EDIF confirms interdiction of Ag. Chief Executive

Press Release

The attention of the Board of Directors of the Export Development and Investment Fund (EDIF) wishes to confirm that the Acting Chief Executive of the Fund, Mr. Agyabeng Antwi-Agyei, together with the Director of Audit, Kwabena Hemeng- Ntiamoah, and the Director of Finance Mr. Joseph Attah-Quansah are on interdiction. A member of the Board, Nana Yeboa Kodie Asare II – Board Member representing the Private Enterprises Foundation (PEF).


BACKGROUND
EDIF was established by Act 582 on the 4th of October 2000 to provide financial resources for the development and promotion of the export trade of Ghana. Operation of the fund however started in July 2001. Its mission is to enhance the economic growth of Ghana by providing funds on concessionary terms for the development and promotion of the country’s non-traditional export sector.

EDIF has so far provided in excess of GH¢157.27 million to support 227 projects across the country.

In 2009, EDIF embarked on a major program called the National Mango Plantations Development program. Under this program, EDIF intends to earmark a substantial amount of its budget to support massive mango production in the Transitional zone and the three Northern regions of Ghana. Farmers in these areas are to be assisted to intercrop Mango plantations with annual crops in order to enhance food availability, bridge the hunger gap and improve household income in the short to medium term. This program was included in the 2009 National Budget, and is in support of the Government’s effort at reducing poverty and increasing the income for the poor in Ghana. The EDIF Mango Project as it has come to be called, has been in operation for the 2009, 2010 and 2011 planting seasons.

Some irregularities were however detected in the disbursement of funds under the EDIF mango project, raising the likelihood that the objectives of the program may be subverted, and that funds meant to alleviate the poverty of Northern farmers might be misappropriated by some parties.

IRREGULARITIES IN DISBURSEMENTS
? The review of quarterly financial reports, established as part of a system designed to improve financial controls of the Fund, revealed that some disbursements in the first quarter of the year had been effected without the requisite Board approvals.

? The review further revealed that on March 4, 2011, The Ag. Chief Executive usurped the authority of the Board and wrote informing thirty-eight (38) farms that the Board of EDIF had approved a recoverable facility to support their production of mangoes for export.

? The Ag. Chief Executive was issued with a written query, asking him to give reasons why disciplinary action should not be taken against him.

? In his response to the query, the Ag. Chief Executive told the Board that he wrote the letters after the March 17 2011 Board meeting. Documentation available to the Board however demonstrated clearly that the letters were issued two weeks before the March 17, 2011 meeting.

? It has also been found out that in addition to sending out award letters without authority, the Ag. Chief Executive also caused various sums of money to be paid to some farms/companies before the matter came before the Board. He again lied to the Board that the monies had not been disbursed before the March 17 meeting, until he was shown evidence on the Fund’s bank statements that the cheques cleared the bank before the 17th March Board meeting.

? After reviewing the responses of the Ag. Chief Executive Agyabeng Antwi- Agyei, the Board at its meeting on the 30th of May 2011 decided to request the Ag. Chief Executive to proceed on leave to enable the fund to investigate further into an outstanding matter of disbursements made in respect of the EDIF Mango Project.

? Meanwhile, in a desperate attempt to implicate the former Board Chair, the Ag. Chief Executive told the Board that it was the former Board Chairman, Peter Illiasu who gave him the verbal approval to issue the award letters. But in a letter to the Board, Mr. Illiasu denied giving any such verbal approval, insisting that such an approval can only be given by the Board and not him, as an individual, and that an approval of this sort would have been in writing.

? As part of the defence of his actions, the Ag. Chief Executive also stated that he signed the cheques because the Director of Finance, Mr. Joseph Attah-Quansah, had prepared them for his signature.

? The Director of Finance was therefore also issued with a written query to explain why disciplinary action should not be taken against him for preparing the cheques for signature whilst being fully aware that no Board approval had been given for the disbursements. In the light of the seriousness of the breaches in controls, the Director of Finance was also simultaneously asked to proceed on leave.

? In his defence, the Director of Finance explained that the Ag verbally instructed him. Chief Executive to prepare the cheques for signature.

? The revelation that the financial controls within EDIF had suffered a severe breach required the Director of Audit to also be issued with a written query. He was subsequently also asked to proceed on immediate leave.

SPECIAL COMMITTEE AND INTERDICTIONS
? The EDIF Board Chairman in consultation with the Sector Minister, Honourable Hanna Tetteh, commissioned a Special Committee to review all the revelations of financial breaches at EDIF. The terms of reference of the special committee which had representation from the Ministry and the Board were:
i. Investigate issues of process and substance as far as disbursement of funds on the Mango Project is concerned

ii. Make observations and findings on Professional conduct of staff involved

iii. To seek to ensure administrative justice by informing the officers of the issues that have been raised against them and to give them the opportunity to be heard in order to offer whatever explanations they may have had for their actions.

? The EDIF Special Committee reached the following conclusions in respect of the three Officers after its deliberations:

The Ag. Chief Executive- Mr. Agyabeng Antwi-Agyei
1. That Mr. Antwi-Agyei did not adhere to laid down procedures of seeking Board approvals for disbursement in this matter

2. The Committee found his explanations for his actions unacceptable

3. He subsequently admitted that he had made a genuine mistake

4. He did not exercise due care in the execution of the 2011 Mango Project disbursements

The Director, Finance - Mr. Joseph Attah-Quansah
1. Mr. Attah-Quansah showed a lack of appreciation of laid down procedures

2. He did not exercise due care in the execution of the 2011 Mango Project disbursements

The Director, Audit – Mr. Kwabena Hemeng- Ntiamoah
1. Mr. Hemeng-Ntiamoah did not exhibit professionalism and competence as required by section 18 of the Internal Audit Agency Act, 2003 with regard to the 2011 Mango Project disbursements

2. He failed to report weaknesses in the disbursement processes to management and the Director General of the Internal Audit Agency as required by sections 16: 3 and 4 of the Internal Audit Agency Act, 2003.

3. Additionally he failed to exercise due care in pre-auditing the disbursements for the 2011 Mango Project

? The Committee was unable to investigate issues of substance relating to disbursement of funds on the Mango Project due to constraints in time and resources, and therefore recommended a full Audit of the Mango Project be commissioned to ascertain matters inter alia:
- Selection process for farmers
- Ownership and title of farms
- Accuracy of acreages
- Whether beneficiaries of facilities actually received amounts approved
- Procurement process on supply of inputs
- Viability and sustainability of the mango project

On the basis of the findings of the special committee, the Board decided that all three officers had clearly shown gross misconduct and were liable to severe administrative sanction. The BoD decided to inform the Sector Minister and the Office of the President that in the light of the findings it would be unable to recommend the confirmation of the Ag Chief Executive in his position. The Board also decided that whilst sufficient grounds existed for the outright dismissal of all three officers, on grounds of gross misconduct, that the officers should be placed on interdiction pending an investigation into their actions to determine if they were liable for criminal prosecution for their actions.

FARM AUDITS
? Revelations of irregularities in disbursement of funds to the farms raised concerns about potential fraud in the Mango Project. This necessitated a special investigation to ascertain that the farms being supported actually existed and that the acreages indicated were actually being cultivated.

? The Board therefore engaged three organisations operating in the areas covered by the EDIF mango project to identify the farms and establish the accuracy of acreages being supported under the Project. The organisations were appointed after authorisation had been sought and obtained from the Public Procurement Agency (PPA) to sole source. These farm audits were carried out in June and July 2011 to enable the Fund provide correct amount of farming inputs to farmers to continue the project in 2011.

? It should be noted that these farm investigations were not the investigations into the substance of the breaches in controls and procedures surrounding the mango project, but were carried out first to assist the Board to provide the required farming inputs and support and secondly to assist the investigative auditors to carry out their audit in due course.

? The farm audits revealed discrepancies in the acreages under cultivation, the inability in some cases of the investigators to locate farms, and the general state of farms and problems with the quality and timing of inputs supplied to farmers under the EDIF Mango Project.

• The Farm audits also revealed that contrary to representations by the Ag. Chief Executive and the Director of Operations, two of the farms- Alliance Farms and Abotare-Ye Farms, were not located in the Brong Ahafo region, but rather the Ashanti region. The mango project had been targeted at the Brong-Ahafo, Northern, Upper East, and Upper West regions. The application from Alliance Farms (on its own letterhead) shows that the applicants indicated its location as the Ashanti region, but by the time it got transcribed onto EDIF documents by the office, this had been changed to Brong-Ahafo.

RESIGNATION OF NANA YEBOA KODIE ASARE II-
Board Member representing the Private Enterprises Foundation (PEF)
? An application for variation of the terms of the grant was submitted to EDIF by Alliance farms. During deliberations on the application, it transpired that Nana Yeboa Kodie Asare II had an interest in this farm, which he had not as yet declared.

? This farm was one of the farms, which was falsely indicated to the board to be located in the Brong- Ahafo region, whilst actually being located in the Ashanti region. Worst of all, Alliance Farms, according to documents from the Registrar General’s Department, was not even a registered company as at March 4, 2011 when the Ag. Chief Executive issued them a letter awarding them GH¢201,660.00 for their 100 Acre Mango farm. According to the Registrar General, Alliance Farms Limited was incorporated on March 15, 2011, and a certificate to commence business issued on March 16, 2011.

? It was also discovered that Nana Yeboa Kodie Asare II, who presided (as Acting Chairman) over the March 17 Board meeting that approved payments to the farms, has considerable interest in one of the farms, Alliance Farms. He however failed to declare his interest in the farm, in contravention of Article 11 of the EDIF Act (Act 582).

? He told the Board later that he had been appointed a director of Alliance Farms and was not a shareholder, but documents from the Registrar General show that he is actually the majority (90%) shareholder of Alliance Farms [45,000 shares in his private name Benjamin Kwadwo Addae. The only other shareholder is Nana Kwabena Ofori, who has 5,000 shares]

? The controversy over the above led to Nana Yeboa Kodie Asare II’s resignation from the Board, a few hours before the Board was to hold an extraordinary meeting to deal with the matter.


INVESTIGATIVE/FORENSIC AUDIT

? The Honourable Minister of Trade and Industry in consultation with the Board, engaged the Auditor General to conduct an investigative audit, as recommended by the Special Committee into the Mango Project from 2009- 2011.

? This audit is currently ongoing and is expected to be completed by the end of the year. The objectives of the investigative audit are to:
• Determine whether any irregularities were committed in the performance of the project
• Identify the parties involved in such irregularities
• Determine as far as possible the amount (if any) of public funds misappropriated and misapplied
• Advise on any corrective action, e.g. criminal proceedings to be taken against any individuals