The Finance Minister, has appeared incentivized by what his private company, Databank, is making from the back of the state to be in the financial market, raising money through bonds both locally and internationally
The Herald, has obtained figures, showing that Ken Ofori-Atta’s Databank, has made a total of GH¢ 159.3 million, from the state by virtue of being a book-runner on government’s bonds in a clear case of conflict of interest situation.
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According to the breakdown, Databank since 2017, when Mr Ofori-Atta, was made Finance Minister by his cousin Nana Akufo-Addo, has been making money, playing the role of a transaction advisor anytime the government runs to the financial market in search of cash through bonds, including Eurobonds.
The amount is minus the money it has made on the Agyapa Royalties transaction among other similar deals.
It also doesn’t capture transactions his Enterprise Insurance company, has gotten through insurance cover provided for certain state deals in arrangements, which had seen other insurance companies, including state-owned SIC, been knocked off the radar. It also doesn’t capture monies made from the state by his funeral home Transitions, including the handling of people who died from the COVID-19 virus.
The sister companies of Databank, which have profited from state deals, have since relocated to a 10-storey building erected into the skies of the city christened “Advantage Place”. It is located at 23rd Mayor Road, Ridge West, Accra near the Greater Accra Regional Hospital, also known as the Ridge Hospital.
While in 2017, when the state raised GHC18.30 billion, Databank made GHC30 million, in 2018, when the state raised GHC24.37 billion, Databank made GHC12.30 million.
In 2019, when the state raised GHC25.48 billion, Databank made GHC11.83 million, and in 2020, when the state raised GHC35 billion, Databank made GHC20.40 million.
In 2021, when the state raised GHC103.62 billion, Databank GHC 85.37 million.
All the figures put together, showed that a total of GHc 159.3 million, has been made by Databank alone.
MONEY EARNED BY KEN OFORI ATTA’S DATA BANK FOR TRANSACTION ADVISORY ROLE IN GOVERNMENT BOND ISSUANCE FROM HIS ANSWERS TO PARLIAMENTARY QUESTION
YEAR OF BOND ISSUANCE (DOMESTIC AND INTERNATIONAL) TOTAL BONDS ISSUES (GHS BILLION) AMOUNT EARNED BY DATA BANK (GHS MILLION)
2017 18.30 30.41
2018 24.37 12.30
2019 25.48 11.83
2020 35.63 20.40
2021 103.62 85.37
TOTAL 207.40 159.31
The numbers were obtained from Ken Ofori Atta’s answers to a question by Theresa Lardi Awuni, the National Democratic Congress (NDC) Member of Parliament for the Okaikwei North Constituency in the Greater Accra Region, about how much government bonds have been issued since 2017 and how much transaction advisors earned as fees.
The Finance Minister told Parliament that “in 2017, total amount of the GHc17.3 billion in 3, 5,7,10 and 15-year local currency government bonds and US$221.4 million in domestic USD-denominated government bonds was raised from the domestic market with the assistance of the Joint Book Runners (JBRs) The cedi equivalent of US$221.4 million converted at the exchange rate of GHC4.5 to US$1.00 amount to GHC1 billion brings the total amount raised in 2017 to GHC18.3 billion from the issuance of government bonds.
“An amount of GHC30.41 million was paid to each JBR totaling GHc91.24 million in 2017 which is 0.5 percent of the total amount raised.
According to Mr. Ofori-Atta, “in 2018, government, after the first mandate of the JBRS had expired, selected five firms namely; Barclays Bank Ghana, Databank, Fidelity Bank, IC Securities and Stanbic Bank Ghana as the new JBRs through an evaluation process. The decision to increase the JBRs to 5 was in response to the deepening of the market and the need to increase the marketing and the selling of the GoG bonds across a wider investor base.
“Government raised a total amount of GHC10.57 billion in 2,3,5,7 and 10-year local currency bonds through a combination of new issuances and bond re-opening/Tap-ins. Amount of GHC52.85 million was paid as fees to the JBRs, where each received GHc10.57 million in 2018. This was approximately 0.5 percent of the amount raised.
“Mr. Speaker, in 2019 a total amount of GHC9.88 billion in the medium to longer dated bonds was raised. A fee of GHC9.88 million was paid each JBR totaling GHC49.42 million for the JBRs engaged in 2018. This makes 0.5 percent of the amount raised.
“In 2020, the 5 BJRs executed 20 new transactions across the 2-year to 7-year tenors and re-opened the 20-year bond. These transactions cumulatively raised about GHC16.6 billion in local currency government bonds, and US$388.9 million in domestic USD-denominated treasury bonds. A total amount of GHC18.83 million totaling GHc94.14 million, which constitutes 0.56 percent of the total amount raised.
“The performance of the JBRs was against the backdrop of a seriously challenged macro-fiscal environment and tighter financing condition induced by the COVID-19 pandemic which muted offshore demand for local currency issuances leaving local investors to take up a large proportion of the year’s Treasury’s financing operations.
“In May 2021, based on the new Primary Dealers (PDs) and Bond Market Specialists (BMS) Guidelines, government selected new PDs out of which, nine (9) institutions were given the mandate as BMS to be in-charge of the book-building process.
“The nine institutions were Stanbic Bank, Ecobank , ABSA Bank, GCB Bank, Cal Bank, Fidelity Bank, IC Securities, Databank, and Blackstar brokerage. From May 2021 to December 2021, they raised a total amount of US$13,818.73 billion in 2-year to 7-year bonds, 10-year bond and tap-in of a 6-year bond. They undertook a 5-year US Dollar Bond of US168.98 million.
“Mr. Speaker, on the external front, government in 2017 did not embark on any Eurobond transaction. However, government in 2018 procured the services of the under listed transaction advisors to raise an amount of US$2.0 billion in a 10-year and 30-year Eurobonds; four (4) International Lead Managers (JP Morgan, Bank of America, Citi Bank and Standard Chartered Bank), three (3) local transaction advisor (Fidelity bank, Databank and IC securities).
“Mr Speaker, the four (4) International transaction advisors procured were each paid US$2,030,513 whiles each of the three (3) local legal advisors each paid US$90,000.00. The International Legal advisor was paid US$379,159.24. The total amount paid to the transaction advisors (foreign and local) was US$9.98million, which is 0.49 percent of the amount raised.
In 2019 and 2020, Government raised a total of US$3.0billion in each year. From 2019, Government took a proactive stance to build the capacity of domestic financial institutions with exposure and skill for future active roles in Eurobond transactions. In view of this, Government for the 2019 and 2020 transactions procured the services of three (3) local co-managers (Fidelity, Databank, and IC Securities) and two sub co-managers (GCB and SAS Investment). For the issuance, they worked alongside the five international lead managers, White & Case as the international legal advisor, JLD $MB and CQ Legal as the local advisors.
“Mr Speaker, the five () International transaction advisors procured were each paid US$1,555,000 whiles each of the three () local transaction advisors were paid US$375,000. Each sub co-manager was paid US$50,000. The International Legal advisor was paid US$399,661.94 and the two local legal advisors, each paid US75, 000.00. in all, a total of US$9.55 Million and US$9.7million was paid International transaction advisors, sub co-managers and the local legal advisors in 2019 and 2020 respectively, which is 0.3 percent of the total amount raised in 2019 and 2020.
“Mr Speaker, Government once again for 2021, took a proactive stance to procure all the necessary transaction advisors (International Joint Lead Managers (JLMs), Local & Legal Advisors) required for the Eurobond programme.
The five (5) International Joint Lead Managers procured were Standard Chartered Bank, RMD Bank, Standard Bank, Bank of America and CITI Bank. The five (5) local transaction advisors procured were, Fidelity Bank, Databank, IC Securities, Temple Investment and Cal Bank. White & Case was procured as the International Legal advisor whiles CQ Legal and K&K Legal were procured as the two (2) local advisors.
The five (5) International Joint Lead Managers were each paid US$1,497,375.00, the five (5) local transaction advisors procured were each paid US$166,375.00, the International legal advisor was paid US$375,000.00 whiles the tow 2) local legal advisors were each paid US$75,000.00 to raise the total amount of US$3,025,000.00. In total, the International and local transaction advisors were paid US$8,843,750.00, which is 0.29 percent of the amount raised.