Kufuor’s Waterville/Shanghai Scandal

and the € 25million payment to
Waterville…….. The Full facts

Contrary to the position articulated by the former chief of staff, Mr
Kwadwo Mpiani, the managing editor of the New Crusading Guide newspaper, Mr
Kweku Baako, and other NPP Propagandists that Waterville fraudulently made
fresh claims after receiving payment on its abrogated contract with the
government, documents in possession of the _True Statesman,_ shows that the
Euros 25million paid to Waterville is legitimate and legal.

Various correspondences between Waterville Holding (BVT) Ltd, Micheletti
and CONSAR LTD, and the former chief of staff, Kwadwo Mpianin indicate that
Waterville has been consistent with its figures for the claims made, and
the claims was within its legal right.

Painstaking investigations conducted by the _True Statesman_ revealed
that, in January, 2005, the Government of Ghana put out international
invitations to bid for the construction and rehabilitation of a number of
projects, namely; Stadia, Hospitals, and Hostels/Accommodation facilities
for football teams and their supporters. The Stadia and the accompanying
facilities were in preparation for Cup of African Nations, 2008 (CAN.
2008).

Seven pre-qualified companies including Waterville (BVI) Holdings
submitted technical and financial proposals. A team of three persons were
appointed by the Ministry of Finance for evaluation of the financial
offers. The team recommended the finance proposal submitted by the
Waterville Consortium comprising of M. Power Pak, Austro Invest and Vamed
Engineering.

Vamed Engineering on 1st July, 2005 assigned its rights as part of the
Waterville Consortium to the contract for the construction of the stadia to
Waterville Holdings (BVT) Ltd.

Waterville was subsequently awarded a formal contract for the projects
and the contracts were executed on 26th April 2006. The contracts covered
the following projects:

Ohene Djan Sports Stadium €36,9 56,29 5.69

Baba Yara Sports Stadium €34,459,428.20

EI-Wak Sports Stadium €2,969,302.00

Prior to the formal award and signing of the contractual documents, the
sites were
formally handed over to Waterville on 6th February 2006 by a letter from
the Ministry
of Education and Sports. Works involving demolition, excavation and
clearing
commenced on site well before the formal signing of contracts given the
limited time
available for the completion of projects for the hosting of the CAN 2008
tournament.

In addition to the works Waterville had been mandated by the Ministry of
Finance
And Economic Planning to source finance for the rehabilitation of the
stadia, 12 Youth Centres, 6 District and Regional Hospitals, and Armed
Forces Housing Project. Waterville was able to source the funding and was
going to execute the various projects under Finance, Design Construct
basis.

Waterville indeed found the finance with a grant element of which was
accepted by the Ministry of Finance and Economic Planning. As a result of
the termination of the Stadia contracts these Projects could not take off.



The Central Tender Review Board (CTRB) on 5th August, 2005 formally issued

a concurrent approval for the award of the contract for the construction
of the above
stadia to Waterville Holdings (BVT) Ltd.

At this stage, it is clear Waterville, through an open, fair and
international bidding process, and in compliance with Ghana’s public
procurement law, won the contract to construct two (2) new stadia,
rehabilitate two (2) more. And subsequently, the construction of a third
stadium was added to the scope.

In spite of Waterville being given approval for the award of all five
stadia, the Kufuor government decided to award two out of the five stadia
already awarded to Waterville to Shanghai Construction (Group) General
Corporation. The procurement process for the two (2) stadia awarded to
Shanghai Construction (Group) General Corporation was not done in
compliance with Ghana’s Public Procurement Law.

The Minister of Education and Sports on 22nd August, 2005 wrote to
Waterville to
terminate the contract for the construction of the three stadia.
Waterville challenged
the validity of the termination of these contracts. On August 1, 2006,
the Attorney-
General confirmed the termination of the contracts.

We also found out that, Kufuor regime later admitted that Waterville was
entitled to some monies for work done on the site before the 1st day of
August 2006. It was as a result of this that Government tasked the
Consultants and the committee including the Chief of Staff, Kwadwo Mpiani
to value the work done by Waterville.

As a consequence of expenditure already made by Waterville at the time
of the government’s cancellation of the contract, Waterville made an
immediate claim for reimbursement of the amounts it had already spent
towards its execution of the contract. It has to be noted that the
Government’s Consultant verified and certified the value of works
provided by Waterville to be a total of Euros 21,569,946.71.

Waterville sought full compensation for the work it did and the losses it
incurred as a result of the Kufuor government’s actions in cancelling the
contract awarded to it to construct and renovate five stadia.

The Consultants certified that an amount of ??21,569,946.71 due to
Waterville for work done before the termination of the contracts. However,
from this amount must be deducted certain payments which had already been
paid to Waterville. Thus what was owed to Waterville and still outstanding
for the works executed was ??9,634,240.16.

It also emerged through our investigations that due to time constrain and
the fact that subcontractors were in financial crisis as a result of the
termination of Waterville contract, Waterville instructed _Government _to
_avoid _the works been jeopardize, to pay some amount as advance payment to
subcontractors on behalf of Waterville and subsequently deducted from
Waterville certificates.

_Government _partially accepted such instruction only with the intention
to allow the
works to continue and then they entered into a new agreement with the
subcontractors. The amount paid as "on account" they deducted from the
new
contract value signed with the subcontractors.

The work done value was calculated_ _based on percentage of works _value
_certified by the _Government _consultant. The _values _are the following:

_a. _Ohene Djan Euro _3,390,728,77 _

b. EI-Wak Euro 909,944,74

_c. _Saba Yara Euro _4,679,848,76 _



The total amount of Euro 8,980,522,28 were therefore declared to be
deducted also
from Waterville certificates.

The two amounts for:

a. Drawing

b. Subcontractors Works

TOTALLING to



Euro 2,955,184,28 amount received by Waterville
Euro 8,980,522,28 amount _received _by subcontractors

Euro _11,935J06,56 _amount so deducted from
Waterville certificate Our investigations further revealed that
Waterville accepted to be paid for the drawings to the following amount:

a. Ohene Djan Euro 1,472,179.08

b. EI-Wak Euro 106,645.80

c. Saba Yara Euro 1,376)59.40

Therefore the total amount of Euro 2,955,184,28 was deducted from
Waterville certificates amounting to Euro _21,569,946.71 _

Further to change of Government in 2009, Waterville presented its claim
again and in the letter dated 14th March 2010 after many meetings with the
Attorney-General and her staff, Waterville submitted the last claim before
going to mediation as prescribed by art.16 of the contract.

Due to the fact that negotiation with previous Government and also
negotiation with current Government did not reach positive agreement,
Waterville asked for mediation as prescribed by art. 16 ARBITRATION of the
Contracts signed between Waterville and the Government of Ghana on 26 April
2006 Following a number of mediation sessions with the
Attorney-General’s department, of which Waterville made a presentation,
together with documentary evidence, which demonstrated that notwithstanding
the fact that no contracts were signed in respect of the proposals for the
construction of various projects such as regional hospitals to the
Government through the Ministry of Finance color: black; background: none
repeat scroll 0% 0% white;">Economic Planning, Waterville was directed by
the Government to continue with arrangements and documentations with
proposed financiers and guarantee agencies for the execution of those
projects. Consequently, the mediation team was of the opinion that
Waterville were at least entitled to the following claims:



Certified
Works
€9,634,240.15

ii, Interest due on the Certified works at Eurobor plus 3 points

from September 1, 2006 till
date
€3,123,754.56


iii. Loss of profit calculated at 20 of€ 52,569,946.71
€1O,563,015.00

iv Interest on the loss of profit at Euro plus 3 points

from September 1, 2006, to
date
€2,863,248.67

v. General damages for breach of contract including
mobilization and demobilization.
€10,000,000.00


vi. Legal
fees
€500,000.00



TOTAL
??36,684,255.99




Following further mediation sessions Waterville stated that in spite of
its claim
in the sum of €36,684,255.99, it is prepared, as a goodwill gesture, to
accept
€32,000,000.00 as full and final settlement of _its _claim, including
certified works,
interest, loss of business profit, general damages for breach of contract
including
mobilization and demobilization and legal fees.

Upon taking professional advice the Attorney-General was informed that
where a contractor has mobilized, gone on site and commenced works, any
termination of the contract attract the payment of loss of profits and
demobilization.

Our investigation team further discovered that Clause 11(4) (4) of the
Contract executed by both parties provide that in case the termination is
caused by default of one party, the other party shall be entitled to claim
the damages suffered for the termination. Thus Waterville is entitled to
payments for loss of profits and damages.

We also found out that should the mediation fail Waterville is entitled to
go to Arbitration in London. It is probable that they can substantially get
this sum or more given the manner in which cases involving African
Governments against European nationals are viewed.

Attorney-General having considered the claims closely recommended to
Waterville to accept the sum of ??25 MILLION as a final figure for
settlement of all its claims without the further time and expense of
arbitration.

Waterville duly accepted and was subsequently paid the settled sum of
??25 MILLION in three tranches, namely €9 million upon the Settlement
and Release Agreement, €8 Million in January, 2011 and the final sum of
€8 Million in April. 2011.



Under this circumstances is clear that Waterville has not _received _any
double payment,
rather any amount paid or _received _that has base on the Waterville
Certificate _have _been
duly deducted to _avoid _double payment.

Waterville as from the date of August 2006 _never received _from previous
Government
any payment under any form. Payment _received _and exchange with
subcontractors were explained in Waterville claims and deducted from the
original Certificate _values _as Waterville _never _intend to ask to paid
twice for the same service.



The issue of M-Powapak and Alfred Woyome as it were has no bearing on
Waterville’s claim. Woyome had no role in the claims Waterville made to
the government for reimbursement and compensation against loss.

There is a clear distinction between payments received by Alfred Woyome
and Waterville’s legitimate claim.

Watervillle made full payment to M-Powapak and Alfred Woyome for their
services, and terminated their services as far back as 2006.

M-Powapack, a firm represented by Mr. Alfred Woyome, was hired for a fee
by Waterville to provide financial advisory and consulting services for a
limited period to assist in Waterville financing the stadia contract.
Waterville made full payment to M-Powapack and Mr. Woyome for their
services. Therefore the claim that Waterville and Woyome conspired to dupe
the state cannot be true. It is clear Waterville followed due process.

What is however not clear is the motive behind Kufuor’s disregard for
the public procurement laws of Ghana and award two out of the five stadia
already awarded to Waterville, to Shanghai Construction General
Corporation, in spite of Waterville being given approval for the award of
all the five stadia.

Stay tuned for more anon.

The True Statesman

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