After disagreeing with the then Minister for Energy, Mr John Peter Amewu, on his description of the Power Distribution Services (PDS) Limited deal as fraudulent, the Appointments Committee of Parliament wondered how Mr Andrew Kofi Egyapa Mercer would be able to work at the same Ministry if approved.
But Mr Egyapa Mercer, who would serve as a Deputy to the Minister for Energy if approved by the Committee, indicated that he doesn’t see any difficulty in going to work at the Ministry.
According to the Nominee, his disagreement was based on the word ‘fraudulent’, used to describe the deal by the then Minister and not the termination of the contract.
“Mr Chairman, you are right, I disagreed with the then Minister of Energy for the choice of words in describing the transaction as fraudulent and I still disagree with him now. Because, Mr Chairman, I read the statement that was issued by the Minister of Information, the official mouth piece of the government of the Republic of Ghana and in that statement the Information Minister said that government had detected some material breaches … nowhere in the official communication was the word fraud used.”
Mr Egyapa Mercer made this assertion when he appeared before the Committee yesterday and most of the questions asked by the members of the committee were about the PDS deal.
Mr Patrick Boamah, MP for Okaikwei Central, Alhassan Suhuyini, MP for Tamale North, Mr Mubarak Mohammed Muntaka, MP, Asawase, Mr Alexander Afenyo Markin, MP, Efuttu and Mr Haruna Iddrisu, MP, Tamale South all asked questions on the PDS deal.
Below is a transcription of the questions and answers that ensued between the committee members and the nominee;
Nominee gives an account of his involvement in the PDS transaction
Patrick Boamah: The famous ‘Informer Newspaper’ has had your name and pictures on its front page connecting you to the PDS transaction. I never knew your role, I don’t know if you were a Minister at that time. I don’t know what you did, tell us so that you can clear the minds of Ghanaians and all of us who have been seeing your name and pictures on front pages anytime this issue arises.
Egyapa Mercer: Mr Chairman, to directly answer your question, I did not play any role whatsoever in the PDS. I am not a Director of PDS neither am I a shareholder of PDS, and so it’s interesting the kinds of assertions that have been made.
However, Mr Chairman, in 2014, I was engaged to incorporate a company for a client of mine who asked me to be Director/Secretary, which is pretty much usual with law practitioners. It turned out that that company, which is called TG Energy Solutions Ghana Ltd., went into some incorporated joint-ventureship, which is usually referred to as some consortium that then bid for the ECG PSP processes and ultimately when they won, incorporated a company called PDS that then contracted with the government of Ghana.
Mr Chairman, the corporate law principles are quite clear that a company is separate and distinct from its shareholders and that PDS, when it was incorporated, had its own Directors and Secretary. I took the pains to actually do an official search before appearing before your committee and it is clear who the directors of PDS are and who the shareholders of PDS are.
Nowhere is Andrew Egyapa Mercer found in these two categories. But like I said, it is interesting that because the documentation for the transaction had my name as Director in one of the shareholders of PDS, then it became easy to associate me with PDS and create the impression as if to say I was connected to PDS, but the truth of the matter is that I am not a Director of PDS nor a shareholder of PDS.
Indeed, I am not even a shareholder of the company that I incorporated, so question of interest does not arise and has never arisen because interest as opposed to fiduciary, which is what directors are.
It is quite clear interests are transferable, they are either real or …, they are either tangible or intangible. These are properties. It’s a legal construct that is transferable. My role as a Director in TG Energy can never be described as transferable to entail me having an interest in that transaction.
Answers questions on Conflict of Interest, disagreement with Minister on use of the word ‘fraud’ and posture at the ministry when approved
Alhassan Suhuyini: On the subject of PDS, you have answered a couple of questions but I would like to revisit it, especially because we have to remember how the state lost $190m of the Millennium Challenge Corporation Facility as a result of this deal.
In your earlier answer you indicated that a client requested you to incorporate a company, TG Solutions, which eventually became part of PDS, that got the opportunity to manage a strategic national asset such as the ECG and later got that contract terminated on allegations of fraud.
I am not a lawyer, but I would like to know two things: when clients request lawyers to incorporate companies, is it permitted for the lawyers to be Secretaries, Directors and Lawyer at the same time? Because records show that TG Energy actually had you as their Director and Secretary and had your office address as its business operation center. Is that what is done ? In the face of parliament’s approval of PDS, giving your relationship with TG Solutions, don’t you think your involvement in the 7th Parliament’s approval amounted to a conflict of interest? Those are the two things I want to find out.
Egyapa Mercer: I will take the second aspect first. Chairman, in the first place you can disclose an interest where one exists, but if you don’t have any interest I fail to see how you can be called upon to declare an interest. As I have indicated, the transaction that the government of Ghana executed with PDS as a legal entity separate and distinct from its shareholders, I do not have any interest in PDS and so there was no requirement on me to make any disclosures. Mr Chairman I think it’s important to emphasise that…
Afenyo Markin interrupts
Afenyo: When you say interest, are you saying you are not a shareholder, is that the point you want to make?
Egyapa Mercer: That is so and I was going to further explain that interest is legal construct. It is in the nature of a property, it’s transferable. Fiduciary, which is who a director is, is not transferable, it’s not a property. It’s an appointment at the pleasure of the owner of the entity and you are subject to termination without recourse to any relief.
That was the relationship that existed between myself and TG Energy and so the parliamentary approval of a transaction between the government of Ghana and PDS would have amounted to busy-body if I had stood in the chamber and said: “Mr Chairman/Mr Speaker I have an interest,” because I did not. And so I cannot be accused of having been conflicted when I participated in the approval process in parliament.
The first question relating to lawyers being requested, I am glad you used the word request. If clients request you (lawyer) to perform certain duties for them, you are at liberty to either accept or decline the request. It is not unusual for the lawyers to act as directors, secretaries to entities that they are engaged to incorporate and that’s what I did.
Suhuyini: My question is whether that’s the appropriate thing to be done. It may not be unusual but it may be inappropriate.
Egyapa Mercer: Mr Chairman really the question of appropriateness does not arise at all. Directorship of companies and company secretarial job is the field of everybody who has competencies that the owner of a business desires to call upon to play that role and so to that extent I did not see anything wrong with that. Questions of where they were operating from is important and Mr Chairman if you will permit me to draw a distinction between registered office and pace of business, its’ completely different. Registered office is a requirement of law and of course indeed place of business is also a requirement, they can be on e and the same or they can be different from each other.
Typically, lawyers, accounting firm, because of the need for you to have a place where processes can be served on the company, use lawyers’ offices, Account firms as registered office and it’s not unusual at all and so yes, TG Energy was incorporated with it registered office as the law offices of Mercer and company. If I may add, that was not their place of business.
Suhuyini: So in my earlier preamble, I alluded to that fact that this PDS contract was terminated on grounds of alleged fraud or fraudulent misrepresentation. You were very vocal in the news at the time in defence of PDS stance and disagreed in some cases with the assertions of the sector Ministers, here being the Deputy Ministers and the substantive Minister, that PDS presented a fraudulent demand guarantee.
You defended that and you thought the Minister misspoke and the Deputy Minister perhaps did not get it right. Now you are being vetted and if approved to go to the same ministry where this transaction has not fully been dealt with, yet because as we speak there is still litigation over some account that PDS and ECG managed together.
You are going to that ministry, now based on this allegation of fraud by previous ministers which you disagreed with as far as this transaction is concerned and if approved you will be working in this ministry where this transaction is being handled, what should we expect your attitude to be?
Egyapa Mercer: Mr Chairman, you are right, I disagreed with the then Minister of Energy for the choice of words in describing the transaction as fraudulent and I still disagree with him now. Because Mr Chairman, I read the statement that was issued by the Minister of Information, the official mouth piece of the government of the Republic of Ghana and in that statement the Information Minister said that government had detected some material breaches and so had proceeded to suspend the transaction pending investigations.
In the investigation that was conducted by the government of Ghana that led to the termination of the contract, nowhere in the official communication were the word fraud used. Chairman indeed I have read the FTR report which was commissioned by MCC and the issues were clear. Chairman, I further proceed to add that I am a lawyer so words like fraud, which connotes grave offences, ought not to be used loosely without the requisite fact or evidence to support it.
And so with all the information that was available to me at the time led me to draw the conclusion that the then Minister of Energy had misspoke and I was on record to have used those words in disagreement with the Minister and like I said the basis was the official correspondent that had come from the Ministry of Information which clearly did not suggest fraud at all.
Mr Chairman, you see, there is a lot of misconception out that and I thought that the PDS transaction, the way it ended, was unfortunate but I do not see fraud anywhere because here is an entity that had as part of its contractual obligations procured an insurance guarantee through Donewell Insurance from a company that is based in the Middle East-Al Koot.
Al Koot issued the guarantee, the finance or transaction advisors indeed approved of the text of the guarantee and they submitted in satisfaction of their obligation under the contract. Subsequently, some enquiry was made by the Board Chairman of ECG soliciting some document from Al Koot and Al Koot then comes and says that the official within our organisation that signed that guarantee did not have requisite authority.
They did not deny the existence of the guarantee or the fact that it was issued by the company, nowhere did they deny that but they said that the official did not have appropriate authority to sign that guarantee so they were not going to be held liable under that. Base on this representation from Al Koot, the government of Ghana says hold on a minute, if the guarantee that you procured and submitted to us…
Afenyo Markin interrupts again
Afenyo Markin: You see, a lawyer speaking law and a non-lawyer using those choice of words, so I just want us to take away the technicalities. I can understand that your disagreement was based on the choice of words, that by law, using these words was what you disagreed with, correct? I just want us to be on the same page
Egyapa Mercer: Absolutely
Afenyo Markin: So that being said, the view taken by government, therefore, was that the guarantee that had been issued by Al Koot which guarantee its principals denied thereof upon enhanced due diligence by ECG, that matter having come to the attention of government, government was, therefore, to protect the public pursue and took steps to terminate the contract correct?
Egyapa Mercer: Mr Chairman you have hit the nail right on the head
Afenyo Markin: So what I am saying is that that one you do not disagree?
Egyapa Mercer: Not at all
Afenyo Markin: Yes, so our colleague actually wants you to position the matter well. You are going to the Ministry of Energy, is it the case that having that disagreement and you saying that you stand by your decision, but you are going to work at that ministry.
Egyapa Mercer: Yes …
Suhuyini: Mr Chairman, I think since I am here let me clarify and state what I actually wanted. Listening to your narration, I get the notion that if your narration is to be believed it will then mean that some injury and loss may have been caused to PDS in this whole transaction, for which if you become Deputy Minster and they make claims on government, your advise to the Minister will be that they were wrongly treated.
Egyapa Mercer: Not at all, Mr Chairman, the position that the government of Ghana took is founded in law and I support the position that the government of Ghana took by terminating the agreement.