Multiple Civil Society Groups Sue Fidelity Bank and State Power Company ECG

Multiple Civil Society Groups Sue Fidelity Bank and State Power Company ECG

In a significant challenge to Ghana’s energy sector, multiple prominent civil society organisations have launched legal action against the state-owned Electricity Company of Ghana (ECG) and Fidelity Bank over alleged procurement irregularities. The lawsuit, filed today in Accra’s High Court, targets what activists describe as opaque financial arrangements worth millions of dollars between the power distributor and one of Ghana’s leading private banks.

The legal challenge comes at a critical juncture for Ghana, under an IMF programme that specifically highlighted the energy sector’s chronic debt as a major fiscal concern. The case threatens to bring into light governance issues within Ghana’s energy sector, which has long been viewed as a significant contributor to the country’s financial woes.

At the heart of the dispute is whether ECG, which provides power to millions of Ghanaians, should be subject to the country’s Public Procurement Act in its financial dealings. The controversy specifically centres on the company’s decision to appoint Fidelity Bank as its “single account” custodian and subsequent large-scale foreign exchange transactions, arrangements that critics argue have bypassed required procurement protocols.

Find below the full press statement from the CSO’s.

MULTIPLE CSOs sue Fidelity Bank and ECG for Procurement Abuses

Today, the 24^th of October 2024, a coalition of Civil Society Organisations (CSOs) concerned with the impact of poor governance on the state of Ghana’s energy sector, instructed a team of lawyers at AudreyGrey, a law firm based in Accra, to file a civil suit against the Electricity Company of Ghana (ECG) and Fidelity Bank Ghana Limited (Fidelity).

The coalition is seeking declarations from the High Court that ECG is subject to the Public Procurement Act (2003), as amended, and, therefore, that its recent engagement of Fidelity as the “single account” custodian, and its subsequent large-scale forex transactions with the same bank, to the tune of millions of dollars, should have been subject to the Act. To the extent that they were not, these business transactions are in breach of the Public Procurement Act. The transactions also raise further concern as there are potential conflicts of interest involving politically exposed executives of Fidelity Bank serving on the Board of ECG.

This legal action of the CSOs is made very urgent by the ongoing financial havoc in the country’s energy sector, a situation long recognised as contributing to the fiscal crisis currently plaguing Ghana. The recent International Monetary Fund (IMF) program, for example, highlighted the chronic energy sector debt as one of the problems choking the country’s finances.

ECG has been implicated in many procurement abuses by the Auditor General over the years, including most recently in relation to its procurement of smart meters. Moreover, the research coordinator of the CSO coalition, the Africa Centre for Energy Policy (ACEP), is currently investigating ECG regarding the multimillion-dollar procurement of a mobile app.

The position of the Coalition is that ECG’s procurement activities are a major part of its perennial financial problems. They reflect a serious breakdown of governance in the energy sector that must be tackled frontally to prevent this country from descending into yet another debilitating power crisis.

It is also crucial for the public to bear in mind that a major portion of the fiscal challenges facing the nation stems from the accumulation of unproductive debt, of which the energy sector is a major driver.

The high inflation, exchange rate depreciation, and even the now famous “haircuts” can thus, in part, be traced to problems in the energy sector.

To the extent that ECG has regularly blamed many of its problems on forex exchange losses to the tune of tens of millions of dollars, we believe that its single account and large-scale foreign exchange (forex) transactions with Fidelity must be subject to the strictest scrutiny, which cannot be achieved without the transparency and level playing field afforded by the Public Procurement Act.

Yet, Fidelity’s lawyers and ECG executives are adamant that ECG should not be brought within the restraining authority of the procurement law.

ECG’s and Fidelity’s continued  joint-insistence that ECG should not be subject to the Public Procurement Act is an affront to good governance in this country and must be scrutinised in the law courts.

We can also not help but notice that the legal brain behind the ongoing effort by Fidelity Bank to get the courts to bless ECG’s goal of evading the Public Procurement Act is none other than the Member of Parliament (MP) for Bolgatanga East, who is also the Chair of the Subsidiary Legislation Committee of Parliament.

In that role, and by dint of his influence in Parliament, Dr. Ayine is duty bound to consider the regulatory aspects of the ongoing financial crisis at ECG that has pitted the state-owned company against the Public Utilities Regulatory Commission.

Furthermore, the procurement abuses at ECG are regularly the subject of proceedings in Parliament.

We would, therefore, like to draw the attention of the Speaker of Parliament to this potential conflict of interest situation.

We entreat the media to follow the procurement issues at ECG with keen interest and to connect them with the nonstop flow of news about the financial challenges in Ghana’s public sector. More CSOs are likely to join this lawsuit, and/or initiate new ones, in the near future.

Below is the list of CSO’s

1.     Africa Center for Energy Policy (ACEP)
2.     Democratic Credentials Network (DCN)
3.     Institute for Liberty And Policy Innovation (ILAPI)
4.     Africa Centre for Entrepreneurship and Youth Empowerment (ACEYE)
5.     Renel Ghana Foundation (RENEL)
6.     Grassroot Mobilizers Foundation (GMF)
7.     Centre for Democratic Development (CDD)
8.     IMANI Centre for Policy and Education (IMANI)
9. Institute for Energy Security (IES)
10. Community Focus Foundation Ghana (CFF-Ghana)
11. ODEKRO PMO Foundation (ODEKRO)
12. iWatch Africa (iWatch)
13. Centre for Extractives & Development (CEDA)