Ghana’s most prominent development finance institution (DFI), the aptly named Development Bank Ghana (DBG), has issued a flurry of statements and reports in the last few days (example) about a range of governance issues.

The country’s major media houses, ever so supportive of big corporates, have dutifully reported each glowing self-exoneration and self-tribute with remarkable consistency (example).

DBG’s flourish of public relations may have something to do with essays (see here and here) I recently wrote channeling the concerns of insiders and whistleblowers at the top DFI worried about a host of corporate governance matters, from alleged procurement abuse to conflicts of interest.

Following my essays, a surprising number of people reached out, including some well-known consultants to share various perspectives. One line of feedback I got sought to deepen my awareness of the corporate (and even external) politics at play.

I was told that the whistleblowers and insiders were jumping the gun as the same issues they were encouraging me to ventilate were the subject of intense internal and external politicking, debate, and investigations. I was asked whether, in these circumstances, my public commentary was adding any value or serving any public interest virtue.

Like the majority of Ghana’s governance-focused Civil Society (CSO) activists, I am sensitive to claims that, sometimes, public activism undermines institutions rather than build them up. Whilst we push for transparency at every given opportunity, our intention should never be to stampede credible institutional processes if we believe that the redress we seek in the public interest is achievable through routine institutional arrangements.

We have been strategic in our discussion of the DBG issues

That is why when I was granted access to an extensive trove of evidence by the aforementioned insiders at DBG, I only publicised about 20% of those issues where I felt that only the sunshine of radical public transparency will shift the balance of power towards those at the bank genuinely committed to governance improvements.

A wide array of alarming personnel and Human Resource (HR) – related issues was left out of my essays since it appeared that the bank’s disciplinary and internal audit functions were adequately primed to deal with them.

Likewise, worrying evidence of contract awards to entities with links to management and board members was not poured out into the public domain because I could not see enough traces in the record of those individuals and entities having had enough chance to react to the damning findings.

Yet, DBG has been working overtime to discredit every bit of our work

I was therefore shocked to my marrow when I read the following passage in DBG’s latest self-exoneration report, purportedly written to its funding partners, shareholder, and regulator, and yet widely circulated for effect.

While civil society activists are free to perform their duties, DBG encourages them to avoid half-truths and misleading statements, as DBG operates transparently, and the facts are clear. It is obvious that the allegations are meant to undermine the establishment and mandate of the Development Bank Ghana and its shareholder and regulator.

This is a serious indictment of myself, my colleagues, and my line of work. DBG is baring its fangs and clearly aiming for the jugular. All this despite the strenuous lengths I and my collaborators have gone to avoid needless sensationalism and to keep our criticisms constructive. But we take it all in our stride.

Records, however, must be straightened

What we cannot do, however, is to allow any impression to stick that we have been telling half-truths or spreading misleading information, or that we don’t know what we are talking about. We have a duty of truth to the people of Ghana, which we cannot abandon.

Thus, as we continue to process which facts and materials in our possession should serve DBG’s ultimate interest if they were to be made public, I am proceeding in this short essay to only address specific allegations made by DBG that seeks to undermine the integrity of the CSO watchdog role in Ghana.

1. Settling scores with imaginary enemies

In DBG’s first two statements, I struggled to understand what exactly they were responding to.

Take the first three rebuttals in their November 13th statement, for instance.

A. I never mentioned anywhere and at anytime that DBG was “capitalised” to the tune of $750 million. I was very clear in my essay that the bulk of funds were “pledges” meant to resource DBG, and that a substantial amount of the money is meant for direct on-lending and not to shore up equity. These pledges are being drawn down as various conditions for their disbursement are met.

At any rate, DBG’s attempts to underplay the funds they have received to date is disingenuous. It is wrong to create the impression that only $238 million has been disbursed to the bank by its stakeholders. As of September 2024, DBG had received $200 million in equity from the government of Ghana and $38 million from the AfDB, true. But it had also sucked up $136 million from the World Bank through the latter’s $175 million facility secured by the government of Ghana. More than $49 million had also been borrowed from German DFI, KfW. Thus, at least, $423 million of the $750 million in pledges has been disbursed already.

B. Nowhere in any of my essays did I talk about 400 million GHS as having gone missing as a result of “improper contracting”.

C. At no point in any of my essays did I mention “losses” of 700 million GHS either.

There are still media reports on the internet purporting to show that DBG has “debunked” certain assertions I made despite my public explanation on X (formerly Twitter) that I did not even make the statements being attributed to me, a clear sign of a coordinated campaign to discredit the work done to date.

Virtually all the “rebuttals” in the first two statements are merely assertions that DBG disagree with characterisations made on the basis of documented evidence of misprocurement and conflicts of interest. They generally fail to address the very serious revelations made in my essay about contract inflation, vendor malpractice, project underperformance, sweetheart deals, and conflicts of interest.

Perhaps, recognising this, DBG released a 37-page report on 19th November, 2024, ostensibly addressed to its key stakeholders.

DBG finally takes up the gauntlet

In the cover letter serving as the foreward to the 19th November report, the Board Chair and Chief Executive Officer (CEO) of DBG jointly describe the charges laid at the doorstep of the bank’s management and board as “unfounded“.

In short, DBG sees nothing of value and concern in everything that we have written, despite our total and careful reliance on the bank’s own internal records and serious red-flags documented by its own compliance, risk, general counsel, and internal audit functionaries. Talk of hubris, lack of grace, and aggressive combativeness!

Even in the face of overwhelming evidence amply documented in the bank’s own records, DBG is still able to make those of us merely bringing this to the public’s attention the villains. It is a classic playbook of Ghanaian politicians. But I never once thought that a bank funded by some of the most sophisticated institutions on Earth would use it. Let us examine some of the specifics of this fantastical show of teflon-don level of evasion and reverse psychology.

2. “We have everything under control”

A. DBG starts off with minimisation. They make it look as if the only issues of concern are captured in a single leaked document (“procure to pay internal audit report”, as they call it). This is of course incorrect. My own essays drew on multiple records cutting across multiple functions of the bank. Even so, only about 20% of the material matters flagged by the bank’s internal watchdogs were covered in my essays because of the strategic goal of preserving DBG’s institutional integrity as explained above.

B. Then they move to reassurance. Three “external”, highly regarded, firms have been hired to conduct reviews and investigations: KPMG, PwC, and an unnamed law firm whose identity can only be uncovered as Lawfields based on the description given. There are grave problems here.

C. First, KPMG is the bank’s current external auditor. It is its clean audits that have been relied upon as a matter of routine to persist the current culture of complacency. As we also noted in the SML affair, KPMG’s closeness to the Finance Ministry, an entity deeply intertwined in all these issues as we hope to explain in future essays, could interfere with its candour. We do not doubt KPMG’s capacity, and its familiarity with DBG’s inner workings could be an advantage. But it cannot, considering its entanglements, be the primary or only entity tasked to conduct these special audits.

D. PwC is similarly equipped to undertake the investigative tasks it had been assigned (to find out who has been feeding analysts and activists such as myself with documents) but we must point out that this focus on witch-hunting whistleblowers at this time when all energies should be directed at governance fixes is misconceived. Furthermore, PwC is the same firm that recruited the senior management against whom these serious allegations have been made. Bringing them in like mob enforcers at this point to “protect their legacy” leaves a bitter taste in the mouth.

E. Lawfields has strong ties to the Bank of Ghana since everyone knows that it is owned by the same Bank of Ghana deputy governor who has the remit to supervise banks in Ghana, including DBG. Given the concerns some have raised that the Bank of Ghana has been lax in its oversight where DBG is concerned, this potential conflict of interest situation merits mention. Furthermore, Lawfields has been intimately involved in reviewing and approving a host of contracts, some of which have come under scrutiny in the ongoing governance tussles. I struggle to understand how its involvement in these reviews and investigations can be reassuring in anyway.

F. In short, the proposed reviews and investigations at DBG must also include truly independent, and internationally reputable, legal and auditing consultants.

3. Did Yaw Nsarkoh & Mary Boakye leave the board due to concerns over governance?

DBG presented a email from Yaw Nsarkoh in which he reminds the board of a prior notice not to seek a renewal of his term on the board. They add a letter from Mary Boakye saying something similar. They insist however that their actions did NOT amount to “resignations”.

I find the gymnastics bizarre for the simple reason that this belated, afterthought, framing contradicts the bank’s own official annual report (page 20), as reproduced below.

Why would DBG recant information in its own annual report? Why are they adopting the rhetorical techniques of Ghanaian politicians in this manner by insisting that blue is red and red is blue?

Regarding their decisions to bail out of the DBG jet, there is evidence that the two directors did indeed, at various times, express serious reservations about the conduct of governance at the bank. If a director resigns following persistent such complaints, it is rational for an objective bystander to make the link. It would help if DBG can go on record to deny that the resigned Directors never made complaints about goings-on related to governance before their departure. Everyone who has sat on a board knows that Directors will catalogue their frustrations in a resignation letter or email note.

4. Did the Chief Financial Officer (CFO) resign due to frustration?

In counter to our assertions that the CFO of DBG had found the working environment stressful and frustrating, DBG, in a remarkable show of transparency, shared her resignation email in which she mentioned health issues.

We cannot argue with the fact that the CFO did use that well-known excuse in her resignation notice. We are however entitled to rely on the evidence we have that she had been frustrated whilst on the job and that this contributed to her resignation.

It is incredibly strange that somehow the Bank of Ghana refused or was unable to confirm her appointment between July 2023 when she was hired by the bank and July 2024 when she resigned “due to health reasons”. One whole year!

Was this due to her reticence in cooperating with the central bank under the circumstances? Or, was this as a result of her “not playing ball” and thus being hanged out to dry? The DBG statement is eerily quiet about the exact circumstances that saw her working remotely from South Africa for months and apparently visiting the Bank intermittently even whilst the Bank of Ghana sat on the approval of her appointment. For one whole year.

This is a matter deserving of its own investigation so for now we will leave it hanging.

5. The threshold for curable conflict of interest

In response to my complaints about preferential deals between Fidelity Bank and DBG, in view of DBG’s CEO’s many entanglements with that bank, DBG attempts to downplay the seriousness of the situation by explaining that the CEO owns “less than 5%” of Fidelity Bank, and is thus not a “significant shareholder”.

Whilst DBG may want to obsess over the technical definition of the “significant shareholder” term, the fact is that I never used that phrase myself. What I was at pains to detail were the CEO’s extensive ties to Fidelity, having served as a senior executive of the latter’s Asian unit for many years, and of course his being a top ten shareholder.

In this essay, my primary concern is the idea, canvassed in the November 19th self-exoneration report, that because the CEO had “disclosed” his interests in Fidelity he could go ahead and authorise preferential dealings with the latter bank.

First, it is now well established in ethics research that disclosure can actually increase bias in certain contexts. In fact, the growing scholarly consensus is that disclosure can worsen bias in the absence of the right ethical environment. To the point where, in the finance and auditing context, for instance, some scholars have described disclosure in charged situations, such as this one, as “rather useless”. Not only is disclosure alone rarely ever adequate in curing conflicts of interest, it is also now widely understood that disclosure is only useful where and when the sanctions regime remains operative and has teeth.

The proper test for the conflict of interest claim we made regarding DBG’s private placements is simple: would these large discounts (exceeding 6% in some cases) to Fidelity and others have been made if the transactions were at arms-length? The simple answer in this case is: NO.

DBG’s explanation for why it chooses to enter these kinds of deals for rates far below the treasury bill benchmark is – wait for it – DDEP.

In 2022/2023, Government of Ghana entered into restructuring of its domestic debt. DBG’s money market decision not to take Government paper was fully vindicated. DBG experienced none of the terrible losses experienced by the banking sector and other state-owned enterprises (SOEs). DBG did not report a loss in either 2022 or 2023.

If any reader thought that everyone in Ghana is aware that treasury bills were not restructured, and could not have been restructured at the time since the government was shut out of the capital markets and had only treasury bills to rely on, well, DBG has news for you: they are not aware.

6. Office decor and fittings

Since DBG refused to engage with the substantive issues we raised about the sole-sourced contract to CPM Africa and the value for money issues, we also refuse to engage with them on the hair-splitting route they took in their “rejoinder”.

7. No internal wranglings?

DBG argues fervently that there aren’t and haven’t been any clashes among and between the key watchdog functions in the organisation, on the one hand, and the senior management, on the other hand. Their point, however, is moot. The mere fact that CSOs in Ghana have been given a large trove of internal documents by unhappy insiders across multiple functions is proof enough that there is a raging conflict within the bank.

8. The Kulana, Linkcom, and Asamoah & Williams (AWC) contracts – the “urgency” claim

Many of the remaining responses in part I of the 19th November report are merely argumentative and do little to address the concerns raised in my two essays, so I will focus on the meaty part II of the report.

Despite the substantial amount of evidence presented in the earlier essays to impugn the procurement processes that led to the engagement of Kulana, Linkcom and AWC, DBG refuses to concede even the slimmest scintilla of malpractice. Many of the responses are reminiscent of the kind of justificatory flourishes we are used to seeing in the rhetoric of Ghanaian politicians.

Even though, in one breath, DBG says that it has engaged KPMG to do a thorough value for money audit of these contracts, it is clear that, in another breath, its board and management have already preempted the outcomes of that investigation (obviously because they feel that they can rely on KPMG’s loyalty).

Regarding Kulana and Linkcom, specifically, DBG insists that everything that happened was kosher.

Yet, in its own chronology of events are all the facts needed to discount the reassurance they are so earnestly urging on all of us.

In DBG’s recounting of events, things came to a head when it was issued a DFI license on the 11th of November, 2021, by the Bank of Ghana with a condition that it exits the core banking platform of state-owned bank, CBG, on which it had been perching. (Take careful note of all the dates).

Exactly a week later, on 19th November 2021, it wrote to the Public Procurement Authority (PPA) to be exempted from the strict requirements of the Public Procurement Act.

On January 20th, 2022, the usually pliant PPA approved the request.

Yet, it was not until March 23rd, 2023, that the Board of DBG approved the organisation’s own corporate procurement policy, which was to serve as a substitute for the public procurement law in various substantive ways. That is to say, it happened more than 14 months after the PPA had granted DBG the right to exempt itself from the strictest requirements of the country’s public procurement laws on the grounds that this will somehow boost efficiency.

More alarmingly, DBG had already decided on the use of the direct contracting method to engage Linkcom, a Portuguese IT company, on January 23rd, 2023, weeks before this approval by its own Board could have laid out when it was entitled to use the sole-sourcing method, and the various safeguards and thresholds that apply.

Even earlier, on 3rd January 2023, it had issued a similar “request for proposal” directly to Kulana without the guiding light of a board-approved procurement policy.

The simple question is: if DBG could wait for a whole year after the PPA approved its request to exempt itself from the strict tendering requirements of the public procurement act, why exactly did it need the exemption? Why not just spend three months running a proper competitive tender?

Where really is the “urgency” and “efficiency”, on the basis of which DBG insists it should not be required to comply with the strict tendering provisions of the public procurement law, when, as we have seen in this case, it takes the Board 14 months to approve a corporate procurement policy and the management more than a year to solicit and review vendor proposals, anyway?

Let’s not discredit our audiences by beating about the bush: DBG did everything to avoid the scrutiny and strictures of competitive tendering. That really is what is happening here. Simples. Its alternative “direct contracting” approach, judging by the time it took, manifested nothing by way of “urgency”.

9. Can we call this “due diligence”?

Central to our charge that DBG’s extensive efforts to evade competitive tendering for these large multimillion dollar contracts awarded to Kulana, Linkcom, and AWC are our claims that a truly meritorous process could not have led to these companies being hired nor to those amounts being paid. DBG counters that the companies were selected only after extensive due diligence and rigorous negotiations.

Yet, DBG is not able to produce a due diligence report on any of these lucky, specially selected, companies, because there is none. They do not even bother to address the direct charges of thin capitalisation and large advance payments without security because they have no answers.

In the case of Linkcom, it boggles the mind as to why a sophisticated development bank will go to a company in Portugal that specializes in providing cloud and related IT solutions to SMEs for its datacenter setup. How is it that a top development bank in Ghana looking to procure an on-premise datacenter would refuse to open a competitive tender but will instead comb the globe for the “perfect vendor” and end up selecting a startup whose specialisation in providing SMEs with lightweight cloud solutions is universally attested?

In conducting our own due diligence on Linkcom, we found that their contract range was very often below $100,000 (example). Yet, somehow, DBG was able to bypass the dozens of IT companies in Ghana, Africa, and the world that handle datacenter setup for large institutions as their bread and butter, and land on some obscure company specialising in SME cloud solutions in Portugal and award them a sole-sourced contract worth more than $12 million even though the said company could not afford the insurance required. Talk of miraculous!

As I tried to explain in my last essay on the subject, this was not an isolated incident.

Like these Kulana and AWC contracts, 77.5% of all 2022 and 2023 contracts, amounting to 508 million Ghana Cedis, awarded by DBG were sole-sourced, with 85% of contract value going to Portuguese boutique IT firm, Linkcom, and Mauritius-domiciled Kulana.

There is another reason, in addition to the lack of documentation, why I believe that no serious due diligence was done prior to awarding these contracts.

During the sole-sourcing arrangement for the $12.5 million plus contract with Linkcom, DBG’s IT department dealt with a Jose Domingos Gomes Teixeira. This gentleman presented himself as an executive of Grupo Aitec. Eventually, when the contract was signed, the signatory on the contractor side was one Pedro Augusto Gouveia Quintela, a Linkcom official.

Why is this relevant? Well, it is because Grupo Aitec no longer exists! It was shut down as far back as 2019 after a storied run as one of Portugal’s most dynamic IT companies with roots dating back to 1987. Since the company wound down, its alumni and offshoots have tried to take forward bits and pieces of its portfolio and vision but none has its pedigree and prestige. Jose Teixeira’s use of the “aitec.pt” email handle and other brand insignia could thus be interpreted as passing off, which any serious due diligence would have flagged.

10. “Kulana was dumped on us by CBG”

DBG insists that its sole-sourcing of Kulana, like Linkcom, was driven by pure necessity. In fact, they say that they simply inherited Kulana from CBG, on whose core banking platform they used to perch until their license came through. The impression given is that Kulana set up the CBG core banking platform and did such a stellar job that there was no need to open a competitive tender when DBG wanted to go their separate way and setup their own.

At any rate, in their view, the earlier claims of possible contract inflation and underperformance have been overtaken by a more recent September 2024 internal audit.

Well, as usual, the facts fight to be heard. CBG’s core banking platform from Temenos could not have been primarily installed by Kulana, whichever subsidiary role they may have played, for the simple reason that they are NOT a Temenos partner.

Despite the hundreds of global partners of Temenos, DBG managed to comb the undergrowth until they identified the one company that is not. According to Temenos, the primary contractor for the CBG core banking setup was Inlaks, a well-known integrator that is indeed a Temenos’ partner. DBG’s attempt to pass Kulana off as some established player in the space is simply not borne out by the facts.

As mentioned in the earlier essays, our sources inside CBG insist that the amounts of fees mentioned as having been by charged by Kulana are obscene and that, had they been deeply involved in the process, far less would have spent.

In any event, the result of the special audit into the Kulana contract (which, by the way, was not a value for money audit) that DBG mentions has been out for weeks now. And it reinforces the earlier position, which is that Kulana pocketed nearly $900,000 of the money it collected ostensibly to pay for the Temenos licenses despite the millions of dollars it had already charged for consulting services.

There is no point rehashing all the issues again, as the original findings discussed in my earlier essays (here and here) have not been overturned by the results of the recent special audits mentioned by DBG in the 19th November report. If anything, they have bolstered them.

11. Who cares? DBG is still doing great!

As I said at the very beginning of this essay, we are sensitive about doing and saying things that might end up damaging DBG itself instead of triggering the serious governance reforms and expansion of oversight to include CSOs that we believe are needed, and which remain the primary goals of our campaign.

But I worry that DBG’s consistent harping on how strong the bank is, and how great it is doing, could induce a form of complacency that overshadows the urgent need for major changes to the governance culture.

Unless DBG continues to attract serious funding and manage the money with extreme care and attention, the institution is set for very rocky times ahead. All the early signs are super clear.

During a board meeting held sometime in the last quarter, the deterioration in the bank’s return-on-equity indicator from 6% to negative two (-2) percent was highlighted to the dismay of some board members.

Equally worrying are emerging, even if still distant, threats to solvency.

As of December 2023, $110 million of the bank’s capital had already been eroded as a result of the ongoing macroeconomic turbulence. The continued fall in the Cedi and unabated inflation could see capital erosion exceed $200 million soon. Coupled with the government’s incapacity to inject the full amount of pledged equity, leading to a 20% shortfall in the capital base, the medium-term picture for DBG could turn rather bleak if it loses funder confidence.

Indeed, from the record of recent board meetings, it is amply clear that the only saving grace in preventing a nearer-term collapse of liquidity is the smooth, continued, draw-down of pledged funds.

12. DBG should pause and listen

That said, we continue to argue that until the governance reforms we are pushing happen, it would not be wise for the Bank to be allowed to draw down on the KfW and World Bank grants for the upcoming guarantee fund. Nor would it make sense for EIB to disburse the nearly $180 million it pledged a while ago.

It is absolutely essential that DBG’s board and management shift from the current defensive posture and retreat from the unrelenting effort to discredit activists using pliant media and PR hacks. We humbly hope that they would focus instead on genuine, good-faith, efforts to work with truly independent consultants to address the identified governance lapses.

It is also very much in the bank’s interest to usher in a new age of open, frank, candid, and mutually respectful, engagements with the CSO community as part of a fresh embrace of true transparency and accountability.

Of course, there would be those in the close circles of the bank’s chief honchos who would continue to advise that aiming for critics’ necks is a simpler and more rewarding strategy.

Discrediting every criticism, however well founded, is indeed a more emotionally sating approach. Except that what is emotionally rewarding is rarely also strategically sound.