Imani Africa, one of the Civil Society Organizations that have objected the Agyapa Royalties deal, has pointed out that the Relationship Agreement in the Agyapa Royalties deal is structured in such a way that the investors who buy the shares of Agyapa following the Initial Public Offering (IPO) in London can circumvent policies favouring Ghana’s national interest if such policies do not align with the share price maximisation goals of traditional investors.
According to Imani, to expect that a vehicle structured this way can become part of some kind of Ghana-determined industrialisation strategy whether in the mining sector or elsewhere is be naïve about the reality of modern shareholder interests.
Providing for objecting the deal, Imani said …”In clause 6 of the Investment Agreement, the government is vicariously banned from revoking mining leases or terminating their ownership, to the extent that such an action would cause the reversion of the asset back to the ownership of the state, if that lease is part of the allocation granted to Agyapa in the transaction. Thus, without investing any of the billions that multiple mining companies have invested to justify their stabilisation and development agreements, a royalties agreement has been used by Agyapa to grant stability rights to virtually all gold-producing mines in the country solely for the benefit of Agyapa.
“By virtue of strict terms in the Relationship Agreement among the Republic of Ghana and the Agyapa entities, Agyapa retains the right to sell more than 51% of its ordinary shares to investors if the IPO is oversubscribed. The continued claim therefore that majority control by Ghana is cast in stone is incorrect.
“The very idea of ‘majority control’, in its traditional sense, is eschewed by the Relationship Agreement through numerous provisions, such as clause 3 of the Agreement wherein the Government is proscribed from attempting to prevent the appointment of Independent Directors it does not like, or to remove them if already appointed. A broad provision in clause 3.2 actually requires that Directors representing Ghana recuse themselves from deliberations where Ghana may have a “conflict of interest”.
“Virtually all critical decisions to be taken by Agyapa must pass by a majority of Independent Directors, not the entire board. That is to say, without recourse to the wishes of the Republic’s representatives on the Board. Such decisions include material changes to constitutive legal documents, appointment of and engagement with auditors, disputes with Ghana over royalties allocations, bank account operations, and determinations about the impact of Ghanaian laws on the stability clauses of the Agreement.
“At any rate, the Republic, through the Mineral Income Investment Fund (MIIF), is only definitely entitled to two Directors. Appointing a second Director may however warrant a majority of the Independent Directors to increase the number of such Directors in order to dilute the influence of the additional Government of Ghana representative. Agyapa’s Independent Directors can decide, per section 5 of the Relationship Agreement, to replace the Government representatives if, to their mind, the continued presence of that Director may lead to some unspecified regulatory non-compliance.
“In short, the Relationship Agreement is cleverly structured such that the investors who buy the shares of Agyapa following the IPO in London can circumvent policies favouring Ghana’s national interest if such policies do not align with the share price maximisation goals of traditional investors. To expect that a vehicle structured this way can become part of some kind of Ghana-determined industrialisation strategy whether in the mining sector or elsewhere is be naïve about the reality of modern shareholder interests.”
Ghana’s legislature approved the controversial agreement Friday, August 14 despite a protest from the Minority.
Based on the agreement, Agyapa Royalties Limited (ARL) will trade shares on the Ghana Stock Exchange and the London Stock Exchange for private people to buy. But the Mineral Income Investment Fund (MIIF) will remain the majority shareholder.
The Minority said the deal makes it impossible for a future government to replace managers of Agyapa Royalties Limited although the Minerals Income Investment Fund will remain the majority shareholder.
The flagbearer of the National Democratic Congress (NDC), John Dramani Mahama, has also questioned the deal and said he will not recognize it in case he wins this year’s polls.
A group of CSOs led by Dr. Steve Manteaw, Chairman of the Civil Society Platform on Oil and Gas, noted that the government of Ghana and Parliament rushed in approving the controversial Agyapa Royalties agreement.
Dr Manteaw said at a press conference on Tuesday, August 25: “What we are telling government is let’s slow down…let’s have more transparency, more consensus building around the approach before we go forward with the approach.
Meanwhile, Finance Minister Ken Ofori-Atta has said at a press conference in Accra on Thursday, August 27 that the government is being innovative in the generation of revenue for developmental projects with regard to the Agyapa Royalties agreement.
Mr Ofori-Atta said government is in a hurry to fix the developmental challenges facing the country hence the need to use all manner of means within the legal framework to raise revenue.
“We are excited about the listing of Agyapa in London by the end of the year. It creates the first royalty company of that nature in Africa.
“It is really sad that for a country that has been mining gold since the 15th Century with the Portuguese, we still don’t have any international listing company either in gold or even cocoa.”
By Laud Nartey|3news.com|Ghana