K.K. Sarpong responds to GNPC, Global Haulage US$7m deal
The Chief Executive of the Ghana National Petroleum Corporation (GNPC), Kofi Kodua Sarpong has explained how GNPC purchased a property from Global Haulage, a company he was formerly connected to
to him, he recused himself from the entire transaction and can therefore not be accused of circumventing corporate governance dictates to channel funds to a company he was formerly connected to.
It has been suggested that Dr. K.K Sarpong’s involvement in channeling funds from GNPC to Global Haulage, whose owners also own the collapsed Royal Bank was scandalous.
Those two entities, Global Haulage and the defunct Royal Bank, belong to Alhaji Iddrissu Adamu [deceased], whose friend, K.K. Sarpong reportedly held shares in the bank.
Before being appointed GNPC CEO, Dr. Sarpong was an Executive Chairman of Royal Bank and was also the Group Chief Executive for Global Haulage.
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A media publication by the Whatsup News had suggested Dr. Sarpong in 2017 reportedly convinced the board of GNPC to expend US$7.5 million of GNPC funds to buy a Takoradi-based real estate owned by the owner of Global Haulage and insolvent Royal Bank.
Total payment, according to the media publication, however, amounted to US$9.5 million instead of the original figure.
In a memo written to the GNPC finance officer dated December 29, 2017 [copy published below] Sarpong ordered the payment to be made ‘instantly" because that purchase was “urgent", he said: “I am taking this unusual step in view of the urgency of the matter."
The memo continued: “I can confirm that we have executed the underlying sale and purchase agreement with the seller. The documents are in the custody of our legal officer, Ama Awuah Kyeremateng who unfortunately is presently out of town to give them to support the payment
“I am by this memo you to effect the payment to Global Haulage Company Limited, the vendor instantly as per their invoice attached.”
“Suffice it to note that a thorough post audit of the transaction can be done once full office work resumes on 8th 2018.”
That very day of writing the memo, the GNPC finance officer reportedly wired US$7.5 million into the accounts of Global Haulage, according to the report and on January 3, 2018, a second payment of US$2million was made, bringing the total amount expended on the real estate at US$9.5 million instead of US$7.5.
The publication suggested that the actual value of that property was US$3 million and that Dr. K.K Sarpong only arm-twisted GNPC to pump money to save Royal bank which was insolvent at the time.
K.K. Sarpong's response
In a radio interview on Accra based Joy FM, on Tuesday morning to explain the transaction, Sarpong said he recused himself from the transaction.
“In the first place, let me confirm that there has been a purchase of a residential property. It's not just a six-unit block, it’s a number of blocks, I think in total I can’t call of hand but it could be as many as 18 to 21 flats or so in a gated community at Chapel Hill in Takoradi.”
“As you may be aware, GNPC is moving parts of its operations to the Western Region, we already started the GNPC Foundation, its been working there for well over a year now from rented premises, we are now going to put the official GNPC complex in Takoradi and then moving the staff there, we thought we should procure accommodation.”
“There were lots of people trying to sell each of one unit here, two units here to us, and then we had this property, which I was aware of because I had been connected to Global Haulage. I must tell you that there are all valuation reports by the relevant agencies, it went through the board of Directors sub-committee and recommended to the board.
“Because of my experience, knowing that I have been related to Global Haulage, I never took part in the negotiations and even the vendors themselves, will tell you, it was very difficult getting me to help them with the transaction.
After it had been approved, properly by the board, they were demanding their payment, we were going to Christmas, they needed their money for whatever reason and the lawyer who had the documentation had taken some leave and we couldn’t reach her.
As Chief Executive, what I said is that, go ahead and pay because I executed the sale and purchase agreement as Chief Executive, all the documentation are there, you can see the date that I executed. Now because the lady [GNPC lawyer] wasn’t there for us to have access to the documentation, didn’t mean that we shouldn’t pay them.”
“As an accountant, we know that we can do pre-auditing and post-auditing if you are sure of the transaction, post-auditing and pre-auditing should give you the same results, so I said go ahead and pay.
"But you noticed that from the document I have sighted, which came from the GNPC, its written there, 2million paid on such and such a day, I’m not saying that all the 7 point something million was not paid on one day,… whoever did that documentation, you notice normally after my approval, I don’t see these things again, it was staggered, they paid to them, I don’t see anything wrong with this at all.”
“We are in preparation, we have moved, we are moving and we are going to move into the Western Region and I find it quite strange that this document, those who published, don’t even contact the Chief Executive because if I didn’t have courage about the transaction, I wouldn’t go in and say that I have taken this unusual step, unusual step in the sense that normally, I want the pre-auditing and those things to go on, but my staff not being available didn’t mean that the vendor should suffer if they needed some of the money, so that is the background to it and I can confirm that me, personally was not deeply involved, because I have ever acted as the Group Chief Executive for Global Haulage before the [Alhaji Adamu] died.
"So I must be honest, yes, if it is the most suitable property there, there was no reason why we shouldn’t buy it…and it is not something that was done . It was done openly, the whole board, nobody on the board can tell me, he wasn’t aware, from the chairman through to the ordinary members, everybody was involved and even GNPC staff itself involved in property cannot say, they were not aware," Sarpong added.
Royal Bank not involved with
Sarpong disagreed with a suggestion that Royal Bank was involved with the transaction and insisted it was Global Haulage transaction.
“I was once head, it doesn’t mean I can’t do with them. If you disclose your interest and you recuse yourself from discussions, that is the normal corporate governance and that is what I did.”
There is also a suggestion that Royal Bank needed injection of capital and that is why they needed the money urgently before Christmas but responding, Sarpong said: "well for whatever reason, I wouldn't know, we bought their property, you executed all the documents, they've brought you an invoice for payment, your staff is not there [who is holding the document] and therefore you say they should not be paid. If they took the money and they were injecting it into Royal Bank, so be it but there will be nothing wrong with it because they sold their property properly to us. And if they get the money and they inject into the Royal Bank to save it, what is wrong with it. I resigned from the Royal Bank about two years ago, please."
Sarpong who was responding to the interview early Tuesday morning after returning from a trip abroad on Monday night also disagreed with the suggestion that, "where ever I worked I cannot do transactions with them. I worked in Cocoa Board they were in cocoa, you mean I don't have to do transactions with them because I know them, I worked in food distribution and that is where I met the old man [Alhaji Adamu], does that mean that I don't have to do with them. You see, with time, we build relationships and that should not affect our professional and that's me. My professional wasn't compromised.
How Global Haulage was selected
Asked how Global Haulage was selected as the one to sell GNPC the property, Dr Sarpong said: "I think that one you may have to talk to my officers who handle property, not chief executive, they refer, people go round, people make offers to us and of them will come to our table, and knowing that the property is there, does it prevent me from buying if I'm buying it at the correct price, I just want you to know. And so if somebody is not connected and he has $10million which is not worth that, I should go and buy that," he questioned.
He explained the other properties that were on offer were scattered all over and what Global Haulage was offering was a gated community located in a prime area in Takoradi, "you don't want that. I'm sorry, my connection with Global Haulage wasn't the influencing factor, let me be honest with you...I think for me, the gated community in Chapel Hill for staff, gives them security, gives them better environment and commuting between where the office is now, and where it will be, where we are trying to locate the proper office around the PTC area, is a good location, we took all that into account."
Asked if that was the cheapest option, "Well I cannot unless I have all the reports before me but when you are buying property, the question of something being cheap is relative, is it the same quality, is it in the same location.