Ghana, only the third African team ever to reach the quarter-finals of a World Cup, were unlucky to lose to Uruguay last Friday. Beyond football, however, a bigger question looms: will oil-rich Ghana, perceived as West Africa’s poster child of political stability, be the first African country to kick the ‘resource curse’?
In June 2007, a consortium of oil companies including the UK-based Tullow Oil and the US-based Kosmos Energy discovered recoverable reserves, currently estimated at 800 million barrels in Ghanaian waters, with the potential for a further billion barrels. Last year, Ghana spent $1.3 billion importing oil. The Jubilee oil field, one of Africa’s biggest offshore finds in the last decade, could turn Ghana into the continent’s fifth largest oil-producing nation, and should bring in $800 million a year. Production is scheduled to begin within the next six months. The first 200 billion cubic feet of gas have been promised free of charge to the state-owned Ghana National Petroleum Corporation (GNPC). But it’s uncertain how much the oil bonanza will benefit the Ghanaian government and the GNPC, let alone the Ghanaian people.
The Kwame Nkrumah MV 21, the Floating Production Storage and Offloading facility that will be used to exploit Ghana’s offshore oil during the first phase of development, is owned by Jubilee Ghana MV 21 BV, a special purpose company incorporated in the Netherlands. The Netherlands is host to more than 20,000 ‘mailbox companies’ (of which 43 per cent have a ‘parent’ in secrecy jurisdictions such as the Cayman Islands, the British Virgin Islands, the Netherlands Antilles or Cyprus). It specialises as a ‘passthrough’ conduit for financial flows including ‘dividends, royalties and interest payments’ via ‘special financial institutions’. The Dutch Central Bank defines ring-fenced SFIs as ‘subsidiaries of foreign parent companies used to channel capital through our country, which has little influence on the Dutch economy.’ The Netherlands does not place details of trusts on public record, or require that company accounts or beneficial ownership be made available for public record.
Corporate mispricing accounts for an estimated 60 per cent of illicit capital flight from resource-rich developing nations, especially those in oil and-mineral rich West Africa. In June 2005, the government of Ghana signed a Memorandum of Understanding with Barclays Bank, and since then Accra has grown as a centre of offshore banking. According to Barclays website:
The Barclays Offshore Banking Unit, the first of its kind in Ghana and indeed Africa south of the Sahara continues to offer world class banking service to non-resident private clients and corporates.
The Bank of Ghana said in a report that the International Financial Services Centre ‘should operate with a minimum of regulation’ even though ‘the operation of IFSC has implications for the Central bank’s work on good governance because it can reduce transparency, including through the exploitation of complex ownership structures.’
Combine that with a sudden influx of oil wealth – what could possibly go wrong?