GCD Saga: Open Letter to Mr. Paul Adom-otchere of Metro TV

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Mr. Paul Adom Otchere, on 19th September 2019, on the Good Evening Ghana show had the opportunity to talk about the brouhaha surrounding the divestiture of the state owned Ghana Consolidated Diamond (GCD) Limited to Great Consolidated Diamond Ghana Limited (GCDGL), a subsidiary of the Jospong Group of Companies.

Mr. Adom Otchere sought to create the impression that the government’s decision to take over the company from GCDGL is politically motivated because it was divested somewhere in 2011 under the former President John Atta Mills (God Bless His soul).

He stated that the government is “putting a Ghanaian company under peril by Ghanaian state officials using the coercive authority of Ghana”.

He boldly alleged that the government is taking over the company from the Ghanaian in order to give it to a foreign investor and added that his outfit (Good Evening Ghana on Metro TV) will come out for this company to defend Ghanaian businesses.

 

He further said that GCDGL has paid $4million out of the $18million it ought to pay and for that matter should be allowed to do its work.

 

Again, Mr. Otchere said that, the government used a Rambo style approach to get the managing director of the company out of his office. (And this must condemn if it did indeed happen.)

 

Just after making his points though, he went for a quick commercial break and I saw a Zoomlion Ghana Limited as the main sponsor of his program. Forgive me if I am wrong on that but I saw their advertisement at least on Facebook live where I watched it and throughout the program, their advert was crawling on the screens.

I do not mean to say that this explains the passion with which he spoke, where he took a bias stand in favour of GCDGL, a subsidiary company of Jospong Group of Companies, the owners of Zoomlion, the main sponsor of his show. You can therefore brush aside this part of my letter.

 

But now let us deal with the facts as they are:

 

Formation of GCD

Diamonds were first discovered at Akwatia in July 1919 by a British Prospecting Team. Thereafter, large scale prospecting began and in 1922 concessions began to be acquired by two companies, the African Selection Trust limited And Anglo Africans Exploration limited. They were joined to acquire diamond ferrous areas in the Akyem Abuakwa and Akyem Kotoku respectively. The Consolidated African selection Trust limited (CAST) was registered in 1924 to acquire the entire shares of these two companies which then went into voluntary liquidation in 1931.

CAST later became Ghana Consolidated Diamonds limited (GCD) and has since produced more than 100,000,000 carats (20,000 kg) of diamonds, mostly industrial grade diamonds.

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However, by 2007, the Ghana government-owned GCD, which is the only formal commercial producer of diamonds, was virtually grinding to a halt leading to the partial closure of the company by the then government.

 

 

Sale to GCDGL

In 2011, after almost four years of less hope and joblessness, the people of Akwatia and its environs breathed a sigh of relief as Great Consolidated Diamonds Ghana Ltd (GCDGL), one of the companies of Jospong Group, took over from the ‘dead’ GCD.

 

The government at the time entered into an Asset Sale and Purchase Agreement with GCDGL and as part of the terms of the said contract, the assets of GCD were divested to GCDGL for $17million upon certain terms and conditions.

 

Speaking at the launch of GCDGL at Akwatia amidst pomp and pageantry, then Vice President, John Dramani Mahama, gave the government’s commitment to   the mining sector and said government was doing everything possible to add value to minerals from the country at the world market saying, government decided to divest GCD to a Ghanaian own company, GCDGL, despite persistent attempt from several foreign companies so as to strengthen the local industrial base.

 

As at 5th December 2011, GCDGL had made part payment of $2.7million according to the sale contract executed by the parties.

Several years down the line, GCDGL which was expected to “invest $100million in a five (5) year multi phase programme to create over 50,000 productive employment for the people of Akwatia failed in its mandate. Operation of the company halted and some of the machinery of the company were being sold as scraps.

 

As results of the fallouts from the company’s non-performance, there have been joblessness, incessant school dropouts, petty thievery, prostitution among the youths in the area, educational achievements in the district have become relatively low, teenage pregnancies among others with several of the youth also running from the town making Akwatia a ‘ghost town’.

As at November 2017, GCDGL owed electricity bill to GRIDCO to a tune of more than GH₵5million ($1million) leading to the disconnection of power to the entire company and communities around. Residents of GCD walker electoral area and Amanfrom camp have since been living in darkness till now.

 

Parliament

In December 2017, Parliament urged the government to withdraw the license of GCDGL for failing to honour its contractual obligation to revive the operations of GCD.

 

The MPs made the call following a statement made on the floor about the operations of GCDGL by the MP for the Akwatia Constituency, Ms Mercy Adu-Gyamfi Ama Sey. Ms. Ama Sey’s statement on the floor of parliament was made after the residents accused their MP of neglect and called on the government to intervene.

READ MORE:  MINISTER QUESTIONS THE CONTINUED OCCUPATION OF CONCESSIONS OF GCD BY GCDGL

 

 

Galamsey

In May this year, it was found that some illegal mining operators popularly known as Galamseyers had taken over the concession of GCDGL. The Galamseyers were found to be carrying on their illegal mining activities at some strategic locations of the company including where the bungalows and residents of the management and staff of the company were.

 

Cancellation of Mining Lease

On 10th June 2019, the Ministry of Lands and Natural Resources through a letter signed by the Minister, Kwaku Asomah-Cheremeh, wrote to the company to inform them of the cancellation of their mining lease in pursuant to Section 68 of the Minerals and Mining Act, 2006 (Act 703).

“Please take note that the cancellation is without prejudice to any obligation or liabilities incurred by GCDCL in relation to the leases prior to the cancellation.” The letter added.

 

The June 2019 letter follows a notice to remedy breach of Mining license sent to the Management of GCDGL from the Ministry in December 2018.

In the Notice to Remedy Breach of Mining License dated 12th December 2018 and signed by the Minister, the ministry said GCDGL had breached the terms of its six (6) mining leases that were granted on 31st December, 2012.

The letter stated that GCDGL owes the Minerals Commission an amount of US$7,705,600 in accrued mineral right fees which is a clear breach of Section 68 (1) (a) of the Minerals and Mining Act, 2006 (Act 703).
“The Company has been dormant for five (5) years and therefore has not been able to carry out its obligations including the production of diamonds required under Section 69 (1) (a) of the Minerals and Mining Act, 2006 (Act 703).” The letter said.

The notice added that “GCDGL is hereby required to remedy the above-mentioned breaches within one hundred and twenty (120) days from the date of this notice.”

“Please take note that failure to satisfactorily remedy the breaches within the time specified in this notice will result in the termination of the mining leases.” It said.

Following the Ministry’s notice, the Divestiture Implementation Committee (DIC), through their lawyers on April 2019 also wrote to the management of the company to serve them notice to remedy the breaches.

In a letter from Cardinal Law Group, Lawyers for the DIC,  they stated that “this is to serve you notice that upon your persistent failure to remedy your default in settling your indebtedness arising from the non-payment of the balance of the total consideration due from you for the divestiture of the assets of the above company (GCD) to you, our client has instructed us to invoke Paragraph 13 of the offer letter dated May 6, 2011 with Reference Number DIC/119/01 to abrogate all agreements our client has with you on the subject.”

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“As you are aware, your indebtedness in terms of the balance aforesaid as of 31st March 2019 stood at Eighteen Million, Eight Hundred and Forty Four Thousand, Fourteen Dollars and Forty Five Cents. (US$ 18,844,014.45).” The letter said.

 

Continuous stay

Notwithstanding the cancellation of the mining lease of the company in June 2019, management and staff of the company continued to occupy facilities belonging to the company. In July 2019, the Eastern Regional Minister, Eric Kwakye Darfour, questioned their continuous occupation. This was when the Regional Minister visited the company to ascertain for himself the state of the affairs. The minister who was not happy with their continuous occupation however said he will not forcefully evict them as at the time, since he had to discuss with the sector minister to know the way forward for the company first, before a final decision is taken on them.

 

South Africa (Foreign) Investors

Speaking on Good Evening Ghana, Mr. Adom Otchere had suggested that the government was trying to take the company from GCDGL, a Ghanaian company to be given to foreigners. The fact is that GCDGL had already put measures in place to bring in investors from South Africa.

 

During the visit of the Regional Minister, Managing Director of the Company, Mr. Enoch Baah, revealed that the company was scouting for investors and have been able to get one interested investor who want to bring in technology from South Africa.

When the Minister asked him about the cancellation of their mining lease, Mr. Baah, after several minutes of trying to be evasive apparently confirmed receiving the letters. He however pleaded with the Regional Minister to intervene for the sector ministry to reconsider their stance on the cancellation since they have new investors from South Africa.

 

The government however, through the State Interests and Governance Authority (SIGA), went in to finally take over the company from GCDGL.

 

If after all of these, Mr. Adom Otchere still thinks the state has not been fair to GCDGL, then he alone can tell us exactly what he wants the state to do again.

By Kwasi Frimpong

(gilbfrimp@gmail.com)

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