AfDB Charges Ahead With Successful US$1 Billion Issue

The African Development Bank (AfDB) successfully launched and priced a three-year US$ 1 billion global bond issue on 2 February.

The Bank has a borrowing program of about US$ 5.5 billion for 2010 and after four such transactions last year, the present issue is the Bank’s first foray in the global benchmark market this year. The proceeds of the issue will help finance the growing portfolio of AfDB projects in Africa. In line with the Bank’s top-notch AAA credit rating, the issue was priced at mid-swaps less 2 bps.

The issue was oversubscribed with the order book reaching about US$ 1.4 billion. This oversubscription demonstrates the strong confidence the markets have in the African Development Bank and the Bank’s Africa development mandate, according to its Treasurer, Pierre Van Peteghem. “We have started our funding program very positively this year and, since the issue was a resounding success, we are very pleased. The tight pricing achieved by AfDB, with a broad distribution both by geography and investor type, clearly demonstrates the high value that international investors place on our credit,” he said.

The wide geographical spread across the globe resulted in 39 percent of the issue going to the Americas, 48 percent to Asia, and 13 percent to Europe, Middle East and Africa region.

Confidence in AfDB also meant that all main investor types were attracted to the issue. Central banks and other official institutions accounted for 68 per cent of the issue, while 17 per cent went to fund managers, and 15 per cent to banks.

According to Hassatou N’Sele, Capital Markets and Financial Operations Manager, “the success of this deal is a reflection of the well executed benchmarks we have brought into the market, and the intensive investor works we have embarked upon. We have seen very strong demand from central banks all over the world and attracted investors that had never participated in an AfDB benchmark before.”

The issue was lead managed by Daiwa Capital Markets, Deutsche Bank, Goldman Sachs International and UBS Investment Bank. The co-lead managers were BNP Paribas, Credit Suisse, HSBC, Mizuho and Standard Chartered. “It was heartening that there was virtual unanimity in the banking community on where they saw our credit. No soft-sounding was required for the issue and the momentum we had in the book was so strong. The issue was launched and executed the same day,” the Chief Treasury Officer, Sandeep Jain, stated.

This highly successful issue comes in the wake of the Bank’s first Dealer Event, held in London on 20 January. The event, which was attended by approximately 50 representatives from more than 20 banks, reflected the Bank’s increased borrowing activities on the capital markets. Its purpose was to raise the Bank’s profile on the markets, and to inform the investment banking community of its funding strategy and strengthen relationship with their capital market teams.

Bond Issue Could Mean New Homes For Ugandans

By Joshua Kyalimpa IPS

In a culture where every man is expected to own his house, moves by Stanbic Bank to provide financing for home and auto purchases are welcome.

A story making the rounds in Kampala begins with a man proposing marriage to his sweetheart. "Do you have a house?" she responds. When he responds no, she says, "Try me again when you have grown up."

Robert Okumu, a property consultant in Kampala, says jokes not withstanding, the property market is in distress. "The fact is that everybody - be it a woman or man - would love to have a house but very few can afford it," says Okumu, who runs Ideal Home Property Consultants.

In the past, every man was able to own his home - albeit a hut with a thatched roof - but today's homes, brick and mortar and indoor plumbing at least for the upwardly mobile middle class, are prohibitively expensive.

Almost half of urban residents stay in rented accommodation; the global economic downturn has rendered many people homeless because they cannot afford the rent.

Even for people with stable, well-paid jobs, few Ugandans are able to take out a mortgage in order to buy a house. A fall in the country's levels of savings has led to a lack of liquidity for most banks, who consequently do not offer long-term financing. Of the few banks that do offer home loans, many have drastically reduced the lending amount. The experience of Kampala resident Moses Mukasa is typical. "I was told by my banker to get a letter verifying employment from my job on top of letters from my local councilman, which I did. But still I could not get the mortgage." Mukasa says that his bank, Barclays Bank of Uganda, later told him that the facility of home loans was being stopped save for the staff at the bank.

While access to home mortgages remains difficult government is concerned that a housing crisis looms.

Ugandan Minister for Housing, Michael Werikhe, says there could be 2.5 million homeless people in urban centers by 2020; one million could be without shelter in Kampala alone. Werikhe is convinced that the country can only avert a crisis if drastic measures are taken to accelerate the pace of growth in the housing development sector.

The recent issuance of a long-term bond by Stanbic Bank, part of South Africa’s Standard Bank, could be the beginning of change in the financial sector.

The bond - for about 15 million dollars - is to be used for long-term liquidity and capital management purposes. It means the bank will have money at its disposal for more Ugandans to access credit; buy homes and cars; and to start businesses and other ventures.

The Stanbic Bank bond is the first long-term bond on the Uganda Securities Exchange (USE). It could mean that more people would be able to gain access to home loans.

Stanbic Bank intends to move into the home, asset and vehicle financing areas, which most financial institutions have abandoned.

Anne Aliker, head of Stanbic's Investment Banking division in East Africa, says once the bank raises the money they should be in a position to lend to people seeking long-term loans for housing as well as short-term loans.

Financial analyst Frank Katusiime says this is one of the largest corporate debt issues in the country and will spur the nascent bond market on the USE, which has seen no activity for a long time, as the share price for listed companies, continue to fall.

Simon Rutega, executive director of the USE, says that by Stanbic coming on board means they have confidence in the exchange and the public. This, he says, is good for the country’s economic growth.

Ghana’s Oil Saga and Allegations of Corruption

By Jesse Sunenblick / Special to The Times

A Ghanaian website is reporting that Ghanaian officials may have failed in their efforts to compel the United States Department of Justice to investigate whether the Texas-based oil company Kosmos violated the Foreign Corrupt Practices Act in acquiring a license to the Jubilee oil field. A Ghanaian company, EO that was set up by two political allies of former president John Kufuor, whose party lost the presidential election last year, brokered the deal.

Joy Online claims to have sources in the office of Ghana’s attorney general who say the investigation of the Kosmos/EO deal is more a matter of political retribution.

“Our sources also revealed that as far back as in June 2009, a meeting attended by Attorney General and Minister of Justice, Betty Mould Iddrisu, Duke Amaniampong–widely believed to be a protégé of [former Chief Executive of the Ghana National Petroleum Corporation] Tsatsu Tsikata–General Counsel of Anadarko Robert Reeves, and others, in Washington D.C., USA was briefed that no specific violations of the foreign corruption practices act had been committed in the Kosmos/EO deal in Ghana or the US, and therefore the Department of Justice of the US was not inclined to investigate the Kosmos/EO agreement.

The said meeting was also told that the Ghana government/Anadarko-sponsored international investigators were not able to find any link between a prohibited act and any Ghanaian government official or party official, and that without any such link or evidence; there was no violation of the FCPA.

“In view of the abysmal failure of both Ghanaian and external investigators to find a ‘smoking gun’, the Attorney General is now inclined to pursue the third option of forgery or false declaration to public agencies against one of the partners of the EO Group. There is talk of the said partner allegedly forging signatures of his other partner and his wife for the purpose of registering the EO Group and other related companies with the Registrar General’s Department’’, disclosed our sources at the AG’s Department.

The E.O. Group, a company whose 3.5% interest in Ghana’s first oil find is estimated to be worth over $200 million, never operated any visible office. Investigators say they traced the registered address given by the company as their place of work to Darko Farms.

Meanwhile, apart from hen coops and animal shelter, investigators could not locate any office belonging to the EO Group, whose promoters are about to face trial for various acts, which are said to border on criminality.

The Police Criminal Investigation Department (CID) in Accra say they have uncovered a web of shocking criminal conduct involving the promoters of the Group and some top government officials connected to former President John Kufuor.

According to deep throat sources within government, the evidence against the promoters of EO Group, who introduced Kosmos Energy, a US-based oil company to Ghana and walked away with a whopping 3.5% (worth over $200 million) is very weighty and has the potential of nullifying the legal existence of the company. Investigators say, right from whistle blow, some of the promoters of the EO Group demonstrated their criminal intents by falsifying claims and public documents, which enabled them to obtain shares in the name of the company.

EO Group was formed in 2002, between Dr. Kwame Barwuah Edusei and George Owusu as partners, with the initials of their surnames forming the company name. On the company’s registration documents, George Owusu is said to have forged Edusei’s signature as shareholder and a director.

George Owusu is also said to have forged another signature of his partner on the Oath of Declaration forms.

Dr. Bawuah Edusei, whose interest in EO was predicated on a forged document, served as one of the most trusted appointees of then President Kufuor. He was appointed as ambassador to Switzerland in August 2004 and later posted to Washington to head Ghana’s Embassy in the US.

George Owusu, the other partner in EO Group remained a close associate of former president Kufuor at all times, as well as a close buddy to Kan Dapaah, one time Energy Minister under the Kufuor administration.

In December 2004, George Owusu of the EO Group incorporated another company called Newbridge Hospitality Services Limited – to provide transportation services. On the company’s registration forms, Owusu is said to have once again forged the signatures of one Gustav Acquaye, Rex Opoku and Evangeline Boatey as shareholder-directors.

Again in February 2005, George Owusu, established another company called Equiva Services Limited, to provide human resource services. There, too, he allegedly forged the signature of one Evangeline Boatey as a director of the company on the registration documents.

Whilst serving as the country representative for Kosmos Energy, George Owusu is said to have run the two companies from the office of Kosmos Energy in Accra. Kosmos is said to have allowed George to have his way because he was said to have become too powerful because of his connections.

By 2007, Kosmos was paying George Owusu $25,000 salary as country representative for Kosmos, plus accommodation, a cook, and a car. Surprisingly, whilst paying these salaries, sources say Kosmos brought down to Ghana another expatriate to do the same job for which George was being paid.

In total, George Owusu was said to have received salary in excess of $2 million from Kosmos Energy as country representative over a three-year period.

Surprisingly, soon after George Owusu was questioned by investigators in connection with fictitious invoices during the ongoing probe, Kosmos fired him, supposedly for making certain serious admissions, some of which touched on the credibility of Kosmos.

During a $2.5 million investigation initiated by one of the oil companies in jubilee field, George Owusu was interviewed at the Golden Tulip Hotel in Accra, with an army of four lawyers on his side, where he was again said to have admitted to forging another document.

George, according to sources, claimed that invoices amounting to about $250,000.00 included work supposedly done by EO Group in 2002.

When it was put to George Owusu by US lawyers that at the time he claimed EO Group undertook the said job for which Kosmos was paying them, EO did not exist, George Owusu is said to have told them that one Glick, a top officer of Kosmos asked him to forge that invoice.

Within a month, Glick was fired, by Kosmos. Glick is believed to be back in America. After George Owusu’s allegations, the investigation wrote to Glick for comment but he refused to comment.

On January 21, 2009, the US lawyers who were conducting the due diligence for one of the partners in the jubilee field sought to interview Dr Barwuah Edusei. He gave them 45 minutes, during which he picked and chose which questions to answer.

Contrary to claims from media impresarios that the case against EO Group and George Owusu is an act of President “Mills’ witch hunt,” it has been established that the investigation into the conduct of Kosmos and EO Group preceded the coming into office of the new administration.

It all started in late 2006, when Anadarko, a US oil giant with the capabilities in deep water exploration was invited by partners in the jubilee field to bring on board their expertise.

Since Aandarko was a publicly listed company, they were obliged to conduct proper due diligence.

When Anadarko approached the other companies they were going to partner in the field for information as part of their due diligence, Tullow Oil and Sabre Oil co-operated, but Kosmos Energy and the E.O. Group did not.

Anadarko therefore started a due diligence that was to cost them about $2.5million, using the services of an experienced US Attorney, with 40 years of experience. Anadarko got alarmed when initial investigations revealed several red flags.

Anadarko subsequently deposited their report with the Department of Justice, under the Foreign Corrupt Practices Act (FCPA), 70-day mandatory period. Red flags popped up going through the files deposited by Anadarko. It was Anadarko’s rig that was used in drilling the Mahogany 1 exploration well, that hit oil in commercial quantities.

The EO group first came to Ghana in 2002, with Ennex, who presented a solid technical and financial data.

EO, after three months of data review, wrote to the Ministry of Energy to terminate the agreement with Ennex. EO at the time lacked technical and financial expertise required to undertake exploration activities. Edusei was a medical doctor, whilst George Yaw Owusu was an environmentalist. In March 2004, the license was terminated.

George Owusu claimed to have called Jim Musselman to tell him about WCTP, brought on Kosmos board in late March, 2004, and got them interested.

April 30, 2004: Kosmos and EO Group entered into a letter agreement signed between Kwame Barwuah Edusei, for EO and Glick, for Kosmos Energy.

The E.O. Group, under the said agreement had 3.5%, whilst Kosmos Energy had 86.5%.

The agreement stated that Kosmos would carry the E.O. Group and additionally, pay them $250,000.00

The EO Group then approached GNPC, seeking to substitute Kosmos Energy for Ennex under their previous agreement. On May 12, 2004, the GNPC/Ministry of Energy, in a letter to the EO Group, told the latter that they did not have an agreement. On the same day, May 12, 2004 the EO Group wrote a letter to GNPC, copied to the MOE and President John Kufuor, saying their letter terminating the agreement was a misunderstanding because they meant to terminate their relationship with Ennex and not GNPC.

Three days later, May 15, 2004 the Application with Kosmos Energy was approved and a Memorandum of Understanding (MOU) signed, stating that they have a license. That was a record time, as petroleum agreements generally are preceded by due diligence and hard negotiations to maximize benefits for Ghana.

In July 2004, they signed a petroleum agreement with GNPC/Government of Ghana. The Petroleum Agreement was signed on behalf of the EO Group by Derrick Oppong Agyare. Even though he was neither an official, director nor a shareholder of the company, he was supposed to have done so under a Power of Attorney, granted him by the group.

Kosmos then came to Ghana. They appointed George Owusu as their Country Representative at an initial fee of $3,000 per month, increasing it to $8,000 and then to $10,000.

In July 2004, Kosmos paid the EO Group $75,000.00 as part of the $250, 000.00. In August 2004, Kosmos paid the Group another $75,000.00. In the same month of August 2004, Edusei was appointed Ghana’s Ambassador to Switzerland. The closeness between the last payment and the appointment of Dr. Edusei as Ambassador to Switzerland got Anadarko’s investigators worried. This was because under the FCPA it is an offence for American companies to pay monies that benefit foreign public officers.