The Executive Director of the Institute for Energy Policies and Research (INSTEPR), Kwadwo N. Poku, has alleged that the acquisition of $36 million electric meters in 2016 was a grand scheme designed by some NDC appointees to defraud the state.
He has, therefore, petitioned the Special Prosecutor’s Office to investigate the circumstances under which the deal was cooked, but the country never benefitted even though all the contract sum of $36 million was paid.
In his petition to the Special Prosecutor, Kissi Agyebeng, the Executive Director said that “the reports show that key appointees within the NDC government in 2015/16 planned this transaction to defraud the state through acquisition of electric meters for ECG.”
“After our press release on this transaction and published by various leading newspapers, the Institute received further information and reports which affirmed our initial belief that this transaction was a grand scheme of fraud. We have therefore submitted these reports to the Office of the Special Prosecutor to investigate and prosecute this former government appointee and their accomplice,” he said.
He explained that “what is disturbing from this information is that the Energy sector has become an area where people entrusted with the finances of this country, seem to siphon millions of state money into private accounts. Most of our civil servants will stand aloof because of job security. All the checks and balances in our public sector are ignored when a Minister writes that money should be moved, or this payment should be made.”
“We have come across numerous questionable payments totaling over GH¢112, 596,555.88 to a company called First Grace Limited within 2015 and 2016. There is also a payment of GH¢238,633,370.61 paid out to 21 companies through a government agency, for whom these companies have done no work or engaged in a contract. All these information is included in our petition to the Special Prosecutor.”
According to Mr. Poku, the Ministry of Power through the Ministry of Finance under the Mahama-led NDC administration, made a payment of $36 million to a company called L&R Investment and Trading Company Limited for the supply of single-phase and three-phase electric meters to Electricity Company of Ghana (ECG).
He said the total contract price for the supply of the meters were $39,999,566.44, to be supplied over a period of twenty-six (26) weeks, but when the contract was signed, an advanced payment of $12 million was allegedly made to L&R Investments plus a Letter of Credit (LC) of $24 million and ever since, nothing has been heard about the deal.
According to him, in September 2016, the Ministry of Power wrote to the Managing Director of ECG, informing him of an $80 million financing secured by the government for the procurement of electric meters and said the letter stated that local Ghanaian companies will be given $40 million.
“Messrs. L&R Investments and Trading Company, whose local representatives are Messrs First Grace Limited, were given $40 million. The ministry’s letter instructed the managing director of ECG to initiate discussion with the said suppliers with the view of entering into contract for the supply of these electric meters. The ministry also asked for immediate response to their letter to facilitate cabinet and parliamentary approval,” Mr. Poku alleged.
He continued that “the management of ECG on their part upon receipt of the ministry’s letter engaged Messrs. L&R Investments and six local Ghanaian companies. After ECG had evaluated the proposal from L&R Investment, a pre-contract meeting was held in October 2016, between the technical team of ECG and the Managing Director, in the name of Mr. Tao Wenhui for L&R Investment.”
He said “at this meeting, the Scope of Supply, Technical Classification, Due Diligence, Pilot Studies, Factory Acceptance Tests (FAT) and Training of ECG metering Staff were discussed and agreed,” adding “the two key conditions before the supply of the meters after signing the contract were the pilot study to assess the meters for two months and the Factory Acceptance Tests (FAT).”
Mr. Poku said that after the contract was signed and L&R given an initial payment of $12 million, the meters that were to be provided as samples (200 electric meters) for the pilot studies were not sent to ECG and the agreed travel of three representatives from ECG to undertake the Factory Acceptance Tests in China before the manufacturing of the said meters did not take place.
“Without any of these conditions being met, the management of ECG was sent shipping documents for containers of meters at Tema Port. ECG informed L&R Investment that they cannot accept the containers because they have not followed the process agreed to as per their contract. After months of back and forth with L&R Investments, the containers of meters were cleared from the Tema Port to stop the accrual of demurrage. The meters in the containers were not the specification as per the supply contract,” Mr. Poku alleged.
According to Mr. Poku, when the $12 million was paid, only $4 million was transferred to prepare for the containers that brought the meters that did not meet the specifications of the ECG.
“INSTEPR was told that the said contract was terminated in 2017 after legal consultations on the non-performance by L&R Investment. This company after months of not conforming to the agreed conditions of their contract, went ahead to discount the $24 million Letter of Credit (LC) given to them under the contract. We have sighted documents that state that on the 16th of August 2017 at a time when Capital Bank Limited had ceased to be a bank under the laws of Bank of Ghana, Capital Bank discounted the LC and made a payment of USD $22.5 million to L&R Investment,” he added.
He said INSTEPR wants the government to find out why no action has been taken in four years to trace the people behind L&R Investment and Trading Company in Ghana and also probe why the initial $12 million was paid to First Grace Limited, and the people behind this company, as well as Capital Bank’s role in the whole deal.
“We do not want to draw any conclusion since this matter should be under investigation, but I am sure every Ghanaian will agree with me that we need some answers and accountability now from our leaders on this fraudulent transaction,” he added.
By Ernest Kofi Adu