Counsel Bensouda: Tax payers’ money should not settle Euro Africa Group loans

Thursday, July 05, 2018

Counsel Amie Bensouda yesterday told Amadou Colley, former governor of Central Bank, that tax payers’ money should not be used to settle Euro Africa Group loans.

Mr. Colley reappeared before the Janneh Commission in connection to the bond agreement between the former government, NAWEC and various commercial banks.

According to him, prior to the NAWEC bond, a national committee, HILEC, which was under the office of the former vice president, to which the permanent secretary and himself were members, called for a meeting. He said in one of the meetings in 2015, the committee discussed the financial situation of NAWEC and their challenges.

He said NAWEC owed ITSC which he said was a subsidiary to Islamic Development Bank (IDB), ING Bank in Switzerland, and in that meeting, they agreed on a set of recommendations to restructure NAWEC’s debt. He added that in November 2014, as the then governor, he requested for the settling of debts and NAWEC requested the former government to waive the loans.

Mr. Colley testified that he was concerned with the number of loans taken by NAWEC from commercial banks; adding that the debts were huge that they approached the office of the former president. He said he (Colley) then instructed the Finance Department to look into the situation to know that the banks were involved.

He said his idea at the time was that NAWEC’s debt should be restructured. He stated that they consulted Euro Africa Group as to why they were not paying the commercial banks, and Euro Africa Group said that NAWEC was not paying them.

Mr. Colley further testified that they should look into the debt owed to Euro Africa by NAWEC, noting that he was concerned about the exposure of EcoBank to the tune of $12,000,000 by NAWEC.

He said that Standard Chartered Bank was also exposed to the tune of $ 8,000,000, and   Trust Bank was also exposed. He testified that the next stage was to invite the minister who agreed and said that some steps should be taken and they invited some commercial banks. He further stated that they agreed to set up a bond to allow NAWEC to settle the debts

Mr. Colley adduced that there had to be an agreement between NAWEC and Euro Africa Group, indicating that the role of CBG was to sign to provide the services in terms of the outstanding balance.

He told the commission that NAWEC defaulted and he was invited by Mr. Kebba Touray, former minister of Finance, in his office and was told that TOSTA Oil Trading had threatened to sue the government by way of Euro Africa using strategic stock at the depot, and they understood that the stock was utilized by Euro Africa when there was a threat from the office of the former president that there must be a supply of fuel, and this was confirmed by NAWEC.

He told the commission that when there were shortages, it was said that the stock should be used and was supplied to NAWEC and that the facility was used as collateral, but he did not see the agreement document. He further said that he received a letter from the office of the former president to travel to Switzerland to negotiate with TOSTA on a $24,000,000 liability.

Among the delegation, he recalled, were Mr.  Edward Graham, former managing director of SSHFC, former managing director of NAWEC and the former Finance Minister, Kebba Touray whom he said failed to travel with them. The delegation negotiated on behalf of the Gambia government, noting that negotiating with TOSTA was better than going to court.

Mr. Colley further stated that TOSTA was charging an interest of 6% but also gave a discount of $6, 000, 000, and that TOSTA finally settled for $18,000,000.

When asked why they were negotiating on behalf of the Gambian government, he responded that SSHFC was the major shareholder of Gam Petroleum, as far as the former government was concerned. He said he did not see any collateral for the use of Gam Petroleum facility as a strategic stock.

He disclosed that they did not supervise the commercial banks on yearly basis, although they had a supervision department.

At this juncture, it was put to him that NAWEC is owned by the government and that the government should not let NAWEC to inject money with interest. In response, he said he totally agree with Counsel Bensouda.

Mrs. Bensouda further told him that if Euro Africa Group owes the commercial banks which they could not afford to pay, tax payers’ money should not be used to settle Euro Africa Group loans. Statements from the governor were admitted in evidence.

Mr. Colley revealed that the Central Bank lent the government of the Gambia the sum of $18,000,000 to settle TOSTA.

At this juncture, Commissioner Saine asked him why did the former government step in to save Euro Africa Group, and he replied that he was concerned and his colleagues were equally concerned, but he felt it prudent to participate in the transaction.

According to him, lending to NAWEC, CBG was not required to assess the loan because of national interest and if Euro Africa was not going beyond the limit, they should also go ahead. However, Mrs. Bensouda put it to him that she found it difficult to appreciate when the former governor said that hence it was of national interest, then there was no limit on NAWEC lending. 

Next to testify was the former minister of Finance, Kebba S. Touray, in relation to the same subject matter, and according to him, they requested NAWEC to give them a statement of their liabilities.

He testified that when they received the statement, they realised that NAEC was highly indebted; noting that NAWEC’s indebtedness towards some companies affected some commercial banks. He added that at the meeting, they concluded that they should find a solution to settle NAWEC’s loan, further adducing that NAWEC owes a huge sum to some commercial banks, Eagle, fuel and spare parts suppliers respectively. 

According to him, at the meeting, there was a proposal that the interest rate NAWEC was paying (22%) should be reduced to 15%. He said they told the CBG governor that the commercial banks may come down because of NAWEC’s loans.

Mr. Touray told the commission that from the Ministry of Finance perspective, NAWEC was able to save money to buy fuel but the company’s balance sheet was in a mess; adding that he would not know whether NAWEC defaulted on the bond. He said he did not know either why NWEC failed.

The former Finance minister disclosed that their concern at the time was NAWEC’s position because they owed over 1 billion dalasi, and the former government did not guarantee the Eagle debts, indicating that they were intervening on behalf of NAWEC.

He testified that because NAWEC is a public enterprise, the government is responsible for the company’s liabilities, and that NAWEC belongs to the government.

He further disclosed that some commercial banks had exposures close to their capital, thereby putting the country’s banking system at stake, because there was a point where the banks could not open a Letter of Credit (LC).

On why was his ministry concerned about Eagle’s debt, he responded that they were not negotiating on behalf of Eagle but NAWEC; adding that getting the private sector’s participation in the energy sector was a concern of the former government. 

Sittings continue today. 

Author: Dawda Faye
Source: Picture: Counsel Bensouda