My Two Cents on the Aveyime Rice Farm Project As President of Integrated Rice Company limited (the other short listed company in the Aveyime Rice Project bid process), I have a unique perspective that is worth sharing with my country folk. My involvement started when the landowners including myself met with the representatives of the Quality Grain Company and the representatives of the government of Ghana represented by Mr. Austin Gamey about land discrepancy etc. The Kisseih family’s contribution at the meeting was to suggest that money for any disputed properties be put in escrow until the disputes had been resolved, so Quality Grain could continue with its work. (We were in support of a successful project). My second major contact was going to Mrs. Juliet Cotton’s trial in 2002 in Lawrenceville, Georgia, USA, it was initiated by Mr. Oscar Hudson, Mrs. Cotton’s uncle, who had helped her finance the project. In June of 2002, Mrs Cotton was found guilty on 35 counts of bank fraud and money laundering. She is currently in jail in Tallahassee, Florida. (See, the U.S. government looks out for itself! – There were no Ghanaian representatives at the trial!) At the trial, Mr. Hudson approached me and disclosed, “Something tells me to talk to you.” This began a relationship between him and I. I believe he genuinely wanted the Quality Grain project to succeed. I tried to help him make connections to Ghana in order for him to succeed in re-starting the farm but failed. (The GoG had no interest in his company – once bitten twice shy. I also didn’t have any strong connections). I therefore abandoned supporting the case, but to this day we remain friends, although I have no relationship with him regarding the Aveyime rice project. Subsequently, I read an article on Ghana web which questioned why the chiefs of that area could not come together to take over management of the Aveyime rice project. That suggestion lit a bulb in my head – in that region the landlords are the chiefs. With the help of my older brother, Dr. George Amattey Kisseih, (our family head), we assembled the interested landowners of the farm area (Ahadjie, Aho, Dzre, Kisseih and Konu families) and thus Integrated Rice Company Limited was born. Integrated Rice Company Limited then approached the Ministry of Food and Agriculture with their interest in the Aveyime Rice Project. In September 2006, the government put the project out for bid with less than two months to respond. Integrated Rice developed a credible enough bid to be chosen as one of the two short-listed firms as featured in the newspapers in February 2007. That same month we were asked to submit three different scenarios, which we did promptly. On June 20th 2007 in an article by Mr. Timothy Gobah in the Daily Graphic, “the Minister of Food and Agriculture, Mr. Ernest Debra, told the Daily Graphic that the selection of one of the two investors would pave the way for work to begin on the project. He disclosed that the government will hold the final meeting with the investors before settling on one of them next week and that after the meeting we will continue from there”. There is no ambiguity here! He is saying categorically that his Ministry is meeting with both parties, and that he has not made a selection yet! This was our first serious and overt proof that MOFA was playing favorites. The ministry was not having any meeting of that sort with Integrated Rice; they had also secretly chosen and signed a Memorandum of Understanding with Prairie Texas Inc. The press conference was an obvious cover up for those activities – the minister was lying!!!!! Integrated Rice wrote to the minister the next day (June 21st 2007) pointing out the glaring discrepancy, among other issues. The Ministry’s next suspicious activity was when Integrated Rice was called early in the morning on July 16th, to pick up a letter which happened to be its letter of rejection, of its bid which said, “We wish to refer to your financial proposals you presented in relation to the project and have to inform you that your proposals were not acceptable”. The interesting facts here are: 1. The MOFA is rejecting Integrated Rice for unspecified financial reasons – not for technical reasons. Later this article will show how well the GoG is treating the foreign firm – Prairie Texas Inc. financially – compared to its treatment of the Ghanaian company – Integrated Rice Company Limited 2. The ambiguous financial reasons are not specified. 3. The real reason for expediting the letter to Integrated Rice becomes obvious when, later that same day, July 16th; there is a program on Joy FM on the rice project at Aveyime. The MOFA is just trying to preempt the radio program. It is revealed during the radio broadcast, that, a memorandum of understanding (MOU) had been signed between the GoG and Prairie Texas Company – no one at the interview said they knew the contents of this MOU. Now let’s look at the MOU’s contents in some detail as reported in the Ghanaian media: 1. Introduction The Government of the Republic of Ghana (“Government”) acting through its Ministry of Food and Agriculture (MOFA) started negotiations with Messrs Prairie Texas Inc., the successful bidder, as a Strategic Investor to partner with the Government to develop the Aveyime Rice Project. (The “Project”) The negotiations were consummated with the signing of the Memorandum of Understanding (MoU) between MOFA and the representatives of Prairie on May 16, 2007. The purpose of this document is to provide an update on negotiations and the additional responses from Messrs Prairie. The document has therefore been prepared to address the followings: • Excerpt from the signed memorandum of understanding • Further responses for Prairie On June 20th the Minister of Agriculture is acting as if both companies were still in contention, meanwhile they had already signed a memorandum of understanding with Prairie Texas Inc. on May 16th. He is just trying to deceive the Ghanaian public. 2. Excerpt from the signed memorandum of understanding The MOU entered between the GoG and the Prairie for the running of the Aveyime Rice Project involves the following: 1. A Joint venture arrangement between the GoG and the Prairie with following shareholdings * GoG – 30% * Prairie – 70% On February 16th 2007 when Integrated Rice was asked to submit 3 proposals it was for; 1.outright sale 2.51% / 49% GoG strategic investor partnership of whole project and 3.51% / 49% GoG strategic investor partnership of rice mill only. Where in these three scenarios does the foreign investor get 70% and the GoG get 30%? The GoG has the mill, the farm equipment, the land and then takes 30% for it – are we auctioning off our country to the lowest bidder? 2. The joint venture is to be capitalized with $3,571,429 equity to be contributed by the GoG and the Prairie in proportion to their respective shareholdings as follows: * GoG – $1,071,429 * Prairie – $2,500,000 3. GoG’s contribution will be the value of assets (excluding the land) of quality grains amounting to $8,145,336. (The compensation for the land will be separately negotiated by the GoG and paid for by the joint venture. The GoG is contributing $8,145,336+land(x) +$1,071,429=$9,216,765+x. Prairie Texas is contributing a meager $2,500,000 and yet Prairie Texas Inc. gets 70%, whilst Ghana gets 30% - which math class did you take? Why don’t you give the same opportunity to the Ghanaian landowners? – Integrated Rice Company Limited. 4. The difference between GoG’s total contribution of $8,145,336 and its capital contribution of $1,071,429, amounting to $7,073,908 will be loaned to the joint venture under loan agreement to be entered between parties. I won’t go over the math here again! 5. Prairie’s contribution will be $2,500,000 cash injection to be paid or a commitment made by 30 days after signing the MoU. Integrated rice can put up the $2,500,000, plus the GoG has not paid the landowners for having the land for over 30 years 6. GoG will not contribute any further financing to the project and its 30% equity will in the future be offloaded to Ghanaians. 7. The amount required for the project to take off will amount to $3,000,000 (excluding the estimated compensation for land). This amount will be financed with the cash equity of $2,500,000 from the Prairie and a term loan (without any GoG guarantee) to be contracted Prairie for the JV 8. Prairie will be given six month to organize the necessary logistics for the commencement of the project. 9. The project will initially import paddy rice for milling until local rice production can meet the capacity needs of the mill 10. The JV can apply the necessary incentives from the Ghana Investment Promotion Center; • the GoG’s 30% equity is acceptable under the following conditions: * the other shareholders apart form GoG will be given the option to buy ½ (15%) of the GoG’S 30% equity as follows: Instead of the foreign company having 49% as in the 2 scenarios, they now have 85%  option period: the option will be exercise between the 4thand 8th anniversary,  pricing will be 3 times the average amount annual profit for the last preceding 3 years plus any accrued profit to the 15% to be bought,  payment will be made in 4 equal installments with each balance attracting an annual interest of 8 % Board Representation • GoG will have 2 seats and Prairie having 5 to 6 seats on the board. • GoG’s Board seat will reduce to one after the exercise of the option. At this juncture, the GoG has no bargaining power. Incentives • They want a 20% waiver on import duty for the paddy imports for 54 months or till GoG’s loan is fully repaid whichever is longer. Since they won’t pay for the loan this is a forever agreement! • 100% of the waiver incentive will be used for the project development, the out grower scheme, etc. at the end of the waiver period, the project can still apply for extension of this incentive. Bank Loans There will be a bank loan of $3,000,000 and an additional inventory financing facility of $6,000,000 Further Responses from Prairie Texas Inc. After the signing of the MoU, Messrs Prairie has come back with the following issues which they claim are condition for investment by their prospective investors: MOFA never discussed any of these options with Integrated Rice • They have accepted the valuation of the assets of the quality grain amounting to $8,145,336 to be contributed by GoG • They have accepted the GoG loan of $7,073,908 with the following conditions: * The loan will attract an annual interest of 8% * The loan will be repaid over a 12 year period with a 2 year moratorium * The annual debt servicing amount should not be more than 15% the project’s previous year’s net profit, and No profit no payment!!! * At the end of the 12 years if the loan is not fully paid the balance will not be paid No profit no payment!!! It is the fiduciary responsibility of the corporation (Prairie Texas Inc) to make the most profit for its shareholders. So if it can do the project without paying the loan, that is what it has to do! They get the project for FREE!! Land Compensation • They have placed a cap of $300,000 as compensation to be paid for the land, • The payment terms for the land will be in three equal installments as follows * First $100,000 when funding is in place * Second $100,000 on the 18th month after the first payment; and * Third $100,000 on the 36th month after the second payment. A foreigner determines the value of the Ghanaian citizen’s land - Less than the price determined by the GoG!! Mind you, the GoG has not paid for the land for 30 yrs +, but now the foreign company dictates what and when it will pay the landowners!! I deduced from the previous assertions that: 1. The public procurement act 663 was not followed toward the award of this project – it was not transparent, suggest corruption “kokofu ballbo” 2. The Constitution of Ghana was not followed in the acquisition of our land for this project – 1992 constitution article 20. 3. Our former Minister of Public Sector Reform Dr. Paa Kwesi Nduom expressed his vision in an article in the Daily Graphic on August 1ST 2007 as follows: “He also expressed concern over the increasing rate at which foreigners were being given the economy of the country under the guise of foreign investments and blamed it partly on attempts to woo foreign investors with all manner of incentives. So - called investors, over the years have trooped to high - level places in government – led, incidentally, by Ghanaian agents - without many positive results. Yet we continue to go abroad looking for the proverbial foreign investor. Many turn out to be people looking for free rides on the backs of Ghanaian taxpayers,” he explained. “Consultancies and contracts of all sorts go to foreigners who end up sending their earnings outside to develop the economies of their countries. Without a domestic private sector, the economy cannot grow at the 8% and above rate needed to get us out of poverty and into the rank of middle - income countries,” Dr Nduom added. He advocated a firm and aggressive policy of domesticating the economy, which would put the Ghanaian at the center of the private sector in Ghana; because it was the job of the government to prepare its people and give them the necessary opportunities to overcome inexperience. “During the General Acheampong regime, there was the policy of giving the commanding heights of the economy to Ghanaians. We need to return to a refined form of that policy. Osagyefo Dr Kwame Nkrumah built industries to give the local economy opportunities to develop, using our raw materials,” he said. Dr Nduom said the two leaders undertook such deliberate policies because no country had prospered on the back of exporting raw material to feed industries abroad. Dr. Nduom argued that Ghana needed domestic businesses that exported products abroad to break out of poverty because those businesses provided sustainable jobs and living wages and salaries for the people. He also challenged Ghanaians living abroad who had had first - hand experience of how the American government- local, state and federal - provided incentives, opportunities, technical assistance and low cost financing to support its entrepreneurs to show the way forward. This project is a prime example of the minister’s concerns. Even Mr. Anderson of Prairie Texas Inc used to think that way!!! Refer to his Volta rice project – feasibility report vol 1 p143, “it means listen to everybody’s advice, but run your business in the best interest of Ghanaians” – the MOFA is going contrary to this thinking! 4. The project’s fundamentals – equipment, mill, land, water, equity (owed the landowners for over 30 yrs of government use).are already in the Tongu district, why separate them? 5. The MOFA questioned Integrated Rice’s financial proposal then turns around and gives financing to Prairie Texas Inc. Prairie Texas is now going to Ghanaian banks like the Ghana commercial bank, Stanbic etc looking for money. I thought they were considered an outside strategic investor! – Shame on us. This facility should be rightly awarded to the Ghanaian company. – Integrated Rice Company Limited. i. Integrated rice is owned by the locals and has the support of the locals. To our media’s credit, there have been numerous articles (in the local press) in support of Integrated Rice for this project. I have yet to see one article supporting the GoG’s point of view. Is the GoG representing Prairie Texas or Ghana? What is the advantage of awarding this project to Prairie Texas as compared to Integrated Rice? ii. On this same project site the GoG has tried 3 other groups a. Agricultural Development Company b. Nippon Koi Aveyime rice project c. Quality Grain rice project. Enough is enough – we have waited patiently as the GoG has tried 3 other groups on our property without any compensation. Now we want to control our destiny. Release our land to us, pay us our back rent, and negotiate on the equipments with us. We should also be given a chance to mess up our own property! We believe we will succeed in rice production for Ghana! Any one of the above factors should have given the project to Integrated Rice Company Limited, but no . . . . .!!! To stop this hypocrisy, the land owners have decided to take this matter to court – they will not allow the government to use the police power of the state to destroy a genuine Ghanaian enterprise. We hope our court system will be just. The GoG can reverse this abominable situation quickly by 1. Abrogating the agreement with Prairie Texas Inc. immediately. 2. Transferring the assets of the project to Integrated Rice Company Limited now, with the same terms you gave the Prairie Texas inc. (what is good for the goose is good for the gander – but seriously as Dr Ndoum’s article stated “he advocated a firm and aggressive policy of domesticating the economy which would put the Ghanaian at the center of the private sector in Ghana”.) 3. Any Ghanaian allowing Ghana to be “raped” like this should be disciplined – whistle blowers can be given special treatment to allow us to get to the bottom of the facts quickly. 4. Any company doing business in Ghana, inimical to the interest of Ghana, should be banned from doing business in Ghana and be fined! 5. The process should be expedited, so rice production can start in the interest of Ghana. Every day delayed, is causing financial detriment to the state. (Other ministers have been jailed for this same reason, for this same project). 6. Every Ghanaian should do what they can to reverse this decision, from the President on down: a. The president should ascertain the facts, if true; he should lead the fight to reverse the decision. b. The politicians should vehemently oppose the decision and reverse it – be involved in the dialogue. c. The Presidential Candidates should use this opportunity to register their opposition to corruption. d. The news media should continue their opposition to the award of the project to Prairie Texas Inc – the modus operandi of the GoG in such issues is to keep quiet until the fervor dies down – don’t allow this to occur. e. We, regular Ghanaians, should register our protests – letters to their representatives, e-mails, radio stations, papers etc. We collectively need to stop this behavior. These behaviors are exactly what are causing the downfall of our country! The more the government gets away with such decisions, the more commonplace it becomes, to the detriment of the average Ghanaian - STOP IT NOW! In our view the process was conducted in favor of Prairie Texas inc. using Integrated Rice as cover. We hope that: a) Zero tolerance for corruption b) Transparency c) Food security d) Ghanaian entrepreneurship, etc are not just slogans. Long live Ghana Thank you Authored by Dr. Amanarh Kisseih President – Integrated Rice Company Limited