Date: July 11, 2009, 10:08 am


VODAFONE FACT SHEET HIGHLIGHTS – LEGAL AND ECONOMIC ISSUES ARISING


1. ENLARGED GT

 

The Sale Agreement is for 70% of GT's shares and for the said 70%, Vodafone would pay U$900 million. But, apart from the 70% shares, Ghana Government, by virtue of the provisions in schedule 16 to the Agreement, is handing over to Vodafone on a silver platter the following:

 

a. Voltacom (Volta Communications Co. Ltd.) - a communications company established by the Volta River Authority (VRA) as a separate business entity that provides communication services to other communication companies for a fee. The value of Voltacom is yet to be assessed for purposes of transferring same to Vodafone.

 

b. VRA Fibre Network: the optical fibre network installed by VRA with public funds which is incorporated within the VRA Electrical Transmission Network and used for more efficient distribution of electrical power to end users.

 

c. VRA Fibre Assets: which comprises all property equipment and assets relating to the VRA Fibre Network including the VRA Fibre Units and all other assets and equipment that are set out in the Assets Register of the VRA. The VRA Fibre units are the systems that contain the Optical wires which are housed within the Optical Ground Wires - composite cable constructions that run along the VRA Electrical Transmission Network.

 

d. Access to the VRA Electrical Transmission Network: this means the electrical transmission network owned by VRA and operated by VRA, including all lands, buildings, towers, cables , equipment and other assets used by VRA in the generation and supply of electricity and related services.

 

e. FibreCo: a company established by the National Communications Authority (NCA) as a communications backbone for the country. The Board of Directors of this company are required to resign en bloc and all its shares transferred, NOT sold, to Vodafone.

 

f. Towers and Radio buildings in Takoradi - VRA and the Ministry of Finance are required to ensure that the towers and radio buildings in Takoradi procured with public funds, are assigned, not sold to Vodafone.

 

Ladies and Gentlemen, for the U$900 million to be paid for 70% shares in GT therefore, all these five other companies and their assets are to be transferred, NOT SOLD,  to Vodafone and Vodafone is supposed to have access to VRA Electrical Transmission Network. Meanwhile by the provisions of the Agreement VRA is required to maintain and insure the transmission network, to enable Vodafone provide services to customers.

 

We are familiar with the popular marketing strategy - "Buy one get one free". But in this case, it is "Buy one get five free". This does not make business sense and we are opposed to it. TO conclude on this aspect of our concerns, we state categorically that there is no company registered in the Registrar­ General's Department called Enlarged GT.  We intend to challenge this in Court.

 

NATIONAL SECURITY

 

The VRA Electrical Transmission Network is an integral part of our National Security Apparatus. VRA is also a strategic national asset. We therefore cannot fathom why for U$900 million, the Government should grant virtually unimpeded access to the electrical transmission network to Vodafone. Our national security is being seriously compromised on this score.

 

NATIONAL SOVEREIGNTY

 

There is an aspect of the Sale Agreement that amounts to a total surrender of our sovereignty as a country to Vodafone. This relates to the manner of the transfer, NOT SALE, of the five other public assets aforementioned, to Vodafone. The transfer, in line with Part B of Schedule 16 is to be done as follows:

 

a. Voltacom's assets are initially to be transferred to VRA, and all actions for the transfer Agreement are to be completed "on terms satisfactory to the Purchaser"

 

b. The Towers and Radio buildings in Takoradi are required to be assigned "in a form approved by the Purchaser".

 

c. The VRA transfer Agreement whereby VRA is required to transfer the Assets of Voltacom, the VRA Fibre Network and the VRA Fibre Assets initially, to the Ministry of Finance for onward transmission to Vodafone are required to be executed "in a form acceptable to the Purchaser".

 

d. The Resolution by the Directors of FibreCo for the transfer of FibreCo's assets to Vodafone are required to be "in a form acceptable to the Purchaser".

 

e. The transfer of FibreCo's shares to Vodafone is required to be executed "in a form acceptable to the Purchaser".

 

f. Even the resignation letters of the Board of Directors of FibreCo are required to be written "in a form acceptable to the Purchaser".

 

g. Huawei Technologies Co. Ltd. a foreign company engaged by the Ministry of Communications for the provision of civil works, training and installation services relating to the Fibre Network in Ghana is required to have its Agreement with the Ministry of Communications amended, and its assets transferred to FibreCo for onward transmission to Vodafone. But for that purpose, "Certain Changes" are required "to be made to the Huawei Onshore Contract in a form acceptable to the Purchaser".

 

This attitude of complete capitulation to the whims of Vodafone constitutes a complete surrender of our sovereignty to Vodafone for just U$900 million. The only occasion in the whole Agreement that mutuality is permitted is in relation to termination. Otherwise the whole agreement appears to be under the thumb of the "Purchaser".

 

OUSTING THE JURISDICTION OF THE COURTS OF GHANA

 

Under the rubric: "NO Injunction", Article 6.1.6 of the Agreement stipulates as follows:

 

"There shall not be any injunction or order that prohibits/restrains the sale of the Sale Shares by COG to the Purchaser in particular or generally".

 

This is tantamount to a complete ouster of the jurisdiction of the Courts of this country in administering justice as far as the Agreement is concerned. By our Constitution, the authority of our Courts to handle or pry into matters legal particularly in relation to the prerogative writs cannot be fettered, not even by Parliament. The Sale Agreement containing such a provision, has been duly executed by Ministers of State, who are also Parliamentarians.

 

NON PROSECUTION FOR CRIMINAL ACTS

 

Under Article 10.7 of the Agreement, Government has undertaken to waive its rights to prosecute any of the officers (Directors, etc.) of all the companies constituting the so-called Enlarged GT Group for any acts of corruption committed in the course of their duties. The provision bearing the title: "PAST BREACHES" runs thus:

 

10.7 "GOG hereby waives and undertakes that it will not at any time bring any claim or prosecution against any member of the Enlarged GT Group or any post-closing directors in respect of any act of such member or director relating to the Anti­-Corruption Warranties which arises from or otherwise relates to the period prior to closing".

 

I leave you to make your own judgement on the provision, but I dare ask: Did the Government understand this provision? When even pick-pockets at the Tema Station or Kejetia are not spared for petty thefts, Government which was given the mandate to run the affairs of this country is by this provision sanctioning corruption.

 

APPLICABLE  LAW

 

Although the Agreement is required to be governed by the laws of the Republic of Ghana and the provisions therein construed in accordance with our laws, (Article 13.20) the authority of our Courts to adjudicate on disputes or conflicts that may arise from the execution of the Agreement have been completely ousted by Articles 13.2.1.1 and 13.21.2 of the Agreement.

 

Under the title "Arbitration" the Agreement in Article 13.21 1 provides as follows:

 

13.21.1 "Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be referred to and finally settled under the Rules of Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with the said Rules".

 

The Agreement goes further to oust the application of our Laws as the Governing Laws in the following terms:

13.21.2 "Subject to Article 13.21.3 below, the seat, or legal place of arbitration shall be Paris . Notwithstanding this, the procedural law of the arbitration shall be in accordance with the laws of England and Wales ".

 

Ladies and Gentlemen, Ministers of State signed this agreement to subordinate our laws including our Laws on Arbitration, as well as the adjudicating authority of our Courts to those of other jurisdiction by these provisions in relation to a company wholly owned by Government.

BREACHES OF DUE PROCESS

 

The effective date of the Agreement is supposed to be the date of execution that is 3rd July 2008. On execution, however, the Government is required by Article 12, to grant Vodafone, its advisors and agents "access to the premises and full access to the statutory books, books of account and all other written records of GT". This is supposed to happen from 3rd July 2008. Meanwhile Parliament is yet to approve the Agreement.

 

By virtue of Article 12.2 Government is required to:

 

"supply all information reasonably requested by the Purchaser and/or its advisors and agents in connection with the enlarged GT Group's premise and those statutory books of account and written records or otherwise relating to GT and each member of the Enlarged CT Group and/or any part of its business, operations, assets and liabilities including its and GT's personnel available as reasonably requested by the Purchaser to provide explanation of documents or to answer questions that will assist in understanding GT's business, activities and commitments".

 

This is to be done from 3rd July, 2008 before the Parliamentary approval.

 

The Purchaser, Vodafone, is even allowed to set up a management team to start running the new company with effect from 3rd July 2008, i.e. before the approval of Parliament is obtained. This explains why Vodafone officials have already started to work at the premises of GT. This also explains why Government is eager to get Parliament to rush the approval of the Agreement through the relevant processes before the official date for the resumption of their duties.

 

These provisions are in clear breach of due process. They conflict with best practices. For U$900 million which Ghanaians can raise easily, Government has stooped to such ignoble depths of submissiveness to a foreign company - just a company.

 

EXCLUSIVITY

For just U$900 million, Government by virtue of Article 13.14, has conferred absolute monopoly over the operations of The Enlarged GT Group on Vodafone. Government by that provision is prohibited from discussing, negotiating or providing any assistance to any third party who may be interested in some or all the share capital of any of the members of the Enlarged GT Group not even when such third parties provide higher bids for same. The Government, before the execution of the Agreement on 3rd July 2008 had already conferred the Exclusivity rights or monopoly rights to Vodafone in a letter dated 15t" May 2008. GT is a state company and therefore we request that the letter on Exclusivity dated 3rd July 2008 be made public.

 

Apart from the letter on Exclusivity dated 15t" May 2008 we also note that there is an instrument called DISCLOSURE LETTER which was delivered to Vodafone in May 2008, specifying the Assets of GT. This DISCLOSURE LETTER must be published because we do not think that all the assets of GT, lands, landed properties, vehicles, machinery, equipment, instruments, materials, spare parts, accessories etc. etc have all been included in the said DISCLOSURE LETTER and appropriately valued. We demand a full disclosure of GT's Assets.

 

SIGNATORIES TO THE AGREEMENT

 

We question why Hon. Asamoah Boateng should sign the Agreement as witness for the signature of the Managing Director of GT. We wonder whether there are no officers of GT, Board Chairman and members, the Solicitor Secretary, Deputy Managing Director and the many other officials of GT, to sign an Agreement of this nature?

 

We also wonder why two (2) Ministers of State and the Managing Director should sign an Agreement in which Government granting fibre optics licenses for 999 years, now expunged, in which Kumasi has been spelt with an "e" (Kumase), and which Agreement has a reference to a schedule 19 when there are no schedules 17 or 18. These and other unpardonable flaws, some of which have been corrected after the public outcry, strengthen our conviction that there is something shadowy about the whole transaction. One wonders whether the Attorney-General who by the Constitution is the principal legal advisor to government has read and approved this agreement.

 
We believe that the Agreement must be abrogated in the supreme interest of the people of Ghana . These grave lapses and examples of indiscretion, and surrender of our national security and our national sovereignty to Vodafone, should be enough to awaken every member of Parliament to his/her duties to Ghana and Ghanaians as representatives of the people of this country charged with overseeing the work of the Executive. The Agreement is against public interest and offends against natural justice, equity and good conscience. Every member of Parliament, including the Speaker, who would approve the Vodafone Agreement for implementation, would risk committing a serious breach of faith which may have the potential of culminating eventually intentionally causing financial loss to the state. And we have enough evidence to establish that offence.

 

ECONOMICS ISSUES ARISING

Why did Government Add the Fibre Optics to GT?

The standard official response to this question is that government could not find “concessional funding for the implementation of the second phase of the National Communications Backbone Project [NCBP]�?.  Concessional funding is subsidised credit, typically between governments.  But the fact is that the same government that tells us that it could not source concessional funding for the NCBP is now borrowing US$300 million at non-concessional commercial rates, which are higher, in order to clear GT’s books for a convenient “debt-free�? take-over by Vodafone.  This appears to be a deliberate effort by the government to starve the NCBP of financing and then sell it off cheap in its continuing efforts to empower foreign private sector while neglecting their Ghanaian counterparts. 

 

It is noteworthy that at the press conference we were only told why the NCBP was being given away to Vodafone, but nothing was said of the reasons for adding on VRA’s Voltacom, which was built by the Company and successfully managed by Ghanaians for more than 15 years.  Significantly, the agreement requires the government of Ghana to ensure that 141 km of fibre optics cable between “Kumase (sic) and Sunyani…shall be completed as soon as practicable�? and handed over to the Enlarged GT Group “with no liabilities and obligations.�?   This would constitute an additional financial obligation to government and further reduce the financial returns to the sale. 

 

How much will Vodafone invest in the Enlarged GT Group?

The only significant provision in the agreement on this subject is the following:  “The Parties recognise the importance to Ghana of the expansion of the fibre backbone and following completion of the



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