IMANI: Trade Ministry’s Statement on Sekondi Free Zone Misleading (…..as Chinese partner fudges website)

16 Jan

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:

This statement from the Ministry purports to respond to IMANIasking the government
to urgently amend the CDB project briefing documents issued to Parliament
regarding the Sekondi Industrial Estate project (in particular: the
“Project summaries for CDB Comprehensive Project Financing Facility, dated
the 23rd of August 2011).
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
(www.imanighana.org & http://www.africanliberty.org)
IMANI Center for Policy & education
First Floor, No. 231 Bari House
Flat Top Junction, Off Achimota-Lapaz Rd.
P.O. Box AT 411
Accra, Ghana
Email : info@imanighana.com
Web : www.imanighana.com

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