Former Finance Minister, Seth Emmanuel Terkper, has warned the government of the elevated risks the registration and establishment of its Special Purpose Vehicle (SPV); Agyapa Royalties Limited in a tax haven presents to Ghana.
Mr Terkper is of the view, that the setting up of Agyapa Royalties through the Mineral Investment Income Fund (MIIF) in a tax haven emboldens the stigma already attached to the country as a money laundering country by the EU.
The European Union (EU) in May 2020, placed Ghana under its Anti-Money Laundering (AML) list. But due to the COVID-19 pandemic situation, the EU deferred the implementation date to October 1, 2020.
“And Instead of giving an update of measures to remove this stigma on Ghana, the NPP rather chose to elevate the risk by setting up a Sovereign Wealth Fund – MIIF – in a Tax Haven,” read the statement by the former finance minister.
He argues that the risk of being blacklisted by the EU is real, since the NPP in the late 2000s created the Government Financial Services Law which the NDC between 2010 and 2016 had to take many steps to avoid Ghana being placed under the Organisation for Economic Co-operation and Development’s (OECD) AML and Tax Haven watchlist.
Individuals and businesses use Tax Havens to hide income and wealth to avoid paying taxes and scrutiny of shady transactions. The EU and OECD use evidence of these activities to sanction States that do not take appropriate measures to stop these practices.
Making further arguments in the statement, Mr Terkper asserted that the MIIF is not a transparent SWF as the government has failed to furnish Parliament, with the incorporation documents and prospectus that form the bases for ownership of Agyapa Royalties and MIIF’s authority to invest and contract loans for Ghana.
Government he says, has also refused to furnish the House with projected cash flows and returns on investment contrary to Article 181(5) of the Constitution.
The Creation of Agyapa Royalties
Parliament in 2018 passed the Minerals Income Investment Fund Act (Act 2018) to manage the equity interests in mining companies and also receive royalties on behalf of the Government of Ghana.
The Minerals Income Investment Fund is mandated to manage and invest these royalties and revenue it receives on behalf of Ghana and invest them for higher returns.
To do this, the law enables the Fund to establish Special Purpose Vehicles (SPVs) to appropriate these investments.
In July 2020, the government introduced an amendment to the Act to ensure that the SPVs that the Fund would establish to manage investments get unrestricted independence.
On the back of the amendment and the original provisions of the act, the Minerals Income Investment Fund set up a limited liability company known as Agyapa Royalties Limited (previously Asaase Royalties Limited) in Jersey, a tax haven in UK.
