Bankswitch saga: Ministers’ laxity caused judgment debt

The controversial Bankswitch judgment debt scandal facing the Mahama-led administration is said to be a dereliction of duties by the Ministries of Justice and Attorney-General, Trade and Industry, and Finance to defend the case at the international courts.

The Chronicle gathered that when the case was called between the Government of Ghana and the Bankswitch Ghana Limited, an IT firm, for arbitration, the A-G failed to defend the country. The inability of Ghana to defend the case caused a judgment debt GHc197 million payable to Bankswitch, whose contract was cancelled in 2010.

Bankswitch in 2014 filed before the Permanent Court of Arbitration, in The Hague, the Netherlands, after the cancellation of a contract signed in 2007 to help government mobilize revenue at the Customs Division of the Ghana Revenue Authority (GRA).

The introduction of Bankswitch Ghana Limited into Ghana in 2007 was facilitated by a World Bank Loan to provide software and data, as well as establish the Valuation Module which would be owned by the Ghana Government and operated by the Customs Division of the Ghana Revenue Authority (GRA) to help stem the huge losses of revenue the country records at the ports.

The contract was signed at a time the State also had a contract with another firm, Ghana Community Network Services Limited (GCNET), a major player in all trading activities at Ghana’s Ports.

However, The Chronicle has established that some government officials preferred to have these private Destination Inspection Companies (DICs) do all the scanning, verification and valuation of all imports into the country and pushed for the abrogation of the Bankswitch contract, which has eventually landed the country in an unprecedented GHc197million judgment debt.

Impeccable sources told this newspaper that Ghana refused to appoint its arbiter, forcing the hand of the court to choose one for Ghana. The UK law firm appointed by government to represent Ghana withdrew its services for unknown reasons. This, therefore, means there was no lawyer in court when the case was heard.

Amazingly, when a teleconference was set up at the Kofi Annan ICT Centre to enable Ghana call its witnesses, no government official was present to question witnesses. Before judgment was delivered, the Ghana government filed voluminous papers explaining that the contract was cancelled because it did not have parliamentary approval.

The Permanent Court of Arbitration in its wisdom rejected the explanation, ruling that a local law cannot be used to relieve Ghana of its international obligation. The court, therefore, asked Ghana to pay the whopping GHc197million in judgment debt. This figure may hit GHc1billion if the country delays payment.

In a move to settle the monstrous judgment debt, Ghana’s Minister of Trade and Industry, Dr. Ekwow Spio-Garbrah was reported to have asked five DICs with the capacity to contribute $35 million each towards repaying the judgment debt to assist government.

This has generated criticism against government. Some opposition politicians and civil society organisations believe the move constitutes bribery. But Dr. Spio-Gabrah has challenged the critics to show which law in the country has been broken, in asking DICs to pay the debts, in return for contracts.

The minister maintained his action was in the best interest of the country and to protect the public purse. He told Radio Gold, an Accra-based radio station that: “Which law has been broken here? Cite the law which I have offended. Have I stolen something or paid an illegal money… I am working in broad daylight with as much transparency and as open as possible”.

In a statement, the Ministry of Trade and Industry (MoTI) admitted exchanging with the DICs regarding the payment of the judgment debt.

The acting Director of Communications and Public Affairs at the MoTI, Nana Akrasi-Sarpong, who issued the statement stated: “The facts are that a company called Bankswitch has succeeded in receiving a Judgment debt against the Government and people of Ghana in the amount of approximately GHc197 million.

“The judgment debt was for the termination by the Prof Mill administration of a contract awarded under the Kufuor administration for services in the trade facilitation arena.

“The Prof Mills administration was of the conviction that the contract was improperly awarded and that Bankswitch had not performed the services for which it was contracted to perform. Bankswitch sued the Government in international courts and won a judgment debt amounting to approximately GHc197 million. Due to delays in paying this judgment debt and the accumulating interest, this debt is rising”.

As the Government has been unable to pay this judgment debt this far, Bankswitch has been negotiating with Government on alternative payment arrangements. Until recently, Bankswitch sought to have the Government pay the entire judgment debt over a 5-year period and in addition for Government to award Bankswitch 0.35% of the FOB values of all Ghana’s imports over five years, according to the statement.

This supplementary award of 0.35% of FOB imports over 5 years, were it to be accepted by the Government of Ghana, would imply a contract to Bankswitch that would be worth more than GHC 1 billion over five years.

This additional overpayment to Bankswitch of more GHc 1 billion would be over and above the full settlement by the Government of Ghana of the GHc 197 million debt, whether paid in one lump sum or over a number of years.