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Opinions of Saturday, 3 May 2003

Columnist: Asare, Kwaku S.

Where is the Justice in the Quality Grains Saga?

After almost two years of taking evidence, hearing arguments and waiting on mindless interlocutory appeals, Justice Afreh literally handed Kwame Peprah, of the Quality Grain Gang, an early Christmas gift when he sentenced him to a maximum of four years imprisonment. Based on the prosecution’s well presented case, Justice Afreh found Peprah guilty on all 4 counts of conspiracy and causing financial loss to the state. Moreover, Afreh sentenced Kwame Peprah to 3 years each on the first three counts and 4 years on the fourth count. Thus, the total sentence came to 13 years ((3 x 3) + 4). However, by allowing the sentences to run concurrently, Justice Afreh effectively waived of 9 years or 3285 days for Peprah, resulting in the best and earliest Christmas gift ever received by Peprah. Ibrahim Adam, former Minister of Food and Agriculture, and George Sipa Yankey, a former Director of the Ministry of Finance, who were convicted on three counts of conspiracy and causing financial loss to the state, were similarly sentenced to a maximum of two years imprisonment. Dr Samuel Dapaah, former Chief Director of the Ministry of Food and Agriculture, and Nana Ato Dadzie, former Chief of Staff at the Presidency were, however, acquitted and discharged.

Justice Afreh cited the pleas of the defense team; the length of the trial, which was two years; the ages of the officials; and the apparent influence of some top government officials in the former administration; as reasons for his leniency in the sentencing phase. With all due respect to Justice Afreh, these do not sound like adequate grounds for the unprecedented magnanimity and leniency showed to the convicts, whose reckless actions caused a poor country, like Ghana, over $20 million. It was the defense team’s mindless and endless interlocutory appeals and legal gamesmanship that prolonged the trial. The convicts’ ages do not significantly differ from many, including their comrade Selormey, who are doing long tem service in the prisons. The apparent influence of top government officials is speculative and, even if proven, is hardly a reason for the concurrent sentencing. By way of contrast, a USA District Judge, citing the enormous damage done to the poor people of Ghana, showed very little mercy or sympathy for Miss Cotton, the convicts’ overseas corroborator, and sentenced her to 15 year prison term.

In Ghana, where a plantain thief can easily get a prison term of 10 years, one would have expected the three convicts to express their heartfelt gratitude to Justice Afreh and remain mute in order not to incur the wrath of the masses, who must feel that “big men” never get their due in the criminal justice system. Alas, these convicts, through their lawyers and political allies, have shamelessly resorted to attacking Justice Afreh, the law that they have run afoul of, and their perceived political opponents.

In his reaction to the ruling, Professor Atta Mills, a former law lecturer and an aspiring Presidential candidate, told JOY FM that the case had vindicated his party’s position that it was politically motivated. In an interview with Joyfm, Mr. Kwaku Baah, lead counsel for Peprah, said “the judgment is unfortunate, the sentence is unjust and unsupported by any known law. I think it was the politician in Mr Afreh that was speaking and not the judge. It is unfortunate for this country, it is unfortunate for the public service and it is unfortunate for the politics of this country in the future.'' He also said that he “was happy that his client was not convicted for fraud or corruption but on grounds of negligence.” NDC General Secretary, Dr Nii Josiah Aryeh, another law professor, bemoaned the criminalization of the actions of the public officials and described the laws under which the three officials were convicted as nebulous. Dr Aryeh argued that while some money has been lost, the convicted persons did not misappropriate any funds. Finally, not to be outdone, Dr Obed Asamoah, Chairman of the NDC, described the law under which the people were charged “as a complete novelty in the criminal history of the country and ought to have been handled differently."

"It is a case in which public officials are being punished for “error of judgment,” framed on a charge known as “willfully causing financial loss to the State.”

I do not find any merit in the criticisms of these lawyers, former Law Professors and the aspiring President. In fact, I consider the criticisms as dishonest and steeped in material ignorance. Atta Mills’ charge that the trial is politically motivated is balderdash. Contrary to Mills’ fertile imagination, Ghana actually lost over $20M as a result of the reckless actions of these convicts. This loss is for real not Politics. Further, as Mills probably knows or should know, the docket on this case was prepared by forensic investigators long before the NPP took office. The docket was prepared at a time when Mills was Vice President and Obed Asamoah was Attorney General. According to a report by Daily Guide, Obed Asamoah had as far back as 1997 warned of the dire consequences in the reckless administering of funds to the Quality Grain project. In effect, the NPP government simply inherited this Quality Grain docket, which had been prepared based on existing laws, and instituted criminal proceedings, which is exactly what the constitution requires of the government. The concerns raised by Kwaku Baah do not warrant serious commentary. As the lawyer in charge of this case, which went on for over 2 years, it is truly pathetic that Kwaku Baah will assert that his client was convicted of negligence and that this case is an unfortunate precedent for public service. For his information, his client was convicted of his willful, malicious and reckless conduct, conduct that is criminal in most jurisdictions in the world. Given the unmeritorious concerns expressed for the future of public servants, it bears emphasizing that not all losses incurred by the state leads to the prosecution of public officials. According to section 179A, which is the so called law on causing financial loss to the state, the financial loss must have arisen out of a malicious, willful or fraudulent act or omission. To appreciate the difference, consider the following two examples:

    Example 1: Three public officers extend a $20M loan to a well known and respected overseas rice company. The loan is duly laid before and approved by parliament (or the appropriate regulatory agencies). Soon after the company starts production, it encounters unexpected difficulties and folds. As a result, the company is unable to pay the loan and Ghana incurs a loss of $20M.

    Example 2: Three public officers extend a $20M loan to a beautiful Atlanta girl, who does not know the difference between “emotuo” and “ricewater.” The loan is extended, in spite of repeated warnings from the Ghana High Commission that this girl is a novice and the loan will not be recoverable. Contrary to the law, which is followed in these cases, the loan is not laid before parliament (or the appropriate regulatory agency). Nor does parliament approve the loan. After taking the $20M, the girl goes on a shopping spree buying luxury cars, boats and houses. Less than $1M is invested in the rice farm. Soon after the company starts production, it encounters unexpected difficulties and folds. As a result, the company is unable to pay the loan and Ghana incurs a loss of $20M.

Even though Ghana incurs $20M loss in both examples, these are entirely different scenarios with different consequences. Section 179A does not cover example 1 because the loss was not occasioned by willful, reckless, fraudulent or malicious actions. No prosecutor will be able to prosecute the officers in example 1. At worst, the officials’ judgments could be questioned leading them to have a lower salary increase. In contrast, section 179A would, should and must go after the crooks in example 2 for their recklessness and willful blindness. In example 2, the officials, fully aware of the significant potential for the financial loss, took an unjustifiable risk. Willfulness is, therefore, no error of judgment, as Obed Asamoah, will have us believe. The burden of proof for a showing of willfulness is much higher than negligence. Indeed, if section 179A covered negligence, both Dapaah and Ato Dadzie would have been convicted!

There is also no basis for Aryeh’s claim that section 179A is nebulous. Quite the contrary, the section is rather precise and stipulates in very unambiguous terms both the actus reus and the level of mens rea (willfulness, malicious, intent) required for a successful prosecution of the offence. The section states that “Any person through whose willful, malicious or fraudulent action or omission the state incurs a financial loss commits an offence,” and the penalty is set out in section 179D- a), which states that a person convicted of an offence under any of the offences specified in his chapter is liable on conviction to a fine of not less than ? 5million or imprisonment not exceeding ten years or both. Thus, the ingredients of the offense are clearly: (a) there was a loss; (b) the loss was financial; (c) the financial loss was the result of the willful act or omission of the accused person.

Finally, much has been made of the fact that the convicts did not derive any material benefits from the contract. Even if this were the case, it is, nevertheless, entirely immaterial that they did not have any material benefits from the Quality Grain deal. More important, however, it is not knowable whether they had any material benefits or not! A common and striking feature of contracts, consummated amidst such recklessness, is that the contract always has some side agreements and only the parties know how they have divided the proceeds. That is, a common way of stealing from the state is to use one’s official capacity to bind the state to contracts with pseudo independent parties, who are nothing more than related parties of the public official. Then the related party subsequently makes side payments to the public official. This was the modus operandi in the court computerization project (i.e., the relationship between Selormey and Boadu) as well as other cases that are still before the courts. It is because of the prevalence of these types of shenanigans that we must bring more, not less prosecutions, under Section 179A.



Nor is this a novel law, as these critics will want Ghanaians to believe. As pointed out by the republic, in Tsatsu Tsikata vs. Republic, Section 179A is the direct successor of section 9 of PNDC L78, which provided for special offences similar in form and content to section 179A. Section 179A maintains substantially section 9 of the repealed PNDCL 78 (incidentally Kwamina Bartels and Safo-Adu were both prosecuted under PNDCL 78 law). Further, the notion that one can be held criminally liable for willful, malicious or fraudulent actions that causes another party to incur a loss is well ensconced in common law. In all these, the lesson is as long as you are a careful civil servant, who follows the laid down procedures and act in good faith, you are free from the ravages of section 179A. On the other hand, those who take unjustifiable risks with the peoples’ resources are criminally liable. This is not too burdensome for any country interested in public accountability!

Because the post-judgment phase of any trial is likely to focus on the judges’ verdict, it is easy to lose track of the real facts. So I briefly reiterate the facts of this case for our posterity.

    ? In 1995, the Export Import Bank (EXIM Bank) of the United States of America agreed to guarantee loans for a rice-farming joint venture, which must have the Ghana Government as a majority shareholder.

    ? The convicts assisted Ms. Cotton to establish two companies: Quality Grain Company Ghana Limited (the joint venture) and Quality Grain Incorporated of USA Incorporated (wholly foreign owned).

    ? The joint venture was essentially a fraud, set up for the sole purpose of assessing the EXIM credit facility. This joint venture applied for registration, with registrar of companies, in November, 1996.

    ? There was never an agreement showing how much Ms. Cotton was to contribute to the joint venture. There was nothing on the structure of management of the project or the establishment of a secure financial and accounting system, including joint signatories to the company’s account as well as other rights and obligations of the parties.

    ? The convicts had access to unambiguous information that Ms. Cotton was a fraud and had no experience in rice farming. This information was furnished by the Ghana Investment and Promotion Council and was corroborated by Mr. Kobby Koomson, the then Ghana Ambassador to USA. Contrary to laid down procedures, the then Attorney General, Obed Asamoah, was kept in the dark about Ms. Cotton and Quality Grains.

    ? Notwithstanding the negative evidence on Cotton, the convicts misled parliament to extend a credit facility of over $6 million, to this non-existent joint venture in July 1996. In order to perpetuate this deception, the convicts got a certificate of incorporation for this fictitious venture dated February, 1996 (even though it applied for this certificate in November, 1996).

    ? In addition to this credit facility, the convicts recklessly committed the government to guaranteeing 2 other loan agreements, totaling over $13.3 million. This loan did not have the necessary Parliamentary approval, in flagrant violation of the Constitution.

    ? When it became too clear that the $20 million had been wasted, Mr. Peprah directed the Controller and Accountant General to pay another $2 million into the personal account of Ms. Cotton.

    ? In exchange for the $22 million loan, which was paid directly to her account, Ms. Cotton and her company invested exactly zero dollars. She had no managerial talents, no entrepreneurial skills, no land and no capital.

    ? Rather than go to Aveyime to produce rice, Ms. Cotton expectedly bought a mansion for over $1 million. She bought a Jaguar, a Bentley, a Rolls-Royce and two Mercedes. She also spent $200,000 on her wedding, including $26,000 for a 50-piece orchestra and $30,000 for a one-month honeymoon in the Caribbean (the convicts attended the wedding).

It is a shame that a Presidential candidate of our country will see no wrong with these sequence of events and series of actions. It is time we got serious about white collar crimes, if we are to make any progress. Let me conclude by agreeing with Kwaku Baah, albeit for a diametrically opposed reason, that the sentences meted out to his client, and the two other convicts, are unjust. In my opinion, Peprah should be serving the full sentence of 13 years! Afreh may have given the convicts an early Christmas present but, once again, it is the ordinary man who will, ultimately, pay for these presents!


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