…Vamed Engineering Indicated To Govt. It Had No Qualification And No Interest In the Award Of Contracts For Stadia Projects In 2005!

The New Crusading GUIDE’s Special Investigations Team (SIT) has intercepted a letter written by Vamed Engineering GmbH & Co. KG, an Austria Company which is active in the sector of healthcare projects, to the Government of Ghana, to the effect that it (Vamed) neither had qualification nor interest in the award of contracts for stadia projects.

The Vamed letter dated 7th September, 2005 was addressed to the then Minister of Education and Sports, Mr. Yaw Osafo Maafo, and copied to the Chief of Staff and Minister for Presidential Affairs, Mr. Kwadwo Mpiani, the Secretary to the President, Ambassador D.K. Osei and the Minister of Finance and Economic Planning, Mr. Kwadwo Baah-Wiredu.

“Honourable Minister Osafo-Maafo, referring to your letter No.WE10/43/01 dated August 22, 2005, which we got handed over on September 1, 2005 by Mr. Alfred Woyome, the Alternate Director of M-Powapak Limtied, we would like to make the following clarifications: (1) VAMED ENGINEERING (VE) is a company which is active in the sector of healthcare projects only and has no qualification and no interests in the award of contracts for stadia projects”, declared Mr. Paul Hallbauer, Managing Director and Mr. K. Krammer, Legal Advisor of Vamed Engineering in the first paragraph of the letter under reference.

The August 22, 2005 Osafo-Maafo letter referred to by Mr. Hallbauer and Mr. Krammer, was the letter in which Mr. Osafo-Maafo communicated the Government of Ghana’s position on the August 5, 2005 letter from the Central Tender Review Board to Mr. Osafo-Maafo, which gave “concurrent approval for the award of the contract to Messrs VAMED Engineering, subject to your submission of the Procurement Plan for MoES including that of LOC (Section 21 (1.4) of the Public Procurement Act, 2003 (Act 553)”.

Osafo-Maafo, in his August 22, 2005 letter addressed to the Managing Director of Vamed Engineering, had expressed regret that “the Ministry of Education and Sports (MoES) is unable to continue with the tendering process due to the high financial commitments implied in the submission, the inconclusive and non-assuring nature of the financial submissions”, and proceeded to thank Vamed for participating in the tendering process for the project.

Vamed Engineering in its ‘clarification letter’ of September 7, 2005, revealed that when they (Vamed) had information that there were hospital projects in relation with the CAN 2008 stadia project, they immediately made an offer for 6 hospitals in 2003 which finally led to the signing of 6 contracts which did not become effective due to lack of funds for the hospital projects.

Vamed disclosed that parallel to their (Vamed’s) interest in the hospital projects, another Austrian company known as VA-Tech, “juridically and economically independent of Vamed’s activities, made an offer for the Stadia Projects relevant to CAN 2008”.

They further indicated that both Vamed’s Contracts and VA-Tech’s offer were based on the assumption that the hospital projects and stadia projects would be financed by the Ghana National Petroleum Corporation (GNPC).

“When it turned out that the envisaged financing could not be arranged VA-Tech withdrew from the Stadia Projects and Waterville represented by M-Powapak Limited started to search for alternate financing possibilities with VE acting as the ‘spearhead’ for the search of such alternative financing for the hospital and stadia projects”, added Mr. Hallbauer and Mr. Krammer in their September 7, 2005 letter to Osafo-Maafo.

They continued: “When VE learned in June 2005 that only the stadia projects but not the hospital projects will be implemented VE stopped the search for alternative financing of all the aforementioned projects. Consequently, we would like to inform you that VE is not and was never in a consortium with Waterville and that therefore in our opinion your letter No.WE10/43/01 dated August 22, 2005 should have been addressed to Waterville”.

In conclusion, the two Vamed top shots emphasised that “…we would like to inform you that VE has not initiated and is not involved in the protest of Waterville’s lawyer against the award of most of the stadia projects to a Chinese Company”.

It is significant to note that the details of the financial engineering which Mr. Woyome is claiming he successfully put together and made available to the Government of Ghana, include 6 hospitals and one wellness centre amounting to €329,411,765.00, Cabait 60 plant and tissue culture facility, Accra, Ghana, amounting to €12,941,176.00 and the stadia projects amounting to €764,117,646.00; all totaling €1,106,470,587.00.

It is 2 per cent of the above total (€1,106,470,587.00) which Mr. Woyome made a claim for in his February 18, 2010 petition to the then Attorney-General and Minister for Justice, Mrs. Betty Mould-Iddrisu.

Hear him: “Madam, from the above, I am formally demanding from the Government of Ghana the payment of the Financial Arrangement Cost which is 2% of all legally offered amounts by Bank Austria to the Government of Ghana amounting to €1,106,470,587.00 equaling €22,129,411.74 as contained in the last page of Waterville’s document entitled: “REPORT FOR DISCUSSION WITH GOVERNMENT OF GHANA ABOUT TERMINATION OF CONTRACT” and contained in Annex F”.

He continued: “The per centum in this circumstance is normally 4% but Waterville negotiated it to 2% with THE PREVIOUS REGIME. Half of this amount is due our external partners: Austro Invest. The other half of €11,064,705.87 I claim on my behalf. Attached also in Annex F is a letter from my group authorizing me to receive such monies in my name as Alfred Agbesi Woyome”.

Meanwhile, the Chief of Staff in Kufuor’s Administration, Mr. Kwadwo Mpiani, in an interview with our Special investigators, categorically denied Mr. Woyome’s assertion saying “WE NEVER NEGOTIATED ANY SUCH DEAL WITH WATERVILLE. IT IS A BIG LIE”.

In the same petition (February 18, 2010) Mr. Woyome sought to undermine the credibility of Vamed’s September 7, 2005 letter to Osafo-Maafo by alleging that that “letter was written by Vamed because we believe that Vamed was being ‘threatened’ with the discontinuation of their other on-going hospital projects in Ghana”. He accused some unnamed members of the Kufuor Administration of having solicited the September 7, 2005 letter from Vamed in response to the August 22, 2005 letter from Osafo-Maafo to Vamed informing the latter of the Government’s inability “to continue with the tendering process due to the high financial commitments implied in the submissions” among other reasons.

Mr. Woyome appeared to have convinced Mrs. Mould-Iddrisu on the validity of his 2 per cent claim as the latter in a letter dated April 29, 2010 addressed to the Minister of Finance & Economic Planning, Dr. Kwabena Duffour, argued that “the claim for two per cent (2%) of the total value of the project that Mr. Woyome and Austro-Invest financially engineered, which they have agreed should be paid to Mr. Woyome is therefore in order, hence my recommendation that you authorize payment of the amount due…”.

Mrs. Mould-Iddrisu recalled that “the claim is for project financial engineering fees by Mr. Woyome and Austro-Invest. The financial arrangements were made in respect of the concurrent approval given by the Central Tender Review Board for the award of contract to Vamed Engineering, who transferred its rights in the project to Waterville Holdings (copies of letter of transfer and acceptance attached) and (copy of letter of Central Tender Review Board dated 5th August attached). It was in these circumstances that the then Government terminated the entire process”.

“IT IS MY OPINION THAT THIS LETTER DATED 5TH AUGUST 2005 FORMED THE BASIS OF A BINDING AGREEMENT BETWEEN VAMED AND THE GOVERNMENT OF GHANA AND THE PROCESS HAVING BEEN TERMINATED WRONGFULLY BY THE GOVERNMENT OF GHANA, THE CLAIMANTS ARE ENTITLED TO COMPENSATION FOR SERVICES RENDERED”, articulated Mrs. Mould-Iddrisu.

She contended that “further to a Ministry of Finance letter dated 4th May 2005, Mr. Woyome made arrangements for the grant of concessional loans for the rehabilitation of the Ohene Djan and Baba Yara Stadia and the construction of three others for the Ghana 2008 football tournament, the construction of six (6) hospitals and the Cobait 60 Irradiation Plant among others”.

She said Mr. Woyome’s role in project financial engineering was further evidenced by a letter from the Ministry of Education and Sports dated 5th July 2005 and an earlier letter from the then Minister for Environment and Science, Prof. Kasim Kasanga dated 28th October 2004 as well as letters showing the collaborative efforts of both Woyome and Waterville in facilitating the financial engineering for the projects.

She revealed that Mr. Woyome had also entered into an agreement with Austro-Invest on 1st September 2005 in which the parties agreed to finalize their collaboration into a working business relationship for their mutual and common benefit. The agreement, she disclosed, provided that Austro-Invest shall offer services relating to syndication of funds from financial institutions as part of the financial structuring and acquisition of projects by Mr. Woyome.

“The parties also agreed that Mr. Woyome will pay Austro-Invest up to 1.5% of the total amount syndicated. This figure was subsequently negotiated downwards to 1% for Austro-Invest in the 16th February 2010 agreement. Mr. Woyome’s role, as distinct from Austro-Invest’s role which was mainly for the syndication of funds, is further evidenced by correspondences with international financial institutions such as the Export-Import Bank of the United States and the Final Demand Letter of J. Michael Farrel, a Washington-based lawyer, who worked on Mr. Woyome’s instructions in respect of a contract involving Austro-Invest (copy of Demand Letter attached). Mr. Michael Farrel has recently threatened to institute legal action against Mr. Woyome and the Government of Ghana for non-payment of legal fees relating to his work for Mr. Woyome (copy attached)”, Mrs. Mould-Iddrisu’s letter to the Finance Minister further indicated.

Interestingly, Mrs. Mould-Iddrisu’s letter under reference, had been occasioned by a letter dated April 12, 2010 from the Minister of Finance and Economic Planning, Dr. Kwabena Duffour in which the latter had sought to draw Mrs. Mould-Iddrisu’s attention to a query raised by the Accounts office of the Ministry of Finance and Economic Planning (MoFEP) on the supporting documentation for Mr. Woyome’s 2 percent claim on the €1,106,470,587.00 he (Woyome) alleged he engineered from Bank Austria for the six hospitals Cobait 60 Plant and CAN 2008 stadia projects.

“I refer to your letter dated 31 March 2010 on the above mentioned subject matter (Settlement of Claim involving the rehabilitation of the Ohene Djan, Baba Yara and El-Wak Sports Stadia) authorizing the Ministry to make payment of two percent (2%) of amount claimed (€1,106,470,587.00)… Our Accounts office has raised a query on the supporting documentation of the claim. For audit purposes they require clarity and evidence on whether the claim is being made by the consortium that won the bid to conduct the financial engineering led by Mr. Woyome jointly or separately. Kindly advise on the implication of this Agreement and also provide us with any further documentation that substantiates Mr. Woyome’s claim”, Dr. Duffour alerted Mrs. Mould-Iddrisu.

Authentic documents intercepted by The New Crusading GUIDE, indicate that as a result of the Finance Ministry’s initial refusal to comply with Mrs. Mould Iddrisu’s recommendation to pay the 2% claim then being made on Government by Mr. Woyome and Austro-Invest, Mrs. Mould-Iddrisu in her capacity as Attorney-General followed up with a letter dated May 28, 2010 stating that as a result of the position taken by the Ministry of Finance and Economic Planning, Mr. Woyome had gone to court and obtained judgement on May 24, 2010 in the sum of GH¢41,811,480.59 plus interest of Euro 5 million (GH¢9,447,000.00) and cost of GH¢25,000.00, amounting to a total of GH¢51,283,480.59.

It was at this stage that the Ministry of Finance negotiated with the Solicitors for Mr. Woyome to pay the money in three installments.

It has also emerged that the Director in charge of Legal Affairs at the Ministry of Finance and Economic Planning, Mr. Paul Asimenu, without the consent of the Minister of Finance and Economic Planning, wrote a letter dated March 25, 2010 to the Attorney-General, supporting the claim of Mr. Woyome to the effect that “…the amount of credit made available for the Stadia Project amounted to €764,117,646 for which the claim for financial engineering is being made. It needs to be pointed out however that the financial term sheet received from Bank Austria included financing for other projects namely; €329,411,765.00 for six hospitals and €12,941,176.00 for a Cobait 60 plant and tissue culture project. The grand total of sums made available by Bank Austria through the Woyome-led Consortium therefore amounted to €1,106,470,587.00”.

Mr. Asimenu who was a member of the Van Lare-Dosoo-led CAN 2008 Sub-Committee on Finance which evaluated the financial proposals of firms which tendered for CAN 2008 stadia construction, and eventually short-listed Vamed and EMSAS/EPIFERM, vouched for the legitimacy and validity of Mr. Woyome’s claim as contained in his (Woyome’s) February 18, 2010 Petition to Attorney-General Betty Mould-Iddrisu.

“The evaluation team adjudged the finance offer from Bank Austria Creditanstalt arranged by Mr. Alfred Woyome, the lead consultant who led M-Powapak/Austro-Invest/Waterville Holdings as the most competitive. We accordingly recommended that offer to Government. Our review revealed the Bank Austria facility as having a grant element 36.2% of which met Government’s concessional criteria of 35% grant element. It is my considered view given the complicity of the work involved in securing the financing in question that the claim of 2% is deemed legitimate”, underscored Mr. Asimenu.

A scrutiny of the Evaluation Report On Financial Proposals of the two short-listed companies, (Vamed and EMSAS/EPIFERM) submitted to the Minister of Education and Sports on July 22, 2005 shows that while proposing that Vamed “is contacted immediately for further discussions in view of the lengthy processes required to secure the MIGA Guarantee”, the Sub-Committee on Finance, also recommended “AN ALTERNATIVE OPTION WHICH THE GOVERNMENT OF GHANA CONSIDERS THE POSSIBILITY OF SECURING ITS OWN LINE OF FUNDING”.

Surprisingly, Mr. Asimenu failed to highlight the inconclusive nature of the financial proposals of Vamed which he was seeking to convince Betty Mould-Iddrisu to adopt as a basis to determine Mr. Woyome’s claim.

As reported in the January 16, 2012 edition of The New Crusading GUIDE, a Financial Proposal Matrix attached to the Evaluation Report, had clearly underscored the limitation and inconclusiveness of Vamed’s financial proposals to the effect that THOUGH MIGA HAD ISSUED A ‘NOTICE OF REGISTRATION’, THE LATTER WAS NOT A COMMITMENT BY MIGA TO ISSUE A GUARANTEE AND ALSO DID NOT IMPLY A JUDGEMENT OF THE INVESTMENT PROJECT, ADDING THAT A FINAL UNDERWRITING DECISION COULD ONLY BE MADE BY MIGA ON THE BASIS OF COMPLETE INFORMATION TO BE PROVIDED IN THE DEFINITIVE APPLICATION FOR GURANTEE WHICH WAS YET TO BE MADE BY VAMED.

The ‘Letter of Support’ provided by Bank Austria was evaluated as “NOT A BINDING OFFER OF FUNDS BUT ONLY INDICATIVE TERMS OF CONDITIONS” WITH AN EXPIRY DATE OF SEPTEMBER 30, 2005.

The CAN 2008 Sub-Committee on Finance conceded that Vamed’s financial proposal was supported with credible documentation and institutions and that though the Bridge Fsinancing arrangement had been made to overcome time lags, no documentation was made available to support that claim.

“Current status requires detailed Government of Ghana procedures and MIGA procedures which could affect the timeliness”, concluded the CAN 2008 Sub-Committee on Finance of which Mr. Asimenu was a member. It was within these circumstances that the Government through the Minister of Education and Sports, Yaw Osafo Maafo wrote his August 22, 2005 letter to Vamed expressing regret “to inform you that the MoES is unable to continue with the tendering process due to the high financial commitments implied in the submissions, the inconclusive and non-assuring nature of the financial submissions”.

Bank Austria, as our January 16, 2012 report titled: “Woyome’s 1.2bn Euro Mirage… No ‘Escrow Account’, No Special Purpose Company (SPC), No Binding Offer of Funds From Bank Austria”, withdrew from the CAN 2008 Stadia Projects, and so whatever offers it had made to the so-called Woyome-led Consortium (Vamed/M-Powapak/Austro-Invest/Waterville) in 2005 cannot and must not form the basis for a claim on the Government of Ghana in 2010.

Indeed Waterville, in a letter dated June 21, 2006 which was addressed to Ghana’s Minister of Finance and Economic Planning, informed the latter that “BANK AUSTRIA, AS YOU MAY BE AWARE, WITHDREW FROM THE PROJECTS”. Waterville in that letter was relaying to the Government a letter of offer from HSBC, London concerning financing which it (Waterville) saw as a substitute or a replacement for the abortive or expired Bank Austria financing arrangement.

The HSBC London deal also failed to materialize and Government eventually wrote to Waterville on August 1, 2006, indicating that the two Contracts it (Govt.) had signed with Waterville for CAN 2008 relative to Ohene Djan, Baba Yara and El-Wak Sports Stadia on April 26, 2006, could not become effective, in view of Waterville’s failure to fulfil the primary condition of financial engineering or the arrangement of funding for the project(s).

The August 1, 2006 letter signed by the then Attorney-General, Joe Ghartey was explicit that among other conditions precedent, the April 26, 2006 contracts required the “rendering of a legal opinion by the Ministry of Finance and Approval of the Contracts by Cabinet and Parliament of the Republic of Ghana; signing of the Loan Agreement relating to the Contracts by the Minister for Finance and Economic Planning; Confirmation by the Bank holding the Escrow Account to the Contractor that the Escrow Account is established and credited with the total amount of the Contract price according to Clause 5; Receipt of the necessary approvals from Multilateral Investment Guarantee Agency (MIGA), Exim Bank, USA and the lender” for them (April 26, 2006 Contracts) between the Government of Ghana (GoG) and Waterville to become effective.

Waterville then caused its Solicitor, Mr. Kwame Tetteh to protest the decision of Government not to approve the contracts for the rehabilitation of the Ohene Djan and Baba Yara Sports stadia in Accra and Kumasi respectively. Waterville, however, subsequently made a U-Turn and in a letter dated September 15, 2006 addressed to the Secretary to Cabinet and copied to other high ranking Government officials including the Chief of Staff, Kwadwo Mpiani and Attorney-General, Joe Ghartey, underscored that “Conscious of the delay that such legality would ensue and the adverse impact upon the CAN 2008 target we decided, without prejudice to our accrued entitlements, TO ACCEPT THE DECISION OF THE GOVERNMENT TO TERMINATE THE AGREEMENTS”.

It is in the face of Waterville’s documented acceptance of the “termination” of their agreements with Government that keen analysts of the unfolding Woyomegate are intrigued that both Government functionaries including the former Attorney-General, Betty Mould-Iddrisu and sections of the pro-NDC media who openly support Woyome’s claim, have sought to use an alleged breach of contract as the justification for Woyome’s 2 per cent of €1.2bn claim.

“Woyome himself has openly admitted that he had no contract with the Government of Ghana; Betty Mould-Iddrisu’s interpretation of the August 5, 2005 concurrent approval given to Vamed’s bid by the Central Tender Review Board as ‘a binding agreement’ was faulty in the face of Section 20 (2b) of the Procurement Act (Act 663) and Waterville’s September 15, 2006 documented acceptance of Joe Ghartey’s August 1, 2006 letter ‘terminating’ the April 26, 2006 contracts coupled with the fact that none of the following companies; M-Powapak, Vamed, Austro-Invest, Waterville had initiated a legal action relative to breach of contract during the Kufuor Administration, are indicative of the fact that the 2% of €1.2bn Woyome claim is illegitimate, invalid and unsustainable”, articulated an official of the Attorney-General’s Department who requested anonymity.

Stay tuned for more explosive and exclusive details on Woyomegate…