General News of Monday, 26 April 2010
Source: THE ENQUIRER
Former Chief of Staff and Minister for Presidential Affairs, Mr. Kwadwo Okyere Mpiani, who was the Chairman of the National Planning Committee (NPC) of the [email protected] celebrations and his brother-in law, Dr. Charles Wereko-Brobby, Chief Executive Officer of the defunct [email protected] Secretariat, and Mr. Sandy Osei Agyemang, Managing Director of United Africa Management Limited (UAML), are to refund an amount of $360,000 (C5.1Billion) in connection with the rental of Largus Forte Hotel during the Ghana @50 celebrations.
Mr. Mpiani and Dr. Wereko-Brobby, in addition to the refund, may be prosecuted for causing financial loss to the state in accordance with the Criminal Offences Act 1960 (Act 29).
The government accepted this based upon the recommendation of the Ghana @50 Commission of Enquiry.
The government, in a white paper on the report, accepted the recommendation that through the actions of Dr. Wereko-Brobby, the government lost the rent of $360,000 paid by the [email protected] Secretariat to Largus Forte for the first year.
According to the report, the Commission of Enquiry was of the view that the rental of 106 room hotel by the Secretariat for two years was ill-advised because the celebration was declared to be year-long.
Again, the report said that guests were not accommodated in the hotel for free of charge and that there was no evidence that government’s guests stayed in the hotel.
In addition to that, the report indicated that the [email protected] Secretariat ignored the advice of a consultant that government should control the use of the 106 rooms on a profitable basis to enhance the Secretariat’s ability to provide accommodation for official visitors.
The report noted further that “The agreement between the Secretariat and the managers of the hotel, United African Management Limited (UAML), did not make any provision for Government to recover the rent of US$360,000.00 let alone make any profit from the operations of the hotel.”
The Commission established that “UAML appropriated all the proceeds from the operation of the hotel,” and that “Government, by the actions of the CEO and the Chairman, lost the rent of US$360,000.00 paid by the Secretariat for the first year of the tenancy.”
According to the Commission, by the terms of the agreement signed by the Secretariat with the proprietor of Largus Fort Hotel, the rent for the second year became due and payable in full in advance on the 15th day of February 2008. The report said that the rent for the second year became due and payable in full advance on February 15, 2008. The proprietor of Largus Forte Hotel took timely and appropriate steps to mitigate his loss by ejecting UAML and Secretariat from the hotel which action was beneficial to government.
According to the government, it accepted the recommendation of the Commission that the proprietor was entitled to rent pro rata in the sum of $150,000 (C2.1Billion) based on the monthly rental of $30,000 for the period of June 15 to November 14, 2008 when he succeeded in putting the hotel back to beneficial use.
The [email protected] Secretariat entered into a two-year lease agreement with UAML by which the Secretariat rented the Largus Forte Hotel for two years for visiting foreign officials to reside in during particularly the [email protected] celebrations.
It was also intended that the government should make profit from the operations of the hotel.
Meanwhile, a financial review carried out as part of the commission’s work revealed that “the NPC has not accounted for the management arrangement with UAML or for the management operations at Largus Forte Hotel.
Evidence before the Commission showed that the NPC and the Secretariat made other arrangements for accommodation, which included the renting of the Largus Fort Hotel situated opposite Gulf House near Shiashie in the Accra.
The proprietor of Largus Fort Hotel, Mr. Joe Ofori, presented a petition to the Commission claiming that the Secretariat owed him arrears of rent in the sum of US$240,000.00 or its equivalent in Ghana cedis for the last eight months of the second year of the tenancy agreement he executed with the Secretariat in respect of the hotel. The tenancy was for a period of two (2) years commencing the 15th day of February 2007. The Secretariat paid the first year’s rent of US$360,000.00 in advance.
The CEO contested the claim asserting that since the proprietor had accepted part payment of the rent in the sum of US$120,000.00 from a third party, United Africa Management Limited (UAML) the contractual relationship had therefore changed and the Secretariat owed no obligation to pay rent. Indeed, UAML was an agent of the Secretariat appointed by a letter dated the 5th of February 2008 with the heading “Appointment as Managers of Fort Largus”
When Mr. Osei Agyemang appeared before the Commission, he submitted that the 106-room hotel, operated at a loss and therefore there was no money to pay rent arrears.
According to the UAML boss, since the proprietor of the hotel had pushed the managers out of the hotel and sold same thereafter it was not obliged to pay any rent arrears.
They also contended that they were only agents of the Secretariat and therefore not party to the agreement between the Secretariat and Largus Fort hotel and therefore had no obligation to pay rent.
However, the Commission sighted letters written by UAML to Mr. Ofori proposing to pay the second year’s rent in three installments, the first on 20th February 2008, which was paid, the second on 20th April 2008, which was not paid, and the third on 20th May 2008, which was also not paid.
The Commission stated that it studied the tenancy agreement between the Secretariat and the managers of Largus Fort, as well as the “management agreement” between the UAML and the Secretariat titled “APPOINTMENT AS MANAGERS OF LARGUS FORT HOTEL” and dated February 5th, 2007. The commission observed that “the terms of this agreement were inexpertly written by the CEO, possibly, without legal assistance,” with Paragraphs 1, 3, 4, and 5 of the letter constituting the operative terms of the management agreement. The commission observed that the letter conveying the terms of the ‘management agreement’ was ambivalent thereby rendering it subject to more than one interpretation.
It observed further that one interpretation, which was obviously adopted by Mr. Sandy Osei Agyeman, was that the managers were not in any way required to account monthly to the Secretariat for the management of the hotel even though the Secretariat acting on behalf of Government paid the first year’s rent of US$360,000.
“Simply put, they were to manage the hotel, pay the expenses and pay themselves the agreed management fee. If there is any profit then Government would get some funds from the operations of the hotel,” the Commission noted. Truly, on the face of the “management agreement” it appears that UAML was not required to account monthly to the Secretariat for its management of the hotel, the Commission noted.
The commission emphasized that if Mr. Osei Agyeman’s interpretation is adopted then the transaction can fairly be said to have criminal flavor or intentions. This conduct amounts to reckless misappropriation of state funds.
“The other interpretation which the Commission in fairness is inclined to adopt is that UAML was, implicitly, expected to render accounts to the Secretariat on a monthly basis,” the commission noted, with “The Secretariat would pay 15% of the gross income to UAML on a monthly basis.”
The Commission observed that “by implication the Secretariat would then retain a surplus after payment of salaries and other outgoings,” observing that from the evidence, “the Secretariat never demanded monthly accounts.”
The Commission found it more bizarre that there was “no information to the effect that Government guests were given any free accommodation in the hotel. Nor was there any requirement that the first year’s rent in the sum of US$360,000.00 paid by the Secretariat was to be refunded to the state. Mr. Sandy Osei Agyeman stated that money was to have been refunded if the hotel had made profit. However, the hotel operated at a net loss and therefore there was no money to repay the Government, even though there was enough money to pay the UAML its full management fees.
According to the MD of UAML, the only thing that saved the hotel was that in the beginning, an oil rig company rented the hotel for six months at a reduced rate which gave UAML the initial capital to work with. The first six months period, March to August 2007, was the period within which the Jubilee Celebration and the AU Summit were held. At least during this period, the hotel could not have hosted Government guests.
Mr. Sandy Osei Agyeman, stated clearly that the sum of US$360,000.00 has been a loss to Government, adding that there was nothing in the agreement with the Secretariat for Government to receive anything from the operations of the hotel. It was revealed during the public hearings that the UAML was incorporated in February 2007 ostensibly for this transaction. The UAML had no track record in hotel management. Its sole shareholder is a company that manufactures hair care products. There was no evidence as to what matters advised the Secretariat to appoint UAML as manager.
From the evidence, the Chairman was aware of the arrangement relating to Largus Fort Hotel, the Commission noted.