It is becoming clear that the $12.25millon guarantee provided by power supply and distribution company, Power Distribution Services (PDS) Ghana Limited to enable it to take over the operations of the Electricity Company of Ghana (ECG) is not valid after all.
DAILY GUIDE has learnt from a credible source that the delegation sent by government to Qatar to authenticate the $12.25millon demand guarantees posted by PDS returned with a verdict that the guarantee was not valid as it was fraudulently procured by Yahaya Al-Nouri, a staff of Al Koot Insurance and Reinsurance Company based in Doha, the Qatari capital.
The government delegation, led by the Interior Minister, Ambrose Dery, also included Deputy Attorney General, Godfred Yeboah Dame, Head of Interpol at Police CID, ACP Fredrick Agyei among others.
PDS, a local and foreign consortium in March, 2019 took over power distribution functions of ECG under a concession agreement that will allow it to operate ECG facilities for power distribution for the next 20 years.
However, four months into the agreement, Ghana government in July suspended the transaction following what “detection of fundamental and material breaches of PDS’ obligation in the provision of Payment Securities (Demand Guarantees) for the transaction which has been discovered upon further due diligence.”
The Ambrose Dery-led 5-member delegation established that there was no valid guarantee issued by Al Koot in the name of PDS as the documents purported to be coming from the Qatari insurance company was forged by a staff, Yahaya Al-Nouri who until recently was Manager of Reinsurance.
Yahaya Al-Nouri has been suspended following the botched transaction and may be handed over to the Qatari police for fraud, DAILY GUIDE has learnt.
Snippets of information picked up by DAILY GUIDE indicate that Al-Koot officials told the delegation that the company was not in a capacity to underwrite PDS guarantee value at $350million when its total net worth is about $170million, making the transaction about 200 percent of its financial capacity.
The company also made it clear that it has no mandate to issue demand guarantees; as it lacks the mandate to engage in counter party and trade risk contracts which involve the issuance of demand guarantees.
Al-Nouri was said to have forged the signature of Osman Hag Musa, Chief Officer, General Insurance and made a staff who is barely a month old at the company to witness it.
The company explained that Al-Nouri capacity to commit the company to any deal does not exceed $15,000 as a manager and can only recommend a similar amount for approval and that the insurance company’s board had the sole mandate to approve big transactions like those of the PDS supposed it has the capacity.
Al-Nouri appeared to have intercepted quries from the ECG about the deal and blocked the appropriate officers to answer to the questions.
Al-Koot provided documents to support its claims, saying that the over $12 million paid by PDS for guarantee was not received by the insurance company.
PDS had engaged its bankers Cal Bank and insurance company, Donewell Insurance to facilitate the insurance cover as payment security for the Lease Assignment Agreement (LAA) and Bulk Supply Agreement (BSA) before the transfer of ECG assets.
Cal Bank and Donewell were said to have engaged a Jordanian insurance brokers, Jo Australia Reinsurance Brokers, to complete the transaction with Al-Koot.
But the insurance guarantees have turned out to be fictitious even though PDS claims it fulfilled its side of the commitment through the $12.25million paid through Cal Bank in two tranches of $8million and $4.25million.
PDS insists that everything was done in a transparent manner with Millennium Development Authority (MiDA) and IFC, the power compact transaction advisors, satisfied with the process.
It is not clear what action Ghana government intends to take.
However, sources say the government is waiting for the outcome of a similar investigation being undertaken by the United States since the US government is funding the power compact agreement signed to by the previous Mahama-led National Democratic Congress (NDC) administration leading to the partial privatization of ECG.
The US government DAILY GUIDE learnt has engaged FTI Consulting to carry out the investigation.
Sources said US is not happy with the initial action taken by the Ghana government to suspend the agreement with the PDS when the anomalies were brought to its attention and would have wished the process continued until the investigations were concluded.
DAILY GUIDE has learnt that government may extend the PDS suspension for an additional month to ensure everything is put right.
Energy Commission is also convening an emergency meeting today with PDS directors and shareholders about the way forward in view of the latest development.
The Akufo-Addo government is not enthused about giving out Ghana’s priced assets worth over GH¢20billion to private entities under the power compact agreement reached by the Mahama administration where about $300million had been disbursed leaving about $180m outstanding disbursement.
The process to carry out private participation in power distribution was midwifed by MiDA with US Millennium Challenge Corporation (MCC) appointed transaction advisors.