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Opinions of Sunday, 15 February 2009

Columnist: Agbodza, Kwami

Mills Ewe-Assisted GT-Vodafone Free Market Mandate

By Kwami Agbodza

Ghana has constitutionally mandated the elected Mills Government to do something about the illegitimate Vodafone Group Public Limited Company (PLC) acquisition of underpriced Ghana Telecom because doing nothing and letting it stand is not a strategic option.

Vodafone Group PLC UK’s illegitimate acquisition of Ghana Telecom fixed line networks, Ghana Telecom Onetouch mobile networks and the National Fibre Optic project with contemptuous disregard for our Constitution and Public Procurement Act awaits resolution. The value at which the sale was concluded is still less than the price – the opportunity costs to Ghana. The profits that Vodafone will be making at Ghana’s expense will be higher as a result of the lower price he paid for our strategic assets. He is not required to pay higher taxes as a result and he is free to repatriate 100% profits back to the UK with the help of the British High Commission at our expense.

Motivated by profit and falling opportunities in developed markets there is the strategic risk that Vodafone can abandon the fixed network operations of Ghana Telecom in favour of the highly profitable mobile wireless operations thus undermining the development of Ghana’s ICT. The recent US$120 million deal between capitalist Vodafone and the Communist Huawei could be seen as part of the underpayment for Ghana Telecom at our expense. The NDC Majority in Parliament today which at the time was the Minority only “cautioned the government not to sell Ghana Telecom (GT) cheaply to foreigners”. Why? Because even the “Onetouch” mobile service alone, could be sold for about one billion dollars.”

Must the Executive, Parliament and the Judiciary do something about the illegitimate Vodafone Acquisition of underpriced GT using the mandate Ghanaians have given His Excellency John Evans Atta-Mills, his Vice His Excellency John Mahama and the NDC Parliamentary Majority?

This article outlines four non-exhausting freemarket things that the Mills Government can do to eliminate the strategic, economic, security and financial losses to the lives and happiness of Ghanaians caused by the illegitimate acquisition of underpriced GT by Vodafone UK PLC. Doing nothing is not a strategic option in democratic economic governance; if the Mills Government will do nothing, it must explain to Ghana why it will do nothing.

Doing nothing is not an option because we cannot entrust the monopoly control of our fixed communication assets, the provision of broadband services, ICT development and our transformation, growth and progress into the hands of Vodafone UK and other foreigners now dominating our domestic communications market: MTN, TIGO, ZAIN, GLO, KASAPA. It is against our national strategic interests of life and human happiness. The potential cost to Ghana of Vodafone’s continuing control of Ghana Telecom is unacceptable. Vodafone’s purchase of Ghana Telecom, apart from being underpriced, is causing strategic, economic, security and financial losses to Ghana that must be completely eliminated in order to improve the lives and happiness of Ghanaians.

We cannot entrust these to Vodafone and other Multinationals for the same reasons that we obtained independence from the British who denied us life and human happiness from 1844-1957 as colonial masters. Ghana must manage its own communication affairs.

We obtained independence so that as human beings we Ghanaians can assert our rights to life and human happiness and govern ourselves in a free and just society.

So, what can the Mills Government do?

First, the Mills Government can re-evaluate the Ghana Telecom sale price to reduce Vodafone’s 70% share ownership to less than 51% thus removing its control over Ghana’s strategic ICT policy.

President Mills through Parliament and the relevant national authority must set up a team to revalue all the assets of Ghana Telecom mobile network, Ghana Telecom fixed network and the National Fibre Optic backbone. The team must undertake the revaluation at a level that Vodafone will not be able or willing to pay. The 70% Vodafone ownership must be devalued to minority ownership. If that is not acceptable to him, Ghana can pay him back his money in sustainable instalments.

Second, the Mills Government can frustrate the strategic goals of Vodafone UK in Ghana which are not in Ghana’s strategic, economic and security interests. It can do this by using immigration control. There are several options. One option is by denying visa to Vodafone UK finance, investment and marketing staff who want to take up position in Ghana. A second option is restricting to minimum the stay of non-Ghanaian staff of Ghana Telecom. A third option is the procedural requirement of a deposit high enough to yield returns for the Ghana Immigration Service.

He could authorise The Ghana Immigration Service to grant only limited visas to foreign employees of Vodafone in Ghana. This immigration tool will thus ensure that no top Vodafone official stays in Ghana for more than six months at a time. If Vodafone wishes to replace departing top officials their visas should be stalled or even denied; the purpose is to ensure that only Ghanaians hold the top positions in Ghana Telecom. No visas should be granted to UK Vodafone officials to come to Ghana to handle finance, investment and marketing until the shares revaluation goes through.

We can learn from the Russians who did these nicely with respect to TNK-BP and expelled all the foreign workers by not renewing their visas. Even Robert Dudley the CEO of TNK-BP had to leave Russia. Such a fate for whoever Vodafone Group PLC should send to Ghana will be very welcomed by Ghanaian nationalists and patriots.

President Mills should authorise a review of the fees paid by foreign top officials upwards to free market levels.

Ghana can learn from the UK itself. The UK now asks ordinary people to put a deposit of at least £1000 down for visitors. Ghana should introduce a new payment code for staff of multinational and transnational organisations. Ghana could ask for at least £500,000 each at director level renewable in six monthly instalments. That money should be put in high-yielding income accounts and used to pay our illustrious immigration staff. This is a sustainable source of income that will serve us well.

Third, the Mills Government can use President Mills’ own legal tax expertise to implement new Telecommunications tax laws to increase the tax paid by these foreign firms towards our fiscal budget.

President Mills should through Parliament change the tax laws for the profitable telecom industry because too much money is being made at our expense by foreigners. The new tax rules must claw all supernormal profits only he is making.

Fourth, the Mills Government drawing on President Mills’ own Nkrumaist credentials as a Young Pioneer can re-activate the Kwame Nkrumah position that the State is the engine of economic growth and take economic leadership back from the private sector which has plunged the world into a global recession. As a result, President Mills could study the urgent possibilities of nationalising some of the multinationals, or revoking their license through the National Communication Authority (NCA). This will reduce unnecessary and spurious competition, give a greater advantage to a publicly-re-owned Ghana Telecom to increase duopolistic profits for national development.

Fifth, the Mills Government can ensure that only Ghanaians who love the nation oversee Ghana telecom re-nationalisation process, implement the new immigration rules and determine the level of supernormal profits. Ghanaians who must be responsible for these bold decisions must have 24hour security protection. Detailed soldiers, police officers and secret service personnel should both protect and watch such Ghanaian civilians operationalising the national interest. President Mills must not trust foreign interests in the persons of Ghanaians or foreigners. Mysterious deaths cannot be ruled out. Ghanaians must understand that trade is war and the World Bank liberalisation of markets in Ghana was a declaration of economic war on Ghanaians which is why it was all done from 1983-1991 through the barrel of the gun.

General Background before Vodafone Illegitimate Acquisition of GT

(1) The life and human happiness of Ghanaians depend on Ghana’s transformation, growth and progress; Ghana’s transformation, growth and progress essentially require Information Communication Technology (ICT); the development of ICT in Ghana critically requires the provision of broadband services; the provision of broadband services in Ghana essentially requires fixed communication assets; whoever owned fixed communication assets in Ghana had a monopoly; monopoly can be very profitable for the owners; Ghana Telecom (GT) the only company in Ghana with these fixed communication assets had that monopoly; Ghanaians owned GT.

(2) The NPP Administration of John Agyekum Kufuor, which believed in private property ownership, did not want Ghanaians to own GT anymore. His Government wanted only one person (a non-Ghanaian-a foreigner) called a strategic investor to own GT, manage its operations and effectively make monopoly profits which will no more be available to enhance the life and human happiness of all Ghanaians. The non-Ghanaian strategic investor was to acquire 65% of the equity (shares) of Ghana Telecom. So in 2006 his government initiated the process to identify this strategic investor.

(3) 66.7 per cent of shares in GT were advertised for sale. Worldwide Offers to own GT were received from firms in the global telecommunications industry who all wanted to own what belonged to Ghanaians. The persons who made offers included Egypt Telecom, France Telecom, Globacom and a local Ghanaian-led consortium. Of all the bids received France Telecom offered the highest of 550 million dollars for 60 per cent of the shares. The price and terms of all the bidders’ offers were unsatisfactory and lower than the Government had expected to reduce its budget deficit. John Agyekum Kufuor’s’ Government suspended the sale.

Vodafone UK Specific Background to their Illegitimate Acquisition of GT

(1) However, Vodafone, according to government sources made an offer of 960 million dollars for 70 per cent of GT’s assets – the Onetouch mobile and fixed telephone networks to which were added the National Fibre Optic backbone project. The 10% share difference was equivalent to $(960m-550m) $410m above the French offer. But One-Touch Mobile Service alone could be sold for about one billion dollars.

(2) There was a general lack of openness and transparency in the privatisation process.

(3) Vodafone was not a fixed-line operator but only a mobile operator and thus did not meet even the minimum requirements set by the Government of Ghana.

(4) The NDC Majority of today, a minority at the time, said Ghana Telecom was a strategic national economic and security asset but they were not averse to its privatisation as long as it was legitimate, which it was not. So they only registered their disapproval of the general lack of openness and transparency in the illegitimate privatisation of Ghana Telecom.

(5) Ghana Telecom was sold without recourse to the provisions of either the Constitution or the Public Procurement Act or both. As a result, Ghana Telecom was not subject to a public tender process for all interested bidders.

(6) The Ghana Telecom sale did not follow “established norms and standards for the privatisation of a telecom entity as required by the International Telecommunications Union (ITU).”

(7) The private telecommunication market did not adequately value the possible diminution in the aggregate welfare of the life and human happiness of Ghanaians from lost ownership and control of all the assets of the GT sale.

Questions (Q) that are raised by the Vodafone UK Specific Background to their Illegitimate Acquisition of GT and Answers (A) to them:

Q1: Should the new Government of Ghana make Vodafone pay the fair freemarket prices for the separate businesses of Onetouch Mobile, fixed telephone networks and the National Fibre Optic backbone? Q2: Did the lack of openness and transparency in the privatisation process cause financial loss to Ghana? Q3: Should the Government of Ghana let Vodafone a mobile operator only without fixed-line experience own Ghana Telecom a fixed-line operator? Q4: What can the NDC Majority in Parliament now do over the illegitimate privatisation of Ghana Telecom over which as a parliamentary minority they could only register their disapproval? Q5: Can the NDC Majority in Parliament ensure GT is subject to a public tender process for all interested bidders as provided in the Constitution and Public Procurement Act? Q6: Can a new bidding process follow “established norms and standards for the privatisation of a telecom entity as required by the International Telecommunications Union (ITU)?” Q7: Will the international private communications market value the welfare loss to Ghanaians?

A1: Yes the Mills Government should make Vodafone pay fair prices. A2: Yes the lack of openness and transparency in the privatisation process caused financial loss to Ghana equivalent to at least the value of the difference of ($1b-$960m) $40m for Onetouch Mobile, the entire value of fixed telephone networks and the entire value of the National Optic backbone project. A3: No because there is the strategic risk that Vodafone motivated by profit and falling opportunities in developed markets can abandon the fixed network operations of Ghana Telecom in favour of the highly profitable mobile wireless operations. A4-6: The Mills Government can pass a law that makes the Vodafone sale null and void and meets the requirements of both the constitution and the Public Procurement Act for a new legitimate privatisation process open to all bidders in a public tender process. All requirements can be included in the law that the NDC Majority can pass. A7: No. The international private communications market will not value the welfare loss to Ghanaians

GHP Background: “Don’t Sell GT Cheaply”, by Gaisie Jackson; “Telecom in Ghana” – A Game of Multinationals, by Samuel Dowuona, 20/1/09; “Ghana Telecom picks Huawei for 3G contract”, 23/1/09.

Other Background: The work of Dr. Nii Moi Thompson, a Ghanaian Economist; The public relations work of Michael Dedey of the CPP and TheKNforum@yahoogroups.com; the work of CPP UK & Ireland.

Note on Writer: Kwami Agbodza is an Nkrumaist and a member of Kwame Nkrumah’s Convention Peoples’ Party (CPP). He is an economist trained in London. He has lectured economics in Ghana, UK and South Africa.

He has also served in the past as Regional Secretary of CPP UK & Ireland, Regional Education Secretary of The Greater Accra Regional CPP Branch, member of the Regional Executive of The Greater Accra Regional CPP Branch, the CPP Chairman of The Ablekuma Central Constituency.

Kwami wrote this because he does not believe in Freemarkets. He does not believe in freemarket because the assumptions required for a freemarket society to subsist can never hold and will never hold.

Kwami also believes that Ghanaians must own, control, manage and finance their strategic economic assets; GT was one of these strategic assets.

Kwami believes that Ghanaians at home and abroad are capable of managing their own economic affairs.

Finally, Kwami believes that the sale of Ghana Telecom was undertaken by Ghanaian minds of the lowest quality, who were assisted by foreign minds that to use Nana Biakoye’s descriptive terms are “nation-wreckers, coffers-looters, thieves, brigands, and immoral satanic creatures.”