Ghana Gold Company (GGC)’, which will hold the country’s gold royalties and equity interest.”
It added that “the GGC will be a newly incorporated company that will be 100 per cent owned by the Government and into which the Government will transfer its gold and equity interests.”
Amidu’s caution
Meanwhile, Martin ABK Amidu, then Attorney-General, had cautioned the government not to go through with the deal without first seeking parliamentary approval.
Mr Amidu’s caution followed attempt by the NDC government to by-pass Parliament to establish the ‘Special Vehicle’, unlike what the current government had done.
He had stated in a letter addressed to the Minister of Finance that Parliament was the right body to establish a public fund for specific purposes such as managing revenue and moneys into which such receipts may be paid.
“Parliament, in my understanding, may establish a public fund for specific purposes such as managing revenue and moneys into which such receipts may be paid. But no moneys can be withdrawn from such special public funds without authorization by or under the authority of an Act of Parliament.
“The Act of Parliament providing for the settling of such a fund may, in my opinion, provide for how the funds may be managed. Parliament may authorize by an Act of Parliament a national vehicle to hold all such interests and to manage such receipts on behalf of government,” he advised.
“It is important to remember that the longstanding constitutional convention developed under successive Ghanaian Constitutions and Governments, due to the fiduciary nature of receipts for extractive resource revenue, is to pay such moneys into the Consolidated Fund for purposes of accountability to the people’s elected representatives in Parliament,” he added.
Ghana Gold Company
Mr Amidu had stated that the establishing of the special vehicle was not illegal since it was within the remit of government to establish a national vehicle to hold all of the Republic’s extractive minerals interests, including gold.
“By virtue of the fact that the Republic’s interest in the extractive resources is held by the President of the Republic as trust property on behalf of the people of Ghana, the constitutional design and scheme requires close supervision of the public interest by the Ministers to whom the President has delegated his trust powers. The scheme and design of the Constitution, particularly chapters 13 and 21 thereof, mandate Parliamentary supervision of the trust powers on behalf of the people of Ghana.
“Consequently, it is suggested that a national vehicle to hold and manage the Republic’s extractive resource interest should be established by an Act of Parliament with powers and relationship akin to those between the Minerals Commission and the Minister for Mines,” he advised.
Parliament’s recommendation
It has also been discovered that a workshop was held for the members of the concerned parliamentary select committees to consider the proposal to establish the company.
At the workshop, members of the committee made several comments about the company, including the fact that its “autonomy and independence was considered very important” and that mechanics needed “to be put in place to avoid cronyism and party based board replacements when governments change.”
“What value would be placed on the company? The question around valuation was posed as well as the extent of work done by the advisers around this point. There is a strong interest in seeing the actual analyses concluded to derive at the valuation, and a comparison of the current value to the value post establishment of the GGC. There was strong suggestion that the presentation to Parliament should focus on value and value drivers,” a document summarizing comments made by the committee at the workshop reads.
Loss of control
In a related development, another special meeting involving various stakeholders to discuss issues relating to the establishment was held on October 25, 2011.
Representatives at the meeting included Togbe Afede, of SAS Securities; Mr Kwamin K Asomaning, of Stanbic Bank; and others from the Minerals Commission, Ministry of Lands and Natural Resources, Ministry of Justice and Macquarie Bank.
After a lengthy discussion on the issue, “it was agreed that the value addition by this form of vehicle must be stressed to the parliamentarians”, according to minutes from the meeting.
“The rationale is that to obtain optimization of value, one must be mindful of market and investor sentiments. Government needs to understand that the markets need to have a high degree of independence, otherwise the value of the assets tend to be undervalued,” the minute added.
Source: dailystatesman.com.gh/ Chris Lartey
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