Lack of clarity on Agyapa deal raises red flag – Terkper

  • Sends wrong signal to investors

Former Finance Minister Seth Terkper has waded into the controversies surrounding the Agyapa Royalties Limited deal, saying the current structure of the company whereby it operates as an off-shore company will raise red flags about the country’s commitment to fighting money laundering – a major indicator investors look out for before investing.

Per the information available now about the deal, Agyapa Rolyalties Ltd. is a Special Purpose Vehicle (SPV) created by the Minerals Income Investment Fund (MIIF) Act, 2018 (Act 978) with the key objective of maximising the county’s mineral wealth for the benefit of Ghanaians, while ensuring that receiving royalties from gold mining companies is sustainable. However, the company was incorporated in a British channel island, Jersey, where it will enjoy tax reliefs on transfer of dividends and other incomes it generates from the deal.

It is on the back of this that Mr. Terkper has expressed concern that – considering the country was put under the Anti Money Laundering (AML) blacklist in May 2020 by the European Union, and was only deferred to October due to the pandemic – going ahead with the deal with a tax haven company will only heighten the risk of being blacklisted.

“Individuals and businesses use tax havens to hide income and wealth to avoid paying taxes and scrutiny of shady transactions. The EU and OECD use evidence of these activities to sanction states that do not take appropriate measures to stop these practices. Hence, it is ironic that government itself would contemplate setting up MIIF in a tax haven.

“Moreover, government has refused to provide the House with the incorporation documents and prospectus that form the bases for ownership of Agyapa Royalties and MIIF’s authority to invest and contract loans for Ghana. It also refused to furnish the House with projected cashflows and returns on investment for contracting loans,” he said in an interview with the B&FT.

He added: “The point from my perspective that I keep highlighting is: why do you take it through a tax haven when you are under AML listing which is supposed to come into effect in October 2020. Money laundering is usually carried out often in tax havens. So, if Ghana is in the Anti Money Laundering scheme, why should we use a company in a tax haven?

“All I am saying is that using a tax haven to achieve this purpose may result in Ghana being put on the Anti Money Laundering blacklist of the European Union. So the deal still needs clarity on the ownership structure and flow of the royalties.

“And the consequence is that if investors are coming in genuinely, they will be subjected to more paperwork than necessary – and that will discourage them.”

Meanwhile, Finance Minister Ken Ofori-Atta in a press conference defended the deal; saying it is a transparent one that will ensure the country not only benefits from mining operations but also trading of recoverable reserves.

“We often fail to see this value, because when assessing the effectiveness of our policies and legislation we limit the extent of our expectation to our national borders. We take no interest in what happens to our resources when they leave our shores – how they are traded in foreign markets, how companies leverage them to create cheap financing, or the different ways in which they are utilised to create profit.

“If the foreign investor can use the recoverable reserves in our country he has in a concession granted by us to him to raise money which he can choose to spend here or other businesses he has elsewhere, why can’t we do the same to maximise the benefit we get and use an additional income to accelerate our development; and by so doing expand our economy?” he said.

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