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No Breach Of Laws In US$2.25Bn Bond Issuance - Finance Minister Responds To ‘Frivolous’ CHRAJ Petition
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Ken Ofori-Atta, Minister of Finance, has described the petition to the Commission on Human Rights and Administrative Justice by Brogya Gyamfi, a member of the NDC, to investigate the $2.25 billion bond issued by the government as “grossly unmeritorious and frivolous,” calling for it to be dismissed.

According to a response to the petition, through the Attorney General and Minister of Justice, even though the petitioner sought an enquiry into conflicts of interest, he failed “to set out particulars of the alleged conflict of interest in the petition.”

“There has been no breach of any of the laws or rules governing the issue of bonds, that the allegations of the complainant are based on plain falsehoods, and there has been no conflict of interest involving the respondent,” the petition signed by Godfred Dame, deputy Attorney-General and Minister of Justice, maintained.

The petitioner, who is the Ashanti Regional Youth Organizer of the NDC, dragged the Finance Minister to CHRAJ, alleging conflict of interest in the bond issued by the government through the Ministry.

With regards to rules governing the issue of bonds in question, the minister explained that bonds are part of government securities and constitute direct, unsecured and unconditional obligations of the government, and that the purpose of issuing Securities is to finance government shortfalls, and redeem maturing Securities.

“Issuance of securities in accordance with the regulations published by the Bank of Ghana is in compliance with the financial laws of Ghana,” he said.

He added that per the guidelines of the Bank of Ghana, relevant rules such as “securities issued in Ghana under the Bank of Ghana Guidelines are denominated in the local currency, and all payments are required to be made in Ghana cedis; only financial institutions licensed by the Securities and Exchange Commission to deal in securities and authorised by Bank of Ghana as Primary Dealers/Joint Book Runners are eligible to participate in the auction of debt securities and the Ministry of Finance is required to publish a quarterly calendar for the issuance of government securities.”

On the allegation that the 7-year and 15-year Bonds were not on the issuance calendar, the minister held that the allegation did not impinge on conflict of interest, stressing: “the propriety or otherwise of the issue of 7 year and 15 year Bonds when same is allegedly not on the issuance calendar, does not fall within the jurisdiction of this Commission.”

“The Bank of Ghana which has the sole mandate to issue Government securities, published a calendar for the second quarter and thereby issued notices to Primary Dealers, Banks, Stockbrokers and General Public - Notice No. BG/TD/2017/15 on 30th March 2017 of the issue of the Bonds in question,” he explained.

Responding to allegations made by the petitioner that the initial pricing guidelines of the Bond were issued around 5.37 pm on March 30, 2017, by email, which was after normal working hours, he described it as not only false but a misleading allegation.

He, thus, asked the Commission to reject it on the basis that “Initial pricing guidelines are not issued by the Ministry of Finance. Under the regulations, they are issued by the Book Runners/Transaction Advisers licensed by the Bank of Ghana - Barclays Bank Ghana, Strategic African Securities and Stanbic Bank Ghana.”

He added, “On the occasion of the issue of the Bonds in question, the Book Runners by a public announcement on 30th March, 2017 at 10.12 am, published details of the Bonds to be issued and sent invitations to all investors before the transaction opened. The initial pricing guidelines were issued on 30th March, 2017 at 12.04 pm.”

The minister described the petitioner’s allegation that the issuance summary was issued on March 31, 2017, at about 4.20 pm by email, indicating that the Bond transaction had been closed and announcement made to the public, as irrelevant.

He explained that an Issuance Summary is prepared by the Book Runners/Primary Dealers licensed by the Bank of Ghana upon close of the transaction.

He added: “It is the final summary of the transaction issued to investors in the nature of an acknowledgement. Neither the Ministry of Finance nor the Minister for Finance respondent hereto, played any role in the preparation of the Issuance Summary. In any event, the Issuance Summary complied with the regulations governing issue of Bonds of this kind, as well as the practice before 2017.”

On the petitioner’s allegation that one single investor, Franklin Templeton Investment Limited, purchased almost 95% of the Bond, the minister clarified that the Ministry of Finance, in the matter of the issue of Bonds, does not transact with any investor and that all transactions are carried out by Book Runners designated by the Bank of Ghana as Primary Dealers.

“Further, there is no law or regulation that imposes a limit on the amount of an investor’s offer. The transaction processes for this issuance did not deviate from previous issuances, as to lead to a finding that Franklin Templeton was favoured,” he added.

According to the response, there was no evidence of any act or omission on the part of either the Ministry or the Minister supporting “an allegation of participation in a business transaction or activity for the benefit of friends or family”, and that neither did the personal interests of either the Ministry of Finance or the Minister for Finance interfere with the performance of their duties and functions.

“Further, no personal or private benefit has been derived by the Minister of Finance through the issuance of the Bonds in question. Simply put, the respondent has not contravened article 284 of the Constitution,” he maintained.

Source: The New Statesman

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