IMANI: Trade Ministry’s Statement on Sekondi Free Zone Misleading
(…..as Chinese partner fudges website)
14th January 2012
We have noted with alarm a statement issued by the Ministry of Trade through the Ghana News Agency and signed by one Nana Akrasi Sarpong, who styles himself: “Acting Director of Communication and Public Affairs” (Please see: http://www.ghananewsagency.
This statement from the Ministry purports to respond to IMANI’s recent comment (http://www.imanighana.com/
We made this call in view of the discovery that the company mentioned in that document as having been engaged “to mobilize a public-private partnership to establish a cluster of industrial minerals processing ventures at the ‘Sekondi Free Zone’“ – China Hasan International – does not in fact possess the demonstrable capacity and track record to secure the $2 billion or $4 billion (reports differ) supposedly required to develop the estate, despite representations to the contrary.
We had even gone to the extent of showing that the Hong Kong address mentioned by the company on its website (en.hasan.cc) and in various documents casts, upon scrutiny, further doubt on the company’s credibility. In fact, China Hasan has changed several entries on its website in the last few hours, just before the Ministry’s statement was issued. Luckily, screenshots were saved by several patriotic Ghanaians in anticipation of this exact type of conduct.
In the circumstances, Ghana is seeking to borrow $100 million from the China Development Bank (CDB) to erect infrastructure for a project that is deeply flawed in its financial arrangements.
Insofar as this project is integrated with a number of other major projects in the A1 tranche of the CDB loan, there is every reason for the general public to be worried that the Trade Ministry and the Ghana Free Zones Board appear unable to confidently assure Ghanaians that they conducted due diligence on China Hasan International Holding prior to awarding the company its license to develop the free zone enclave and prior to making the project for which the license was issued the core proof of financing eligibility of the Sekondi Industrial Estate component of the CDB facility.
Instead of addressing the very clear and vital issues raised in the comment by IMANI, the Trade Ministry resorted to attacks on IMANI's integrity, shockingly asserting that “We would like to assure the general public that there is no truth in the [IMANI] publication”.
We will urge Parliament to critically examine these matters since the CDB briefing documents are still in Parliament’s possession in connection with its ongoing evaluation of the CDB facility, and it is obviously important to ensure their accuracy and reliability.
The Ministry asserts that China Hasan International “has not been awarded any contract for the construction of the proposed development in Ghana”. Yet, in the very next line, they announce bizarrely that: “The company’s subsidiary in Ghana namely Hasan Investment Ghana Limited, has been granted a developer’s license to develop the Sekondi Industrial Estate under the provisions of the Free Zones Act (Act 504).”
This is clearly and dangerously disingenuous.
Unless the Ministry is not aware that said subsidiary of China Hasan International in Ghana cannot by any stretch of the imagination be considered more credit-worthy than its parent company; or that for all the purposes under discussion here a “license” is very much a “contract”. We will return to this point shortly.
Indeed it is contrary to the spirit of Act 504 (1995), which the Trade Ministry cites, with no sense of irony, for government to be making efforts to secure funding to erect infrastructure for the benefit of a private free zone developer. Section 9(II)B of Act 504 specifically states that:
“[A free zone developer shall]develop all other infrastructure necessary for the enhancement of the efficient and effective activities of the zone, in accordance with any regulations made under this Act…”
In this clear sense, government’s proposal to borrow money from the CDB to fund the infrastructure requirements of the free zone is not in fact supported by the very Act the Ministry claimed to be citing in its defence.
The same Act 504 also permits “sub-contracting” by the private developer (section 10), which is a right that can only logically accrue to the licensed developer if the Act also construes the awarded “license” as a “contract”.
Indeed, in this specific instance, unlike the case in certain intellectual property licensing arrangements, there is no discernible ambiguity in the opinions of specialists on the matter, which we have been diligent in surveying, about whether the “license” is a “contract”, considering the reciprocal obligations on both parties – China Hasan and the Ghana Free Zones Board. At any rate, many legal authorities consider even unilateral agreements, where all the obligations are on one party, as valid contracts.
There is little to gain, except to brave the overwhelming tide of specialist opinion, to argue that a license issued under a statutory provision is not a contract. This is not only hair-splitting of a rather worrying type, but also manifestly wrong.
We also note that the Ministry does not mention the Memorandum of Understanding it entered into on behalf of the government of Ghana in Beijing in September 2010, evidence of which were splashed all over Hasan International’s website before they were mysteriously removed in the last few hours (cached copies are available on request). Though this MOU may not constitute a BINDING contract, it can nevertheless be CONSTRUABLE as a contract, depending on the precise language used, regarding “specific understandings” of the parties at the moment of execution.
It would appear from the statement issued by the Ministry of Trade that the authorities are not interested in a critical examination of the issues involved. We will repeat them again here for emphasis, and then leave other competent public interest bodies, such as Parliament, to exercise their mandate.
1. Did the Ghana Free Zones Board (GFZB) conduct any due diligence on China Hasan International and its local subsidiary before awarding it the private developer’s license?
2. Were they satisfied that Hasan’s track record and credit-worthiness placed them in a position to raise the billions of dollars apparently required to develop the minerals processing estate in the free zones enclave?
3. Bearing in mind that the Sekondi Industrial Estate is, by the government’s own admission, a “flagship initiative under the Better Ghana Agenda”, does it intend to conduct such due diligence, and based on the results decide whether to place its hopes in China Hasan or not?
4. Will the government and the GFZB promptly amend the document before parliament and any transaction documents pertinent to the CDB facility in which China Hasan is mentioned as proof of financing eligibility in order not to cast doubts on the competence and viability of the government’s preparations for accessing the CDB Tranche A1 facility?
5. Will the government immediately launch a search for a more credible project financier for the estate project in order to salvage the process to transform the Sekondi-Takoradi metropolis and the country’s metallurgical industry, which would both be threatened if China Hasan fails to deliver?
Executive Director’s Office
IMANI Center for Policy & Education
