PDS saga takes new turn

…as insurer contests reinsurers disclaimer of PDS guarantee

The controversy over the authenticity of the guarantees underpinning the granting of a 20 year electricity distribution concession to Power Distribution Services, now being investigated by government, has deepened following an official statement from Donewell Insurance – which provided the supposed guarantees in the first place on behalf of PDS – claiming that the guarantees were genuine, having been signed by an authorized official of the reinsurers, which has even accepted  US$7 million premium payment for providing 95 percent reinsurance cover on them.

According to Donewell’s statement, Al Koot Insurance and Reinsurance Company of Qatar, – an “A” rated company chosen by Donewell’s own reinsurance brokers, JoAustralia Reinsurance Brokers in accordance with the requirements of the agreement – was paid US$7 million as reinsurance premium through the Broker JoAustralia which received a Swift payment on March 21 for onward transmission to Al Koot.  However Al Koot, in a letter dated July 16 denied receiving any premium payment.

While Donewell regards this as shocking, some insurance experts have raised the possibility that Jo Australia did not forward the payment to Al Koot as required of it.

But even with this possibility Donewell still finds reason to accuse Al Koot of bad faith – to put it mildly – in its disavowal of its signatory to the guarantees. Claims Donewell:

“It is important to note that in an email dated July 22, 2017 sent by Yahya Ali Al Nouri, the Reinsurance Manager of Al Koot, in which the author of the July 16 (disavowal) letter was copied, Mr Al Nouri is designated as a signatory to the technical documents of Al Koot”.

Effectively therefore Donewell is questioning why Al Koot did not blow the whistle at that time if indeed there was any whistle that needed to be blown.

Donewell also claims that going back further, on February 26, Al Koot made a request to JoAustralia to arrange a full retrocession of its portion of the risk arising from the guarantee, and indeed on April 16, JoAustralia sent a credit note to Al Koot notifying the latter that in accordance with the mutual agreement between the two companies, JoAustralia had credited Al Koot, holding (client) account as per a credit note dated April 16.

Consequent to all this Donewell accuses Al Koot of not being truthful in its communications with Electricity Company of Ghana in claiming it was not even aware of the guarantees it had provided, whereas it had requested for a retrocession and had even received premium payment.

Donewell goes further to say: “It is (also) unfortunate for Al Koot to further allege that its Reinsurance Manager did not have the capacity to act on its behalf when he had held himself out as having the said capacity to do so as far back as 2017. Al Koot’s sudden denial of the fact that it is not permitted by its constitutional documents to underwrite counter party and trade risk when had in the past accepted such a risk imposed upon it by JoAustralia at the behest of Donewell is most unfortunate.

“It is surprising that subsequent to the denial of the knowledge of the existence of the said guarantee and the description of same as ‘void ab initio’ Al Koot decided to cancel the non-existent guarantee and its attendant retrocession in a letter dated July 31, 2019 on the basis of the non-receipt of premium from JoAustralia within a 45 day premium payment warranty.”

The immediate question arising is: did JoAustralia forward the US$7 million premium payment to Al Koot as it was supposed to do? If indeed it did then Al Koot may turn out to be the culprit as Donewell now alleges.

Another question. Is Yahya Ali Al Nouri authorized to sign off on the guaranty or not, having done so as recently as 2017? Yet another: Does Al Koot no longer allow itself to underwrite counter party and trade risk like it used to?

These are questions that government’s ongoing investigation will have to find answers to.