Former Energy Minister Albert Kan Dapaah is before the Judgment Debt Commissioner explaining the sale of GNPC drill ship in 2001 to pay for a debt owed Societe Generale.

He has been called to explain the circumstances under which a drill ship was sold.

Kan Dapaah gives a background to Ghana's oil exploration activity which began in 1878.

He says oil production at Saltpond oil field began in 1978 and was terminated at some point in 1995

It was a policy by GNPC, then headed by Tsatsu Tsikata that there had to be crude oil somewhere in Ghana and therefore used the corporation's own resources to explore for oil so that all the benefits accrued from the successful exploration will come to Ghana. The corporation then acquired a number of marine assets to explore for hydro carbon.

Societe General then became a factor in GNPC affairs. Oil exploration is expensive and to the extent that GNPC did not get budgetary support it undertook commercial activities and financial engineering programmes to raise funds for the exploration.

One of the arrangement was the hedging facility with Societe General which began from 1987- to around 1998. The hedging was entered into with the projection that by 1998 oil will be struck in the Tano Basin.

But the 1998 projected date came with no success in oil find. GNPC was then saddled in debt.

The debt hovered around 35 million dollars but the debt increased to 40 million dollars and when GNPC could not pay Societe General, the bank sought to recover its money.

In the late 90s GNPC was subjected to severe criticism from people who did not believe in the ideals and philosophy that GNPC could fund the oil exploration. Tsatsu Tsikata was subsequently removed as boss of the GNPC and appointed as Energy Advisor.

In the midst of the GNPC challenges, JA Kufuor was then elected in the 2000 elections. Part of the major decision by the Kufuor government was to streamline operations at the GNPC.

GNPC had several challenges- it had no funds to pay workers; its creditors were on the neck of the corporation to pay its debts. Structures had completely been broken down. Overwhelmed by all these challenges at GNPC, Cabinet considered to liquidate the corporation or file for bankruptcy but first had to seek expert advice. That advice was sought from JB Da Rocha and BA Mensah renowned accountants all of whom advised against filing for bankruptcy and liquidation. They advised government to restructure the corporation.

In pursuit of restructuring and refocusing of the corporation, a three member committee was constituted, headed by Prof Adae. At the time there was no board and it was the decision by Cabinet that the board should be constituted only after the Prof Adae committee was done with it's recommendation.

In August 2001, with the advice of cabinet, GIMPA was appointed as resident consultant for GNPC.

In the midst of the GNPC challenges, JA Kufuor was then elected in the 2000 elections. Part of the major decision by the Kufuor government was to streamline operations at the GNPC.

GNPC had several challenges- it had no funds to pay workers; its creditors were on the neck of the corporation to pay its debts. Structures had completely been broken down. Overwhelmed by all these challenges at GNPC, cabinet considered to liquidate the corporation or file for bankruptcy but first had to seek expert advice. That advice was sought from JB Da Rocha and BA Mensah renowned accountants all of whom advised against filing for bankruptcy and liquidation. The advised government to restructure the corporation.

In pursuit of restructuring and refocusing of the corporation, a three member committee was constituted, headed by Prof Adae. At the time there was no board and it was the decision by Cabinet that the board should be constituted only after the Prof Adae committee was done with it's recommendation.

In August 2001, with the advice of cabinet, GIMPA was appointed as resident consultant for GNPC.

The Kufuor government then decided that the search for oil was to done by the private sector instead of the GNPC and it was decided at cabinet level to do away with some of the marine assets.

Nic Mends, then Vice president of Societe General came to see him [Kan Dapaah] in connection with the hedging losses and came to discuss a negotiated settlement.

It was agreed at some point that the settlement debt was to be a little over 14 million. But Societe General had gone to court to recover its money. On 6 June 2001, Societe General procured a judgement from an English court in which GNPC were to pay an amount of 40 million dollars in debt with over 7million interest.

The Drill Ship was used as a mortgage for some of the debt. Societe General then ordered for the arrest of the drill ship in Oman.

KT Hammond was then discharged by Cabinet to France to meet with Societe General and to see how best to protect the interest of Ghana.

At his first meeting with Societe the basis of judgement had changed and the original figure of 14 million was no longer on the table

KT realised that the ship had been mortgaged for about 30 million dollars and procured the court order for the selling of the ship in Oman. At that point Societe Gen needed no government permission to sell the ship. It was effectively theirs.

It was agreed that the ship was to be sold for 24 million dollars. Included in the package is the copy of the sales agreement

GNPC was indebted to Societe General to the sum of 47 million according to the UK Court and with some interest charges the debt soared to over 50 million dollars.  KT managed to beat the figure down from the over 50 m to 19 million dollars.

Cabinet then approved of the settlement agreement and gave KT Hammond the power to enter into the negotiated settlement.

It was resolved by Societe General and the government to sell off the drill ship at a cost of 24 million dollars. Per the sales agreement, the buyer was to pay directly to Societe General an amount of 19 million dollars

A note from the bankers of the buyers, a payment order which shows that 19 million dollars was paid directly have all been included.

The money never came to the Ghana government.

A further 4.5 million dollars was paid on 16 July 2001 to constance and constance acting on behalf of the government of Ghana. Out of the 4.5 million it was agreed that an amount of 100,000 dollars be paid from one million dollars to people who were owed some money for services rendered to the ship.

GNPC gave a memo listing the number of people who were owed and who deserved to be paid. An amount of 50,000 pounds was also paid to lawyers.

The remaining amount of 900,000 dollars from the one million was paid into an escrow-account and was paid to suppliers of GNPC.

Where did the 3.5 million go?

The balance of 3.5 was paid on July 18, 2001 by a Barclays bankers draft into the government of Ghana UK account.

This payment is easily verifiable. But as to what the money was used for subsequently, i cannot say. The Accountant General should be able to explain that to the commission.

 

KT Hammond appears before the Commission

KT Hammond, who was then a Deputy Energy Minister during the controversial sale of the drill ship and who played a key role in the negotiated settlement with Societe General takes his turn.

He presents copies of newspaper reports he claims made prejudicial statement about the case and applauds Kweku Baako Jnr for putting out the truth at all times.

KT Hammond continues from where his boss left off, discussing the details of the losses GNPC incurred in respect of the hedging policy.

Sokpor, lawyer for the Commission demands why Hammond was not accompanied by officials of the GNPC or the Attorney General's Office when he went to negotiate the settlement with Societe General in London.

KT Hammond says GNPC was in such a mess, nobody needed their advise on anything. He would not comment on why no official from the Attorney General went with him. He says he had practiced law in London for 10 years and cabinet thought he was.

Sole Commissioner Justice Yaw Apau is unhappy the Attorney General then did not follow up the court case which the GNPC had begun against Societe General and sat down until a default judgement was given by the UK court before it then sent KT Hammond to go negotiate.

After negotiation; it was ready for sale of drill ship

By April, 2001 GNPC was in the process of selling the ship. A document signed by Opoku Mensah and dated June 12, 2001 sale of GNPC drill ship discoverer 511.

Another document dated June 6, 2001 addressed to Dr Ofori Kwao boss of GNPC with an offer to purchase discoverer 511.

It is at this stage that he was informed there is a solicitor called Constance and Constance to help with respect to the sale of the ship.

Sorkpor asks was it fair that the government relied on the valuation report by the buyers of the ship without any other independent valuation?

Hammond responds and says to the extent that the company was already advisors of GNPC it was not a difficult decision to rely on the valuation report by the said company who were themselves buyers.

After the ship was sold a press conference was held by the then minister to inform Ghanaians on the circumstances surrounding the sale.

Tsatsu Tsikata then held a counter press conference and at no point did he make any comment about the amount derived from the sale of the ship. If it was the case that Tsikata thought the government of Ghana had been shortchanged in the sale, he would have raised it in his press conference.

Justice Yaw Apau asks who gave the instruction for the remaining 3.5 million dollars to be paid into the government of Ghana account in the UK.

KT Hammond says it's been 12 years and he may have forgotten who exactly gave the order but he can say for a fact that the government of Ghana advised that the cheque of 3.5 million dollars be given to the acting UK High Commissioner, Ambassador Kpodo who then paid the amount into the government of Ghana account in the UK.

Justice Yaw Apau reminds him about comments he, Hammond, made on radio which suggested that he had brought a cheque of 3.5 million dollars and handed it over to President Kufuor.

Hammond says that may be a slip. It was a coloured photocopy of the cheque of 3.5 million he brought to Ghana as evidence and not the original cheque. The actual cheque was handed over to the acting UK High Commissioner who then paid into the Bank of Ghana account.

Mysterious document

Almost in tears, KT Hammond presents to the commission a 65 paged document which spells out how the 3.5 million dollars was disbursed. He says he and his boss Kan Dapaah were chastised unnecessarily for embezzling the amount.

He says he found in his pPigeon hole in Parliament the document detailing how the money was disbursed in 2003-04 and hands over the document to the Commission.

He does not know who dropped the document into his pigeon hole but says it was all part of God's intervention to exonerate him.