Ambulance Case: Ato Forson Ordered Payment In Breach of Contract Terms – Health Minister

The Minister of Health, Kwaku Agyeman-Manu, on Tuesday said in court that the National Democratic Congress (NDC) MP for Ajumako Enyan Essiam in the Central Region, Cassiel Ato Forson, ordered for the payment of €3.95 million to Big Sea Company Limited, contrary to the terms of the contract with the Government of Ghana.

Agyeman-Manu made this known when he answered questions from lawyer of the accused person under cross examination in the case in which the MP is standing trial with two others for willfully causing financial loss to the state.

In court

Dr Abdul Basit Aziz Bamba, lawyer for Ato Forson, posed several questions to the health minister with the aim of establishing that his client ordered for the payment after following due process.

However, Mr Agyeman-Manu, in his answers indicated that the evidence available to him proved otherwise.

Question: You have stated in your testimony that the contract that was executed between government through the Ministry of Health and Big Sea, did not allow for advance payment. Is that correct?

Answer: Yes

Question: And you have also confirmed that letters of credit are not payments but guarantees of payment subject to certain conditions being met.

Answer: That is correct.

Question: Is it your testimony that as far the ambulance contract was concerned an advance payment was made to Big Sea?

Answer: That is so.

Question: I suggest to you that no advance payment was made to Big Sea.

Answer: I do not agree to that.

Question: And in this particular transition the Bank of Ghana made payment only after the requisite documents had been presented to the bank. Are you aware that?

Answer: No.

Question: I suggest to you that payments under the Letters of Credit (LC) were made when requisite documents had been presented to the paying bank?

Answer: I am not aware of any documents submitted to any bank that will meet the requirements to enable the bank to make the payments.

Question: am putting it to you that these documents were submitted to the paying bank?

Answer: I still insists that I am not aware.

Question: And the Ministry of Health, was aware of the submission of these documents.

Answer: I have stated that through my search at the Ministry I have never sighted any correspondence that indicated so.

Question: And there is evidence before this Court that the Ministry of Health approved all payments under the C?

Answer: I am not aware of any such documents.

Question: In light of your lack of knowledge about the submission of documents to the paying bank, will you still maintain your view that there was advance payment in the ambulance transaction?

Answer: Yes, I will until I get some evidence to the contrary.

Background

The former Deputy minister of finance, Dr Ato Forson, has pleaded not guilty to charges of causing financial loss of €2.37 million to the state in an ambulance purchase deal.

He was granted a self-recognisance bail in the sum of GHC3 million by the Accra High Court, presided over by Justice Afia Serwaa Asare-Botwe.

The two other accused persons standing trial with him, Dr Sylvester Anemana, a former Chief Director of the Ministry of Health and Richard Jakpa, a businessman, have also pleaded not guilty to charges of abetment to causing financial loss to the state.

Dr Anemana was granted bail in the sum of one million Cedis with three sureties, one of whom should be a public servant not below the rank of a director, while Jakpa was granted bail in the sum of GH¢5 million, with three sureties, one to be justified.

Charges

The four have been charged five counts in total. These are: Wilfully causing financial loss to the Republic of Ghana, contrary to Section 179A (3) (a) of the Criminal Offences Act 1960 (Act 29),
abetment of crime, namely wilfully causing financial loss to the state, contrary to Sections 20 )1) and 179 A (3) (a) of the same Criminal Offences Act 1960, contravention of the Public Procumbent Act 2003 (Act 663), contrary to Section 92 (2)(b) of the said act, and intentionally misapplying public property, contrary to Section 1 (2) of the Public Property Protection Act 1977 (SMCD 140).

Facts of the case

In the year 2009, the then president of the Republic of Ghana announced, in his annual message on the State of the Nation delivered to Parliament, that new ambulances would be procured to expand the existing fleet to enable many districts to be covered by the National Ambulance Service (NAS).

Following this speech, the Ministry of Health (MoH) initiated actions to acquire more of the vehicles.

The third accused, using his company Jakpa at Business, presented a proposal and term loan to MoH which he claimed to have arranged through Stanbic Bank to finance the supply of 200 ambulances to the government.

On 22 December 2011, cabinet endorsed an executive approval that had been granted for a joint memorandum submitted by the health minister and the deputy minister of finance and economic planning for the purchase of 200 ambulances for the NAS, out of a medium-term loan facility of €15.8 million, to be paid using a credit arrangement between Stanbic Bank Ghana Ltd and the Government of Ghana through the Ministry of Finance.

By a joint memorandum dated 30 April 2012, the then minister of finance, Dr Kwabena Duffuor, and minister of health, Alban S K Bagbin, applied for parliamentary approval for the supply of 200 ambulances at a price of €15.8 million, to be paid using the planned-for credit arrangement involving Stanbic Bank Ghana Ltd.

This memorandum to Parliament did not make reference to any role to be played in the transaction by either Big Sea General Trading Ltd (Big Sea), based in Dubai, United Arab Emirates, or the agents for Big Sea, Jakpa at Business Ltd. Nor did it refer to the terms under which the ambulances would be procured or terms under which the two companies would be involved in the transaction.

On 1 November 2012, Parliament granted approval for the financing agreement between the Government of Ghana and Stanbic Bank Ghana Ltd to procure the ambulances.

By a letter dated 19 November 2012, the second accused, who was then the chief director at the Ministry of Health, requested approval from the Public Procurement Authority (PPA) to engage Big Sea through a process of single-sourcing to supply the 200 ambulances.

The letter falsely stated that the reason for single-sourcing was that Big Sea had arranged funding for the project.

By an agreement dated 19 December 2012, the Government of Ghana, represented by the Ministry of Health, then formally contracted Big Sea General Trading llc, based in Dubai, to supply 200 Mercedes Benz ambulances.

The contract sum was €15,800,000, at a unit price of €79,000.

According to the terms of the contract, the contract was to become effective upon the signature of the contract by both parties and when all government and other approvals had been obtained by both.

The terms of delivery, according to the agreement, were that the first consignment of 25 vehicles should be delivered within 120 days of execution of the agreement. The outstanding 175 vehicles were to be delivered in batches of 25 every 30 days thereafter.

Under the agreement, advance payment was prohibited. In addition, payment for the purchase price of €l5.8 million was to be by “raising an irrevocable and transferable letter of credit” from the Government of Ghana’s bankers for the benefit of the supplier.

Upon delivery of every 50 ambulances, 25% of the purchase price was to be paid through confirmed letters of credit (LCs) on sight of goods opened in favour of the supplier, upon submission of a number of documents specified in the agreement.

On 7 August 2014, the first accused person, Cassiel A Forson, wrote to the Bank of Ghana “urgently requesting … to establish the letters of credit for the supply of 50 ambulances amounting to €3,950,000, representing 25% of the contract sum, while arrangements are being made to perfect and sign the loan agreement … in favour of Big Sea”.

On 12 August 2014, the first accused wrote to the controller and accountant general authorising the release of a sum of GHC806,688.75 to the minister of health to enable him to pay the bank charges covering the establishment of LCs for the supply of 50 Mercedes Benz ambulances and related services.

He further directed that the LCs should be charged to the budget of the Ministry of Health, contrary to Parliament’s approval on the funding for the supply of the ambulances.

The controller and accountant general, on the authority of the letters dated 7 and 12 August 2014, written by the first accused, wrote to the Bank of Ghana on 14 August 2014, authorising it to establish irrevocable, transferable LCs in the sum of €3.95 million in favour of Big Sea.

A consignment of ten ambulances, which was shipped from Dubai on 22 October 2014, arrived on 16 December 2014. Post-delivery inspection of the first batch of ten ambulances revealed that they had no medical equipment. Other fundamental defects included defects to the body of the vehicles and the patient compartment of the ambulances.

These defects were brought to the attention of Big Sea in a letter dated 11 February 2015, written by the second accused, Sylvester Anemana.

By a reply dated 19 February 2015, Big Sea acknowledged the defects to the vehicles but said that they proceeded to ship the vehicles when they received the LCs on 18 August 2014. The company also said that the second consignment of ten vehicles, with the same defects, had been shipped 51 days before the date of the letter from the ministry.

The company promised to send its technicians to fix all problems relating to the defects and train Ghanaian staff before handing over the ambulances.

The third batch of ten vehicles was shipped on 12 February 2015. By this time, the second batch had already arrived at Tema Port. All 30 ambulances bore the fundamental defects described.

A further inspection by Silver Star Auto Ltd at the request of the Ministry of Health showed that the vehicles were not originally built as ambulances, and were therefore not fit to be converted for such a purpose. In total, €2.37 million was paid for the 30 vehicles.

The third accused, as the local representative of Big Sea, knowing that the company had not shipped ambulances, still arranged with his principal to supply the purported ambulances and contracted with Big Sea to charge a commission of 28.5% on the proceeds from supplying these 30 vehicles, purported to be ambulances, to the Government of Ghana.

By a letter dated 20 January 2016, the then minister of health, Alex Segbefia, informed Big Sea that the vehicles did not meet the specifications for an ambulance and were not fit for purpose. The minister requested inspection of a well-equipped ambulance vehicle that would meet specifications by 20 February 2016.

Following this, a team led by the chief executive officer of the National Ambulance Service proceeded to Dubai and carried out an inspection on 11 February 2016. After the visit to Dubai, Big Sea undertook to send a technical team to Ghana to rectify the defects. This has not been done.

Source: asaaseradio