Monday, December 22, 2014

Silver Star CEO sentenced to 21 days imprisonment for contempt



 

Kalmoni Nouhad, CEO of Silver Star
The Commercial Court in Accra today sentenced the Chief Executive Officer of Silver Star Auto Limited to 21 days imprisonment for contempt.
Kalmoni Nouhad was convicted on December 1, 2014 after his company failed to obey the court’s orders to deliver a brand-new Mercedes Benz to a plaintiff on July 10, 2014. The court however, deferred its sentencing and reasons to today.
The court, presided over by Mr Justice G. Koomson, held that the convict woefully failed to obey the court’s order after he had given an undertaken to obey the court’s directives. But the convict is not in prison because his lawyer, Kizito Beyuo, filed a notice of appeal immediately after the court’s decision.
Rule 27 of the Court of Appeal Rules states that there will be an automatic stay of execution of the conviction, for seven days.

Background to the case
The plaintiff, G. A. Sarpong & Co instituted civil action against Silver Star Limited in 2009 after the Plaintiff purchased a brand new Mercedes benz car which ended up being defective.
The High Court, which heard the matter ordered the automobile company to replace the vehicle because it fell within the warranty period but the company appealed.
Silver Star Limited’s appeal succeeded in part because the Court of Appeal ordered it to replace the defective vehicle’s engine.
According to the Court of Appeal, the plaintiff was entitled to the replacement of the engine and not the entire vehicle.
Dissatisfied with the court’s decision, G. A. Sarpong and Co went to the Supreme Court and succeeded in overturning the Court of Appeal’s decision.
The highest court of the land, in January 2014, held that the plaintiff was entitled to a replacement of the defective vehicle for a brand new one.

Enforcement
Counsel for the plaintiff, Mr Joseph Opoku Boateng, filed the necessary legal documents at the High Court and sought to enforce the Supreme Court’s decision.
Per the rules of court, the plaintiff went back to the High Court to enforce the judgment of the Supreme Court.
The plaintiff applied for an order of delivery and the court ordered that the vehicle should be delivered within 14 days. 
However, the defendant defaulted and was, thus convicted on December 1, 2014 and sentencing deferred to December 22, 2014.

Saturday, December 20, 2014

Don’t reduce fuel prices — Bulk oil distributors



The Ghana Chamber of Bulk Oil Distributors (CBOD) has appealed to the government to not reduce the prices of fuel despite the fall of crude oil prices on the international market.
“Reducing petroleum prices is likely going to lead to shortages because the Bulk Oil Distributors (BDCs) are currently owed by the government,” the Chief Executive of the CBOD, Mr Senyo Hosi, said in an interview with the Daily Graphic in Accra yesterday. 
According to him, government’s liability to the BDCs currently “stands around GH¢1.5 billion and since the last payment, we have not had funds paid to us directly from government coffers.
“The pricing has become the primary tool that the government uses to pay us the debt and even at current rate, it will take well over 10 months to pay the 2013 debt before we look at 2014,” Mr Hosi said.
After the 17.5 per cent increment in the prices of fuel after the budget presentation last month, at the pump, the price of premium petrol is  3.04 per cent higher ; gas oil (diesel) 3.13 per cent and 2.85 per cent on kerosene, used in rural areas mostly by the poor. 
Funding confidence
Mr Hosi said any attempt by the government to reduce petroleum prices “will result in dampening funding confidence which will inevitably affect our chances of accessing letters of credit (LCs) from the banks.”
The Chief Executive said the businesses of the BDCs were suffering because of the interest payments they were making on loans they had taken from the banks.
He questioned why the very people calling for a reduction in petroleum prices did not do same when the prices soared earlier this year.
“When the debt was accruing at the time that the prices were going up, none of us was ready for an automatic adjustment and now that prices are dropping, the same people are calling for automatic adjustment. We have served consumers and government in this country fairly. So either the government pays us or allows the payment of realistic prices for petroleum products,” Mr Hosi added.
Full-cost recovery, he said, was the only means by which the government could settle its debts and ensure regular supply of petroleum products.
Drop in fuel prices
The price of Brent Crude oil as of December 18, 2014 was $60.06 but the National Petroleum Authority (NPA) has indicated it is not in a position to reduce prices because it is indebted to the BDCs to the tune of some GHc237 million as of October 2014.
According to the Public Realtions Manager of the National Petroleum Authority (NPA), Mr Yaro Kasambata, petrol prices would only be slashed downwards if current prices were sustained for the government to recoup its remaining debt of GH¢237 million as of October 2014.
“In the interim, the NPA will continue to monitor prices on the world market and if the current downward trend continues, we will evaluate the situation and use part of any over-recoveries accrued to offset the current under-recovery bill (debts owed BDCs), as well as use part to do a downward adjustment in prices at the pumps to the benefit of consumers.
“This is also to ensure that supply of petroleum products to the market is not adversely interrupted in view of the upcoming festive season. The NPA will continue to ensure that there are no supply disruptions on the market,” the NPA said.

Thursday, December 18, 2014

ECG loses $350 million yearly — IFC report

ECG loses $350 million yearly — IFC report
An International Finance Corporation (IFC) report has indicated that the Electricity Company of Ghana (ECG) losses about $350 million in revenue every year.
It said on aggregate, technical, commercial and collection losses were around 35 per cent, implying an annual revenue loss of $350 million. 
Each percentage loss is estimated at $1 million.
“This implies additional revenue of around $175 million would have been available if the company’s losses were halved,” a former Board Chairman of the State Enterprises Commission (SEC), Mr Francis Ocran, announced  an interaction with the media in Accra yesterday.
This was when a Stakeholders Consultation Team on Private Sector Participation (PSP) in power distribution, headed by Mr Ocran met the media at the Accra International Conference Centre.
The meeting was aimed at soliciting views from the media on whether or not Ghana should adopt a concession and privatisation model in its bid to enhance efficiency in power distribution.
The country is currently grappling with power challenges, with individuals and businesses experiencing persistent power cuts almost on a daily basis.

Power interruptions
Mr Ocran said because the ECG was experiencing both operational and net income losses, it was not in the position to fund its much-needed capital investment programme of GH¢10.8billion over the next 25 years. This represents an annual average of over GH¢400 million in real terms,” Mr Ocran noted.
Citing other aspects of the IFC report, Mr Ocran said “a due diligence performed by IFC on ECG said the company’s technical and financial performance was poor and said for instance that on average, in 2012, customers suffered 106 interruptions, against an international benchmark of 10 per year.”
ECG, which is one of the largest power distribution utilities in Sub-Saharan Africa, has over 2.5 million registered customers and sells about 6,000 GWh of electricity per annum, Mr Ocran said.
Attributing ECG’s challenges to insufficient power generation to meet growing demand, transmission capacity constraints, a constrained and inefficient distribution system, among other issues, Mr Ocran said, “Ghana loses about  2-5 per cent of GDP annually as a result of lost economic output due to the insufficient and unreliable power supply.”
He said state institutions were also culprits in the ECG’s challenges, with the disclosure that they were currently indebted to the company to the tune of GH¢700 million, and asked, “what do you expect ECG to do?”

MCC Compact
Due to the foregoing challenges facing the ECG, the Millennium Challenge Corporation (MCC) is assisting the government with $498.2 million to enhance its power distribution across the country.
The MCC has indicated that the Compact funds will be in two tranches. Tranche 1 of about $300 million and tranche 2 of $198.20 million. 
The disbursement of Tranche 2 will be determined by performance.
The Compact’s goal is to promote poverty reduction through private sector-led economic growth.

Stakeholders Meeting
Mr Ocran explained that the goal of his team was to meet 17 stakeholder groups, including the media, to iron out all issues pertaining to the government’s resolve to turn around the operations of the ECG to meet the demands of domestic and industrial consumers.
He said “power supply was identified as a key binding constraint to the country’s economic growth. Government, has therefore, signed a second compact, namely Ghana Compact II, through the support of the US Government/MCC to address the current challenges facing the power sector.”
Mr Ocran explained that “the idea is to make ECG a credible off-taker of power so that Independent Power Producers have confidence in the company and that they will be guaranteed their revenue streams.’’


Tuesday, December 16, 2014

Stanchart suffers $14 million penalty

 





 Standard Chartered Bank Ghana Limited (Stanchart) suffered a heavy legal blow yesterday when the Fast Track High Court ordered it to pay $14 million to a businessman for wrongfully refusing to honour cheques issued by him.
The bank was also slapped with GH¢30,000 cost, and further directed to pay the amount with interest, with effect from August 2012 to the day of final payment.
Mr Akwasi Boakye Osei, the plaintiff in the case, had prayed the court to award a total of $18.7 billion in special and general damages but the court, after considering the evidence adduced in the case, settled on $14 million.
The court, presided over by Mr Justice K. A. Ofori-Atta, held that the plaintiff and his witnesses had led ample evidence to warrant the grant of his claims.
It, however, held that the plaintiff failed to lead specific evidence on why special damages of $2.1 billion should be awarded to him and, accordingly, refused to grant it.

Case of plaintiff
Mr Osei, a customer of Standard Chartered Bank brought the action against the bank, in May 2014 after the bank failed to honour five cheques he had issued to two churches, the Accra Metropolitan Assembly (AMA), the Internal Revenue Service (IRS) and an outdoor advertising company.
His beef was that the bank had caused him embarrassment, huge financial losses, the potential to face court action from revenue agencies and the threat to lose his property following threats from the Accra Metropolitan Assembly (AMA) to auction his property on the Oxford Street, Osu to defray his indebtedness to the assembly.
The plaintiff said he had at all material times had enough funds in his accounts but the bank kept dishonouring his cheques despite giving the green light to the bank to honour the cheques.
“Defendants consistently refused to honour plaintiff’s cheques when at all material times the plaintiff’s account with the defendant’s at Osu Branch, Accra was on credit and defendant had sought for and plaintiff had confirmed that payments be made,” the plaintiff had argued.

Particulars of loss and damages
Listing the particulars of loss and damages as a result of the bank’s inaction, Mr Osei said, among other things, that he had lost business with DDP Outdoors Ltd to the tune of $2 million; $15 million loss of business prospects in Adwoa Adjeiwaa building; $1 million loss of image to two churches and loss of $45 million revenue due to the refusal of tenants at Adwoa Adjeiwaa building to renew their tenancy.
According to the plaintiff, the bank had caused him to lose the prospect of raising funds to undertake a multi-million project similar to the Adwoa Adjeiwaa building project.
He said due to the bank’s failure to honour a February 13, 2012 cheque he had issued to the then IRS, the IRS had withdrawn a five per cent withholding tax granted to one of his properties.
“By reason of the matters aforesaid, plaintiff has been injured in his businesses and has been put into considerable trouble, inconvenience, expense and has suffered loss and damage,” the plaintiff averred in his amended statement of claim.

Stanchart 
In its statement of defence, the bank denied the plaintiff’s claims and said it acted in accordance with best banking practices to protect the plaintiff from fraudsters.
According to the bank, it could not reach the plaintiff to confirm whether or not payment should be made to some payees while at some material times, he did not have enough funds to match the face value of some of his cheques.
“The defendant further avers that the plaintiff’s alleged loss of image with the two churches and the projection of future loss as unilaterally determined by the plaintiff for 15 years relating to the Adwoa Adjeiwaa Building and Tema Warehouse are not only fanciful but also ludicrous and unreasonable as they are totally unrelated to the plaintiff’s banking transactions with the defendant.
Describing the plaintiff’s claims as ridiculous, the bank averred that “the plaintiff is wrongly allocating blame for his personal problems which have as now assumed corporate gab,” adding that “the plaintiff is not entitled to his mandatory claim or any at all”.

Decision of court
But in a two-hour-long judgement, the court expressed the view that the plaintiff was entitled to some of his claims and submitted that the bank’s decision to write “account dormant” on the plaintiff’s cheque to the IRS exposed the plaintiff to criminal prosecution from the IRS and also risked being blacklisted in the banking industry for up to three years.
The court held that the bank had subjected Mr Osei to ridicule and humiliation by its refusal to honour the plaintiff’s cheques a number of times.
It also accepted Mr Osei’s explanation that his account at the bank was not dormant as was being alleged by the defendant.
Mr Justice Ofori-Atta said there was no basis for the bank to dishonour the plaintiff’s cheques and accordingly entered judgement against the bank.
The parties called 10 witnesses each.

Cost
Counsel for the plaintiff, Mr J. K. Agyemang, pleaded with the court to award $1.4 million cost against the bank but counsel for the bank, Mr Samuel Atta Akyea, opposed the request.
Mr Akyea argued that the value of the five cheques which were dishonoured by the bank did not total $100,000 and also reminded the court that “you said no direct special damages. You have only awarded general damages,” and urged the court to allow the parties to bear their own costs.
Mr Agyemang did not take kindly to Mr Akyea’s statement and said “the plaintiff succeeded and is entitled to cost”.
He described the bank’s action as irresponsible and said it was surprising the lawyer now had the “audacity to say we are not entitled to cost”.
He advised the the defendant’s counsel to plead for a reduction and “not to say we are not entitled to cost”.
The court eventually awarded GH¢30,000 cost in favour of Mr Osei.