…As It fires damning petition to SEC over $2.25 billion bond scandal
The decision of the opposition National Democratic Congress to petition the Securities and Exchange Commission over the Franklin Templeton scandal is an interesting setup of a nasty deja vu for FT.
FT is already a tricky customer for the SEC, which will likely seize the opportunity offered by the complaint filed by the NDC’s Okudzeto Ablakwa, to dig into a usual suspect.
The same Franklin Templeton, which was secretly sole-sourced to buy over 95% dominant share of the GoG’s $2.25billion 15-year and 7-year bonds by Ghana’s Finance Minister was accused of mutual fund fraud in the US by the SEC barely two years ago.
In 2014, Massachusetts regulators accused the firm, which is parent company of Franklin Templeton Investments, of allowing a Las Vegas based Securities Broker, Daniel Calugar, to make $45million worth of improper mutual-fund trades.
With Templeton currently in the news in Ghana for the apparent dubious trading, in which Ghana’s Finance Minister had apparently offered insider information about the bonds, the SEC’s new dance with FT is definitely déjà vu.
The NDC is petitioning the SEC on account of Trevor G. Trefgarne, who is a Director of FT at the same time as Chairman of the Board of Directors of the Enterprise Group, owned by the Finance Minister.
Obviously, the situation where Mr. Trefgarne straddles both FT and Enterprise Group and yet FT gets to buy 95% of bonds that had been floated by the Finance Minister, who owns Enterprise Group, smacks of nothing but conflict of interest.
The Minority NDC’s complaint, which was filed with the Enforcement division of the SEC in Washington DC on 1st of May 2017, also complained of possible insider dealing as one of the offences committed in the sale of the $2.25 billion bonds to FT.
SEC, which is said to have provided a reference number TCR1493656314549 for the NDC’s case, is said to have thanked the Minority for the petition; this is the same SEC which had prosecuted FT for mutual fund irregularities two years ago.
In 2014, Massachusetts regulators prosecuted the firm, which is parent company of Franklin Templeton Investments, for allowing a Las Vegas based Securities Broker, Daniel Calugar, to make $45million worth of improper mutual-fund trades.
According to the suit by the Massachusetts regulators, the compelling lure for Franklin Templeton in that alleged sinister transaction with Calugar was that Mr. Calugar had made a $10million investment in a Franklin hedge fund.
In a civil complaint that the Massachusetts Securities Division had filed against Mr. Calugar, who was then already under accusation by the SEC of earning $175million through shady trading in mutual funds managed by another firm, Alliance Capital Management and Massachusetts Financial Services, the investor billionaire was alleged to have had similar shady investments with Templeton.
The complaint at the time had only named Franklin Resources, a subsidiary of Templeton, which was based in San Mateo, California. However, it had also stated that top management of the parent company, including William Post, who was previously President and Chief Executive of the California region of Templeton/Franklin Investment Services, had been in on the dalliance with Calugar.
“Senior Franklin Templeton executives had knowledge of and furthered the activity and were reluctant to pass up the profits generated by courting multimillion dollar hedge fund clients,” the statement had said.
At the time Franklin Templeton was a juggernaut worth $337 billion in assets. The business has nearly $900 billion under management and a market value of about $34 billion.
“The Franklin case is another example of a mutual fund having one standard for the ordinary investor and an entirely different for some able to move millions and millions of dollars through in market-timing trades,” Massachusetts Secretary of State at the time, William Galvin, had said.
Fast forward to April 2017 and William Galvin’s observation about Templeton’s questionable style of transaction would become topical in Ghana; only this time Franklin Templeton is the one moving the millions and millions of dollars to buy advantage in GoG’s bond issue, while Ghana’s Finance Minister himself is apparently the source of privileged insider information.
On April 3, 2017, the Public Relations unit of the Ministry of Finance issued a statement that announced that the Ministry had successfully issued a 15 and 7 year bonds, with the same coupon rate of 19.75%.
In total, the two bonds had yielded $1.13billion. Additionally, the statement announced that the Ministry had raised $1.12billion through a 5 and 10 year bonds via, “a tap arrangement.”
Even though the sale of the $2.25 billion bonds by President Akufo-Addo’s cousin of a Finance Minister is the single biggest daily transaction in the whole of sub-Saharan Africa, it did not go through Parliament.
Under the laws of Ghana, international contracts, ie, contracts that the state enters into with offshore companies, are supposed to be submitted to Parliament for approval first.
The Finance Ministry’s statement, strangely, did not also state the names of the individuals or companies which had participated in its purchase of the bonds, except to say that, “the issuance attracted a number of global portfolio investors including a very substantial investment in the 15 year bond by a very well respected global financial investor.”
In a report that has since gone viral on social media, international news Agency, Reuters, which has mockingly referred to the bond issuance by Akufo-Addo’s Finance Minister as, “a jumbo debt action” reveals that the “well respected global financial investor” in question is US based Franklin Templeton.
Templeton bought over 95% of the bonds.
Interestingly, while Hon. Trefgarne is reported as having been listed in a December 31st, 2016 unedited semi-annual report of Franklin Templeton as one of the company’s five Board of Directors, a compilation of his credentials, in the same report also named him as the Chairman of Enterprise Group Limited based in Ghana.
The dominant shareholder in the Enterprise Group is Data Bank, which is partly owned by the Finance Minister, Ken Ofori-Atta.
Among the Board of Directors chaired by Mr. Trefgarne at the Enterprise Group includes Keli Gadzekpo, Group Chief Executive of Enterprise Group, and Dr. Angela Ofori-Atta, who doubles as a Director of Enterprise Insurance, a subsidiary of the Enterprise Group.
Dr. Angela Ofori-Atta is the wife of the Finance Minister, Ken Ofori- Atta.
Also, Akufo-Addo’s Attorney General and Minister of Justice, Gloria Akuffo, is listed along Dr. Angela Ofori-Atta as non Executive members of Enterprise Group.
Selfsame Gloria Akuffo is a former employee of the Enterprise Group, having worked as a Director of Enterprise Life, a subsidiary of Enterprise Group. Gloria Akuffo has since revealed that as Attorney General she was never privy to the Finance Ministry’s bond sale to FT.
As the writing on the wall indicates that Enterprise Group has leveraged its owner’s new position as Finance Minister to offer a sweetheart deal to a company in which the Enterprise Group has interest, it is a fact that the Finance Minister, Ken Ofori-Atta, partnered with the Group Chief Executive of Enterprise Group, Keli Gadzekpo, to found Data Bank in 1990.
Currently, Data Bank owns 39% majority share in Enterprise Insurance.
On Tuesday, April 17, 2017 the Minority in Parliament had demanded a full scale Parliamentary Enquiry into the matter with threat that if Parliament did not investigate, it would petition the Commission on Human Rights and Administrative Justice (CHRAJ).
Since then, Parliament, which is dominated by the ruling NPP, has refused to commission the Parliamentary enquiry.
However, Brogya Gyenfi, the NDC’s Ashanti Regional Youth Organizer, has since also petitioned CHRAJ over the issue invoking the Conflict of Interest Jurisdiction of the investigative body.
CHRAJ has since summoned response from the Finance Minister who is said to have complied.
Earlier in the week however, Brogya Genfi told Accra-based Radio Gold that he has, since filing the petition, come to possess fresh evidence that strengthens his case against the Finance Minister.