Government’s effort to complete the Initial Public Offer for Agyapa Royalties Company Limited on the London Stock Exchange this month has hit a setback as the Office of the Special Prosecutor has asked the Ministry of Finance to suspend the listing until it has conducted its corruption risk assessment.
This is the latest development in a drawn-out controversy generated by government’s initiative to use the company as a special purpose vehicle through which it can monetize the share of the gold royalties accruing to the Minerals Income Investment Fund, which itself was set up specifically for that purpose.
The OSP, already under criticism for its perceived lack of progress in prosecuting alleged public corruption cases since it was established in 2017, has opted to look into the structure of the Agyapa transaction which has come under intense scrutiny by some civil society organisations and public policy think tanks who suspect that an attempt at state capture of incoming gold revenues is hidden within the initiative.
Hurried time table
However, although the OSP’s intervention will set back government’s hurried time table, it is not expected to throw a significant spanner in the works – most public policy analysts and commentators believe that this is more of posturing by the OSP to look lively than a concerted effort to ensure transparency, which is why the Finance Ministry itself has acceded to the request without a squeak of protest.
In a statement by the Deputy Minister of Finance, Mr Charles Adu Boahene, and addressed to the OSP, he said the Ministry is abiding by the directive to suspend the IPO pending completion of its investigations.
The ministry said: “The international investor community has been closely monitoring the outcome of the current state of the transaction, and, it would, therefore, be detrimental to proceed without receiving the necessary approvals and green light from your Office,” it said.
“Additionally, we will be required to fully disclose in the prospectus to the transaction, the outcome of any investigation by your office prior to approval by the respective regulators of stock exchanges in Ghana and the United Kingdom”, the letter to the OSP said.
The letter said the ministry was ever ready to “provide any further information or clarification” to the OSP on the deal.
The Special Prosecutor, Mr Martin Amidu, wrote to the Ministry of Finance a few weeks ago, to hold on with the launch of the IPO until his office had been provided with all the relevant documents and information needed for him to complete his corruption risk assessment. agreement.
The Special Prosecutor has so far been given information concerning mainly the processes for the IPO and the appointment of the Transaction Advisors.
But it also wants information and documents relating to the identification and recommendation of the transaction advisors.
The Ministry in its latest letter said it had furnished the prosecutor with relevant documents pertaining to the appointment of the Transaction Advisors and the opinion of the principal legal advisor to Government, among others.
Parliament, a few weeks ago, in line with the Minerals Income Investment Fund (MIIF) Act, 2018 (Act 978), approved agreements to allow the country to derive maximum value from its mineral resources and monetise its mineral income accruing to the country.
The move, gives Agyapa Royalties Limited, the opportunity to secure about $1 billion to enable government to finance large infrastructural projects in the mining industry and invest in gold backed funds for profit.
Out of these expected proceeds of the IPO, at least US$500 million is expected to come from private investors who will be offered 49 per cent of Agyapa through the IPO, although this could potentially go as high as US$750 million depending on the valuation. Instructively this is one of the sticking points with the initiative’s critics who argue that the company is being undervalued.
The fiercest critics assert that this is deliberate in order to enable certain government officials and their private sector collaborators to buy into the company on the cheap.
Ghana can expect some US$150 – 200 million a year from gold royalties if the global gold price – which is currently at an all-time high – holds up.