In August 2012, former President John Dramani Mahama, granted executive approval to the Ministry for the construction of 5,000 affordable housing units (the Saglemi Affordable Housing Project) for sale to workers through mortgage arrangements provided by Ghana Home Loans to be implemented by Construtora OAS Limited.
The project was to be funded by a Buyer’s Credit of US$200million provided by Messrs Credit Suisse International (Credit Suisse).
On 31st October 2012, Parliament granted approval for the government to secure a facility of $200million from Credit Suisse for the project, following a joint memorandum to Parliament by the then Minister for MWRWH, Mr Enoch Teye Mensah and the then Minister for Finance and Economic Planning, Dr. Kwabena Duffour.
On January 4, 2013, a Facility Agreement was signed between the Ministry of Finance, as borrower, and Credit Suisse, as creditor, for a facility of $200million for the project and same day, MWRWH through the then Minister, Mr E.T Mensah, signed an Engineering, Procurement and Construction (EPC) Agreement with Construtora OAS Ghana Ltd represented by 4th accused for the construction of affordable housing units at Saglemi in the Greater-Accra Region.
The project, which was to be executed in four phases on 2,172 acres of land was at a contract price of US$200million, including consultancy services, an Escrow Management Agreement, a condition precedent to the release of the facility to the borrower, was also signed pursuant to the Facility Agreement and the EPC Agreement, between the Ministry of Finance (Borrower), the MWRWH(Account holder), the Bank of Ghana(Account holding bank) and Construtora OAS (Contractor)].
The purpose of the agreement was to ensure that the $200million facility would be properly applied towards the development of the 5,000 housing units.
The agreement, therefore, required payments under the contract to be effected only when specific works had been duly executed, verified and certified by the consultants of the project, the Architectural and Engineering Services Limited (AESL).
The EPC Agreement provided for an advance payment of 40 per cent of the contract price to the contractor within five working days of the receipt of the facility in the Escrow Account, where the advance payment was to be applied towards specific works set out in the contract.
The remaining amount of the contract price was to be paid to the contractor based on the fulfilment of specific project milestones and the contractor was required under the agreement to set out the details of the achieved project milestones, which had to be verified and certified by the consultants before payment is done.
On January 9, 2013, Credit Suisse disbursed an amount of $198,450,000, representing the $200million less fees and transaction expenses into the Escrow Account and on February 27, 2013, an amount of $80million representing 40 per cent of the contract sum was transferred to Construtora OAS as advanced payment.
However, the contractor allegedly failed to apply the amount towards the purpose for, which the payment was made, thus, on February 27, 2014, Alhaji Dauda who had assumed office as the new Minister, without any parliamentary approval, allegedly reviewed the original EPC and signed the first and restated agreement with Construtora OAS, represented by its Executive Chairman, the 4th accused, and in the process, changed the scope of works and the application of the $200million approved by Parliament for the construction of 5000 housing units.
The new agreement required the contractor to execute the project in three phases over a site of 1,272 acres whilst the $200million was now to be applied towards the execution of only the first phase of the project comprising just about 1,502 housing units, contrary to the executive and parliamentary approvals as well as the Facility and Escrow Management Agreements.
As a result, on April 15, 2013, the AESL signed a contract with Vito Hugo-Coordenaca Gestao De Projectos (VHM) subcontracting its consultancy services under the EPC agreement to the company for $500,000,000 over a period of 24months.
This was the amount provided under the EPC Agreement for consultancy services for the 5000 housing units.
Under the agreement between AESL and VHM, a maximum amount of $2,000,000 was to be paid to AESL as not more than $2,987,750 was to be paid to VHM for their services.
This contract also provided for 40 per cent advanced payment.
In April 2015, when AESL and the VHM were still providing consultancy services under the contract, the MWRWH, allegedly entered into another contract for consultancy services with Ridge Management Solutions DWC-LLC (RMS), represented by its director and majority shareholder, Tettey, for three months at a contract sum of $5.6million.
This was at a time RMS allegedly was not registered in Ghana as a company.
Once again, the MWRWH was required to make an advance payment of 40 per cent of the contract sum.
This contract was said to be completely outside the EPC Agreement.
Investigations revealed that Tettey, who is the majority shareholder of RMS is also a Director of VHM Ghana Limited, allegedly.
In August 2016, the 2nd accused entered into yet another consultancy agreement with RMS, this time, for what was referred to as “marketing implementation services” for a sum of $2,502,198.00 and again, the Ministry was required to make an advanced payment of 40 per cent of the contract sum, when all that while, AESL and VHM were purportedly performing the same consultancy services for the project, their consultancy agreements having been extended at various times by Mensah and Alhaji Yakubu.
On December 21, 2016, Alhaji Yakubu without recourse to Parliament allegedly reviewed the First and Restated Agreement and signed the Second and Restated Agreement, which led to a further reduction in the scope of works to 1,412 housing units at a revised contract price of US$ 181,018,000.00 and extended the completion period of the contract to July 31, 2017 without any basis.
Between March 2014 and January 2015, an amount of $46,131,153.41 was paid to the contractor, Construtora OAS, whilst a total of $3,386,916.08 was paid to AESL and VHM when no works had been duly executed by the contractor, with the payments allegedly authorised and approved by Former Minister ,Alhaji Dauda and Alhaji Yakubu without any evidence of specific project milestones achieved by the contractor as required under the EPC Agreement. Payment were said to have been mader under former Minister for Works and Housing- Atta Akyea
It is also argued that there was no justification for the advanced payment of $80 million earlier made, but
between June 2015 and January 2017, a further amount of $54,066,768.16 was paid to the contractor of the project when no works had been duly executed.
Again, though there were no milestone reports supporting the payments, Mensah and Alhaji Yakubu allegedly ordered for further payments to be made to the three consultants; AESL, VHM and RMS, far in excess of the $5,000,000 stated as consultancy fees in the original EPC Agreement without any evidence of work they had done.
There were no verification and certification of actual work done by the contractor as required under the EPC Agreement though a total amount of $196,428,891.66 has been spent on the Saglemi Affordable Housing Project, with the contractor having been paid $179,904,757.78, allegedly.
Investigations revealed that the cost of works executed on the site, including consultancy services, is about $64,982,900.77.
Only 651.75 acres of land out of the 2,172 acres of land made available by the MWRWH to the contractor for the project has been developed.
Investigations further revealed that only 668 housing units were completed by the contractor.
The houses are, however, not habitable so not a single house under the project has been sold and the facility remains unpaid, resulting in huge financial loss to the Republic of Ghana.
GNA
