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General News of Monday, 14 October 2013

Source: The New Crusading Guide

$24m GNPC drillship palaver: Gov't's $3.5m traced to New York

On-going tracking efforts of the Business Desk of The New Crusading Guide concerning the whereabouts of the balance of $3.5m paid out of the $24m purchase price of GNPC's Drillship, Discoverer 511, to the Government of Ghana (GoG) have begun to yield significant results.

Credible information available to The New Crusading Guide, by courtesy of highly-placed sources at the Ghana International Bank (GIB) in the United Kingdom (UK), indicates the latter was on July 26, 2001, instructed by the Bank of Ghana (BoG) to forward/transfer a Banker's Draft of the value of $3.5m to the Government of Ghana (GoG) Accounts at the Chase Manhattan Bank, New York.

Our sources who preferred to speak to us on condition of strict confidentiality, expressed surprise that BoG officials in Accra, Ghana, had appeared before the Sole Commissioner on Judgement Debts, to testify to the effect that BoG had no records on the "whereabouts" of the $3.5m Banker's Draft which stood in the name of the Government of Ghana(GoG), apparently without reference to previous (July 2001) correspondence between the BoG and GIB, formerly known as Ghana Commercial Bank(GCB), London, United Kingdom(UK).

"As far as our records show, both the Ministry of Finance & Economic Planning (MoFEP) and the Bank of Ghana (BoG) were instrumental in the relaying of the instructions to the Ghana International Bank (GIB) to forward the $3.5m Banker's Draft to the New York-based Chase Manhattan Bank to be credited to the accounts of the Government of Ghana(GoG) which was accordingly and dutifully executed", stated our sources at GIB.

Our sources advocated that the Sole Commissioner should request the Ministry of Finance & Economic Planning (MoFEP) and the Bank of Ghana ( BoG) to conduct further due diligence into their respective records relative to their instructions to the Ghana International Bank(GIB) in connection with the transfer of the $3.5m Banker's Draft to the accounts of the Government of Ghana (GoG) at the Chase Manhattan Bank in New York.

It would be recalled that Mr. K. T. Hammond, a Deputy Minister of Energy in the Kufuor Administration at the time of the sale of the Discoverer 511, recently told sections of the Ghanaian media that he was mandated by the Government to negotiate a settlement with the French Bank, Societe Generale, in the latter's dispute with the GNPC over a hedging transaction that had gone sour and had become a subject of litigation in a London Court.

"I, K.T. Hammond came to this country (Ghana) with a cheque for $3.5 million payable to the Government of Ghana which was later presented to the Ministry of Finance to be paid into Government's Consolidated Fund as part of proceeds; because about close to one million dollars had to be used to settle the other indebtedness of this same GNPC", he articulated.

Mr. Hammond also disclosed that he had the Power of Attorney from the Management of the GNPC with the official blessing of the Attorney-General in accordance with the laws of the Land, to represent the GNPC and the Government of Ghana (GoG) in the negotiations with Societe Generale which culminated in an amicable settlement of payment of $19.5m out of the purchase price of $24m to the French Bank which had sued the GNPC for the recovery of $47m. Incidentally, Societe Generale in pursuance of its claim had successfully sought and obtained orders from the London Court to arrest and detain the GNPC Drillship, D511, which was then on duty in the waters off Oman. The Drillship had been used as collateral for credit facility GNPC had obtained from Societe Generale.

Mr. Albert Kan Dapaah, the substantive Minister for Energy at the time, recently in a formal communication to the Sole Commissioner, dated 13th September, 2013, corroborated the disclosures made by Mr. K.T. Hammond to the effect that "following extensive negotiations with SG, GoG managed to reach an agreement with SG to pay it Nineteen Million Five Hundred Thousand United States Dollars(US$19,500,000), thereby saving GoG Twenty Seven Million Five Hundred Thousand United States Dollars(US$27,500,000.00)".

Mr. Kan Dapaah indicated to the Sole Commissioner that "GoG and SG then reached an agreement to sell the vessel and pay the proceeds into an escrow account to be operated by lawyers of both SG and GoG and a representative of SG and Hon. K.T. Hammond as representative of GoG. The sale itself was conducted jointly by the solicitors of SG and GoG with the active involvement of GNPC".

"The vessel pursuant to the aforementioned understanding between GoG and SG was sold for Twenty Four Million United States Dollars (US$24,000,000) out of which sum SG was paid its entitlement of Nineteen Million Five Hundred Thousand United States Dollars(US$19,500,000). The UK lawyers who worked on the transaction were paid One Hundred Thousand United States Dollars (US$100,000.00) for their services. A cheque of three million five hundred thousand United States Dollars [US$3,500,000] in the name of Government of Ghana was also paid to the Ministry of Finance", Kan Dapaah clarified.

He disclosed that GNPC subsequently made representations to the Ministry of Energy that it owed certain individuals and institutions who had work and/or provided services to the vessel and desired that the remaining sum of US$900,000 would be used to pay off some of the debts owed those individuals and companies.

"The Ministry of Energy in its response asked GNPC to submit claims regarding those individuals and companies for vetting; following which all claims that were passed as genuine were forwarded to the signatories of the escrow account for payment", underscored Kan Dapaah.

Our Business Desk has sighted a letter titled "GNPC Drillship: Banking Details of Creditors" dated 27th July, 2001, signed by Dr. A. Ofori-Quaah, then Acting Chief Executive of GNPC, and addressed to the Ministry of Energy (Attn: Hon. K.T. Hammond, Deputy Minister) to the effect that "Please find attached the list of creditors of drillship 5-11 and their Bank Details for your necessary action...".

We have also intercepted official GNPC records which show communication between New World Investments Ltd (Stockbrokers/Portfolio Managers, etc), Messrs. Bassoe Offshore Consultants, acting for Frontier Drilling of Norway, the buyers of the D511 and Dr. Ofori-Quaah(GNPC) relative to the technical appraisal and valuation of GNPC owned Drilling Rigs including the D511 along with the offer to purchase the Discoverer 511.

Bassoe Offshore Consultants Ltd., established in 1978, was profiled as "a specialist brokerage and consulting firm in offshore drilling industry" which provided market intelligence on the worldwide offshore drilling and related businesses.

It was based in Edinburg, Scotland,Europe's second largest financial city after London, and close to Aberdeen, the drilling market capital of the North Sea. The company had the capacity to track the contracts, day rates and specifications of every drilling unit in the world and undertook confidential consultancy work, provided valuations of offshore equipment and gave due diligence and expert witness support.

Defending its client, Frontier Drilling of Norway's initial purchase price of $20m, Erland P. Bassoe, owner of Bassoe Offshore Consultants Ltd., noted that "nobody has paid more than USD 20 million cash for a drillship similar to the Discoverer 511 for 15 years (and 1997/98 experienced the highest market for 15 years in the oil industry). It is on this basis that we believe that it is highly recommendable that Ghana accepts the offer from Frontier".

From all indications, Frontier Drilling eventually agreed to buy the D511 at the purchase price of $24m; $4m more than its initial offer of $20m as captured in the 6th June, 2001 letter from the New World Investments Ltd. to the Acting Chief Executive of GNPC, Dr. Ofori-Quaah.

A fax message dated 9th October, 2001 from Bassoe Offshore to Dr. Ofori-Quaah and copied to New World Investments Ltd., referenced: "Sale of Rigs"; underscored Bassoe Offshore's interest in "making a strong effort to market your remaining drilling rigs for sale through our extensive international network", adding that " we are presently drafting a short agreement to this effect which we plan to send to you tomorrow for you review and approval".

"In the meantime, we are pleased to advise you that recent events in the market prove that you sold the Discoverer 511 at the most optimal moment. The market is a bit more difficult now, and we do not think it would be possible to obtain the same price in today's market", observed Erland P.Bassoe.

Further scrutiny of official records of both the Attorney-General's Department and the GNPC, clearly point to the active role played by the GNPC in the negotiations and eventual sale of the Discoverer 511. This is in sharp contrast to claims by some GNPC and Ministry of Energy officials that the Corporation was completely sidelined in the entire matter.

For instance, our Business Desk has sighted the Power of Attorney issued by the GNPC to Mr. K.T. Hammond appointing him as the "Grantor's true and lawful attorney for it and in its name, place and stead to do any and all of the following: (1): to sign any addendum or addenda to a Memorandum of Agreement dated 20th June 2001("the MOA") made between the Grantor and Frontier Drilling ASA of Norway(the "Buyer"); (2): to execute in favour of and to deliver to the Buyer a bill or bills of sale in respect of the sale by the Grantor to the Buyer of the Grantor's Panamanian flag self propelled drill ship called "Discoverer 511" ("the vessel") for the sum of twenty four million US dollars(US$24,000,000) as provided in the MOA; (3): effect physical delivery of the Vessel to the Buyer and to date, sign, execute, deliver, register or otherwise render perfect all such protocol or protocols of delivery and acceptance, letter or letters of undertaking, applications, oaths, documents, deeds or other instruments as may be necessary or desirable in connection with the delivery of the Vessel by the Grantor to the Buyer; (4):to receive the purchase price of the Vessel and to receive any other sums which may be due from the Buyer to the Grantor in connection with the sale pursuant to the MOA; (5): to maintain up to the Closing the Vessel on the Panamanian Register; (6): to execute all documents and to take all such acts and things as may be necessary or appropriate in connection with the sale of the Vessel".

The 3rd July, 2001 Power of Attorney under reference was witnessed by Mrs. Ursula Owusu Adjei, Special Assistant to the Attorney-General and Minister for Justice and Mrs. P.J. Dontoh, Chief State Attorney at the Attorney-General's Department. Attached to the Power of Attorney was a Resolution of the Ghana National Petroleum Corporation(GNPC) passed in Accra, Ghana on the 29th day of June, 2001. Among other points, it was resolved that (1): "The sale by the Corporation of the Vessel to the Buyers for the sum of twenty four million US dollars(US$24,000,000) be and is hereby approved, confirmed and ratified; (2): The terms and conditions of the MOA and the execution thereof by Kobina Tahir Hammond for and on behalf of the Corporation be and are hereby approved, confirmed and ratified in all respects”. Also attached to the Power of Attorney and the Resolution was a Certification of Authentication dated 3rd July, 2001 and signed by the Attorney-General and Minister of Justice, Nana Addo Dankwa Akufo-Addo.

Please stay tuned for "further and better particulars" on the US$3.5m Banker's Draft lodged in the accounts of the Government of Ghana at the Chase Manhattan Bank, New York, and the latest developments from Societe Generale relative to its receipt of US$19.5m as part of the negotiated settlement mutually arrived at in July 2001.