US investors in the Aveyime Rice Project have sued the Ministry of Food and Agriculture (MOFA), accusing it of fraudulent misrepresentation in how the firm was established.

Prairie Texas Incorporated in a suit filed by Lawyer Theophilus Cudjoe at the Accra High Court is seeking a declaration that it was induced by fraudulent representation on the part of the Ministry to invest in the company in 2007.

According to them, this investment has caused them financial loss, reports Joy News’ Joseph Opoku Gakpo

The company closed down in 2015, eight years after it was revived in 2007 as Prairie Volta Limited by the former Kufuor administration following several years of dormancy.

At the height of its operations, the company employed more than 300 people on its farms and rice milling sites in the Tongu area of the Volta region. The company produced almost 9,000 tonnes of paddy rice a year.  

Prairie Volta Limited has always had a controversial history. In April 2003, an Accra Fast Track Court sentenced former Finance Minister Kwame Peprah to four years in prison over the project.

Ibrahim Adam, former Agric Minister and George Yankey, a former Director at the Finance of were also sentenced to two years' imprisonment each.

They were found guilty for causing financial loss to the state over the Rawlings government’s decision to hand US citizen Juliet Cotton $19 million in the 1990s for the rice project which went waste because she allegedly misused the money.

When the dust settled, the Kufuor Administration sought to revive the project in 2007 and brought in Prairie Texas Incorporated, led by Ghanaian John VanDyk-Mensah.

The project was officially opened in May 2008 as Prairie Volta Limited by former Minister for Agriculture Ernest Debrah.

MOFA holds a 30 per cent stake in the collapsed factory, GCB Bank 30 per cent and Prairie Texas Limited another 40 per cent. It collapsed about four years ago and government has since taken over the site.

But the US investors now claim they were induced by fraudulent representation on the part of the government to invest, which has caused them to suffer financial loss.

Court documents explain Prairie Volta Texas entered into an agreement which was the basis for sharing the stocks to each of the parties.

Government put the value of the shares at $8.2 million based on the value of existing equipment from which $7.3million was to be given as loan to the company and the remaining about $1 million converted into shares.

The US investors say the value of the equipment as stated by government was overpriced and with the $7.3 million sitting in their books as loans, it’s been difficult to raise money from international partners to invest in the project.

Related: Collapse of Aveyime Rice Project: US investor accuses gov’t of deception

“From the word go, the assets the government brought in was overvalued. Various attempts to revalue the assets to its true value have failed. Now we have $8 million sitting on our balance sheet as loans,” John VanDyk-Mensah who is one of the investors told Joy news in an earlier interview.

“USAID, SNV, IFC and other entities. These are all social investors. They were interested in supporting us. We lost all of that because they had to look into our balance sheet and they always say how did you get this $8 million on your balance sheet?” he said.

Government has now taken over the company fully after it closed down about four years ago. But Prairie Volta Limited is challenging this.

In the court action, the US investors are seeking a declaration that the original value placed on the equipment is unlawful. They also want an order from the court reversing the value placed on the shares and an order appointing an appropriate auditor to re-value the shares.  

They are also seeking an order declaring that the actions taken by the ministry and GCB in administering the affairs of the company since March 2017 constitute offensive conduct.

The US investors are also seeking a declaration that MOFA’s decision to appoint Seth Dumoga and one Mr. Atakli to run the affairs of the company without their approval or knowledge is unlawful. They are also seeking costs calculated at 20 per cent of their shares.