On 5th January 2012, IMANI Center for Policy & Education opened an investigation into the February 2011 issuance of a private developer’s license to Hasan Investment Ghana Limited, a subsidiary of China Hasan International Holding Ltd, a People Republic of China domiciled company. The investigation was part of our organisation’s ongoing probe into the preparedness of Government of Ghana to trigger disbursements from the pledged $3 billion China Development Bank (CDB) master facility. Our initial investigations raised serious doubt about the capacity of the relevant government departments and agencies to perform robust due diligence and feasibility planning in order to facilitate the flow of the funds for certain critical projects, including the Sekondi Industrial Estate. To assess the level of due diligence and feasibility planning that went into the government’s efforts to secure the CDB facility, IMANI had subjected a few projects including the Sekondi one mentioned above to detailed scrutiny. IMANI’s focus on this project and other Tranche A1 loans under the CDB facility was dictated by the government’s own stated priority of industrialisation. The tranche A1 loans are considered critical in this regard. The loans are expected to fund a railway system to cart raw minerals from the western region into an export processing zone in Sekondi - the above-mentioned Sekondi Industrial Estate - for value addition and onward export through a revamped port at Takoradi. The oversight of the industrial estate component of the overall project is vested in the Ghana Free Zones Board. The government describes it in its strategic brief on the CDB facility laid before parliament as a “flagship initiative of the Better Ghana Agenda”. The industrial estate is at the root of a promise to transform the Sekondi town into a modern metropolis. 50,000 jobs were promised to the region’s youth in the first phase alone. In the circumstances, IMANI was compelled to take a critical look at this project given its importance and centrality in tranche A1 of the CDB facility. Our previous publications focussed on our strong doubts about China Hasan International’s capacity to raise funds for the project based on our assessment of its track record in Angola (their only other operating country apart from China and Ghana). A secondary issue was the confusion over China Hasan’s addresses in Hong Kong and Beijing. Imagine our shock then when on the 16th of June 2012 it was reported that Parliament has approved a subsidiary credit agreement between CDB and the Republic of Ghana to make available $67 million to the industrial estate project, with Hasan International still listed as the only strategic investor. We concluded previously that China Hasan could not raise the reported $4 billion to build the industrial estate because of serious delays with its ongoing projects in Angola, most of which were still at concept stage many years after the initial announcement, even though much smaller sums than what is required for Sekondi are involved. We remain unconvinced that it can raised the “$800 million to $1 billion” currently envisaged in the agreement approved by Parliament. Since there was always the possibility that China Hasan’s inability to raise financing for its Angola projects was connected with a lack of exposure to Africa on the part of its traditional partners in China, we decided, upon hearing the news of the parliamentary approval, to conduct some due diligence on China Hasan and its subsidiaries/affiliates in China itself. This was merely out of extra caution since the Angola track record was sufficient for our analysis. We focussed our due diligence on the most impressive China-related item on China Hasan’s resume. On its website (duly cached for future reference since the company has a habit of tweaking its website in response to news coverage), China Hasan mentions its majority shareholder stake in the Nanchong City Commercial Bank. http://en.hasan.cc/news_detail_sy/newsId=42fb1292-2a40-4cec-bb25-3421277de639&comp_stats=comp-FrontNews_list01-1275383990021.html Because this bank is a reasonably well regarded tier-2 city bank, we felt that it was important to delve deeper. Again, this was out of extra caution since Nanchong’s entire loan portfolio is much smaller than the original capital requirements of the Sekondi project. Still, as the most impressive item on China Hasan’s mainland China resume, it deserved a closer look. We have received a list of all the major shareholders of Nanchong Bank. The entities with shareholding above 3% are: DEG Sichuan Mingyu Group Co., Ltd Nanchong Lianyin Trade Co., Ltd Sichuan Jiaxin Trade Co.,Ltd Chengdu Yunji Real Estate Development Co., Ltd SIDT SBFIC (technical assistance) Nanchong Municipality Consequently, we are unable to confirm China Hasan’s shareholding stake independently of the company’s own claims. It follows that we must be extremely sceptical about giving this claim by Hasan any credence. The only independently verifiable connection between China Hasan and the Nanchong City Commercial Bank (NCCB) we have been able to establish is a 0.2% stake, acquired through an affiliate, in a partially owned microcredit subsidiary of NCCB known as: Yilong Huimin Cunzhen Bank. It is important to emphasise that there is no evidence of Hasan’s ownership of any stake at all in Nanchong Bank. Notwithstanding parliament’s action, we still call upon the government of Ghana, and in particular the Ghana Free Zones Board (GFZB), to immediately take steps to attract a third, more financially capable, partner on the Sekondi Industrial Estate project. We are very worried that several months after signing a memorandum of understanding with China Hasan, the GFZB has failed to conduct further checks to ascertain the company’s capacity to develop the industrial estate. Such an important project requires more urgent and diligent efforts on the part of the GFZB. We are also worried about the continued silence on the part of the Ministry of Finance, regarding the amendment of the project summaries brief it submitted to Parliamentarians in connection with their review of the CDB Master Facility Agreement. In view of a number of private messages we have received following our publications about this matter, we would like to strongly clarify that we have absolutely no qualms about the continued expansion and deepening of links between Ghana and the Chinese private sector. We strongly endorse and encourage these links, as we believe they provide greater diversity in our development cooperation efforts, thus improving the strategic choices for global partnerships available to this country. Nor is our effort driven by any ill-will whatsoever towards China Hasan. In fact, we believe an accelerated effort to find a third, more financially capable, partner on the project can only lead to quicker progress, thus opening up additional opportunities, including sub-contracting opportunities, for many companies. Commensurate with its capacity, China Hasan should be free to pursue any of these opportunities, subject to the same due diligence constraints as all other interested companies. The ball is now in the court of Ghanaian public opinion. IMANI is hereby closing its investigation into this matter.