Nick Shaxson ■ Murky Ghana gold deal raises questions about Jersey


Update: the previous blog had the incorrect link for the Angola-Russia deal. The correct link has been inserted.

Update: Sept 28. IMANI Africa: 10 most alarming problems with Agyapa Royalties deal

Update: there’s now a petition you can sign and share, available here.

From Ghana Business News:

On the last days before Ghana’s Parliament went on recess the government laid before it for approval some agreements
. . .
Parliament hastily went through those bills, ‘debated’ and approved them on Friday August 14, 2020.

The bill, which is not law yet, is a strange, murky, and exceptionally unpopular arrangement. Ghana’s Attorney-General described the deal as “unconscionable.” A group of civil society organisations has said it “lacks the basic minimum of transparency.” A think tank calls it “broad daylight robbery.”

Essentially, a mysterious company based in the UK tax haven of Jersey, Agyapa Royalties, has inserted itself into the middle of what looks like a highly unwise financing arrangement. In exchange for an up-front payment from ‘investors’, variously forecast between $500 million and $1 billion, Ghana will be signing away over three quarters of its future gold royalties to Agyapa — forever.

We have obtained a little information about Agyapa from Jersey, which, combined with some leaked documents from Ghana outlined below, paint a pretty shocking picture.

Mortgaging the future

This is far from the first time an African country has exchanged future mineral revenues for an up-front cash injection. Angola has since the 1980s set up a series of oil “prefinancing” arrangements where it has taken often large loans from consortia of western banks in exchange for future oil cargoes secured by its state oil company Sonangol. During the war, these loans were used to secure urgent weapons deliveries – with plenty of money going missing along the way. However, while those Angolan loans have for years rightly been criticised for their opacity, this Ghana deal seems to have added a further element: the insertion of this mysterious private party into the middle of the financing streams, under opaque terms. Even Angola rarely went that far (with one spectacularly murky exception involving Russian debts, for true connoisseurs of shady dealing.)

Shadow Banking and the Wall Street Consensus

The Ghanaian financing arrangements are consistent with, and are a twisted version of, what the shadow banking expert Daniela Gabor calls the “Wall Street Development Consensus” (a close relative of the Wall Street Climate Consensus that we’ve written about recently.) Under the overarching Wall Street Consensus (which is supported by the World Bank, development banks and others,) the solution to “development” issues in Africa and elsewhere (and the solution to funding the climate transition) is to maximise the amount of finance flowing in to countries and projects by tapping into the vast pools of liquidity in the hardly-regulated shadow banking sector. Getting “investment” money into poor countries may sound like a great idea: but what matters is the terms and conditions under which money will subsequently flow out via repayments, interest and other channels.

Agyapa would seem to be an example of this: an apparently large injection of up-front money to Ghana’s budget, in exchange for likely vastly larger sums flowing out at a later date.

Unfortunately, this broad consensus has a growing chorus of allies and cheerleaders: even in supposedly pro-African bodies such as the African Union and the UN Economic Commission for Africa (UNECA.) The latter has lobbied hard for African countries to create an “enabling environment” for private equity, public-private partnerships, and other ‘innovative’ shadow-banking practices which have appallingly predatory records in countries at all income levels. This is all the more strange, given that the same document strenuously highlights the risks of illicit financial flows.

This Wall Street Consensus involves pushing domestic financial market reforms to make countries more hospitable to securitisation and other shadow-banking practices; and for states and taxpayers to underwrite risks and costs, while maximising rewards for investors. As one analysis puts it:

such reforms would involve a wholesale reorganization of the financial sectors and the creation of new financial markets in developing countries in order to accommodate the investment practices of global institutional investors.

In other words, making “development” serve the interests of financial players, rather than the other way around.

Put crudely, a large part of shadow banking essentially involves creating ever cleverer tools for providers of capital to maximise rewards for themselves, while shifting risks, costs and losses onto the shoulders of others. This kind of financial ‘inward investment’ can be likened to a crowbar: a tool for providers of capital to jimmy open the national safe and make off with the proceeds. African countries are generally recipients of capital, not providers of capital: there is no discernible net ‘development’ benefit to this formula — while there are a large number of risks.

An Agyapa-related “Indemnity Letter” that has come to our attention contains pages and pages of such risk-shifting language — and its header contains this:

What fees would such players earn? At this stage, we cannot know.

More and more questions

The Agyapa deal raises clouds of more specific questions, of which this article can only cover a few.

Question 1: Is this good value for money? An internal Ghana government document from last month outlining the details of what it calls “Project Kingdom” justifies it like this:

There is no way for us to know if it is will be good value for money, or what the future royalty payment projections are, which would be needed as an initial basis for calculating appropriate financing costs, and we don’t know what the actual financing costs will be either. We have no idea. An opposition statement describes this as an agreement in perpetuity: an unverified but credible document we have seen essentially supports this: the agreement ends when the gold runs out.

Even that crazy Angola-Russia deal never went quite that far. What is more, the document says that under the agreement,

“Royalty rates in Ghana are 5% for some mines and 3 to 5% for others depending on the gold price.”

Ghana is a stable, long-term, low-risk gold producer: why are these rates so low?

What about tax? Well, look at this astonishing set of carve-outs, as outlined in an August 2020 Finance Committee report (to aid understanding, ARG Royalties Ghana is a wholly owned local subsidiary of Agyapa):

The sheer brazenness of all this is breathtaking.

In addition, it is worth noting that

London’s courts and tribunals, in the discreet pursuit of what some call “competitiveness,” have since the age of imperialism proved highly favourable to the interests of mobile global capital, especially when it is pitted against sovereign governments like Ghana’s. And one of London’s several advantages is, as a law firm put it:

arbitration in London is chosen by many parties because of the confidentiality advantages that are provided.

What is more, Agyapa’s location in Jersey could place important parts of Ghana’s future before the courts of Jersey, which has just as much, if not more, of a pro-capital, anti-sovereign bias than London’s, and on past records may be prone to “unusual rulings” in this respect – as we have noted before (see e.g. p5 here, under “Jeffrey Verdon”).

There are many other reasons why Agyapa appears likely to be an exceptionally bad deal for Ghana.

  • The stunning absence of transparency, over project terms, and project ownership: the information we have is based on leaks, not on official publication. Indeed, an opposition statement said that the government’s decision to withhold documents is “in clear violation of Article 181(5) of the Constitution.”
  • It is election year in Ghana — so incumbents are likely keen to maximise personal rewards up front before they may perhaps lose power.
  • A statement by Ghanaian Civil Society Organisations estimates that these future royalties are being sold off at 30% of their true value. This is admittedly speculative, in the absence of transparency, but still.
  • An opposition party statement slammed “the indecent haste with which these high-stakes agreements were being rushed through the parliamentary approval process” — they had four hours to scrutinise a deal which was two years in the making.
  • more generally, the astonishing potential for mischief in international financial arrangements, especially those run through tax havens, with lenders typically holding large information advantages over borrowers, and the ease with which conflicts of interest can be hidden.
  • A range of other criticisms is available here.

And all that is even before we get into the next question.

Question 2: What is Agyapa and who owns it?

Good Question. The above document calls it a “Gold Royalty Company.” The Jersey Financial Services Commission provides this data:

We note, in passing, the role of Ogier, an “offshore magic circle” law firm, in the transaction. (We sent them a detailed list of questions with follow-up: nothing has come back so far.)

The underlying Annual Return (under a previous name, Asaase Royalties Limited) registered on February 28th 2020 provides helpful information on who the directors are:

It does, however, provide details of an “authorised signatory” as company secretary:

And this, apparently, is he . . .

The annual return says, slightly more helpfully, that it is a company made up of 5,000,000 shares of which just one share has been issued, worth £0.01, under this ownership structure:

The Minerals Income Investment Fund (MIIF,) according to the Project Kingdom document, was

“established from the passing of the MIIF Act December 2018 to hold and manage the equity interests of the Government of Ghana (“GoG”) in mining companies, to receive mineral royalties due to the GoG from mining operations, provide for the management and investment of the assets of the Fund, finance further developments in the mining sector and monitor and improve flows into the mining sector.”

So that is alright then. Or is it? Well, the same document says:

“Government of Ghana through MIIF will be the majority shareholder with at least 51% of the shareholding.”

(Other documents and media reports say “49 percent” instead of “at least 49 percent.”) So somebody else will retain the remaining 49 percent. But who?

There is plenty of speculation in the Ghanaian media about who will benefit from this, which we won’t indulge. But we will note that the annual return above states that under Jersey law any members who hold one percent or more of the vehicle should be disclosed. However, the documents also state that the 49 percent of shares not held by the Ghana government will ultimately be listed on the London and Ghana Stock Exchanges.

That way, it would be easy for shareholders of Agyapa to hide their identities. For example, imagine that one powerful Ghanaian somehow obtains all that 49 percent equity. He or she sets up 50 companies, each in an opaque tax haven, all of which she owns, and each shell company then owns a slightly less than one percent share of Agyapa – and therefore squeezes under that Jersey threshhold of one percent.

There are several other features of Jersey law that enable secrecy to be assured for Agyapa. We won’t get into details here, but this document provides an overview of some loopholes that Agyapa may be taking advantage of. Jersey certainly isn’t unique in this respect: this is how offshore business so often works.

We will also note, in passing, the presence of a couple of Ghanaian names in the documents registered at the Jersey FSC. For example, in the incorporation documents, we find this:

These people are unlikely to be the real players: a source familiar with Ghanaian politics, shown these names, told TJN:

These are fairly prominent party hacks, but it’s the people behind the people that is probably more interesting.

Illicit Financial Flows: the Jersey Connection

Jersey ranks 16th out of 133 jurisdictions on the 2020 Financial Secrecy Index (for comparison, Ghana ranks 117th). Jersey also ranks 7th on the most recent Corporate Tax Haven Index (Ghana is 60th). Between them, the two indexes capture the global risk of illicit financial flows posed by each place.

Think of a list of the risks that are posed by financial secrecy, for a country with major natural resource wealth. Now imagine that the government of that country, working with a major international law firm in a leading secrecy jurisdiction, has come up with a scheme that appears to tick every item on the list.

That’s where Ghana now finds itself – facing the threat of a deal that could strip the country of revenue and, through powerful contractual terms enforceable in London and Jersey, taking away from future governments the possibility to democratically reverse the decision.

The law firm Ogier advertises itself as ‘the only firm’ to advise on the law of five particular jurisdictions: BVI, Cayman Islands, Guernsey, Jersey and Luxembourg. Aside from Jersey, the jurisdictions rank 9th, 1st, 11th and 6th respectively on the Financial Secrecy Index; and 1st, 3rd, 6th and 15th respectively on the Corporate Tax Haven Index.

A country like Ghana with natural resource wealth faces a range of risks of illicit financial flows (IFF). Together, these can result in major losses of tax revenue, and also do significant damage to the standards of governance and effective political representation. Financial secrecy is at the heart of each IFF risk.

A lack of transparency about the value of a country’s natural resources, or of the resulting profits, creates the risk that fair values are not achieved; that fair revenues are not received; and that private interests may gain unfairly. 

A lack of transparency about the ownership of assets and income streams related to a country’s natural resources create the additional risks that contracts may be entered into opaquely, in which public resources are transferred to private hands without appropriate scrutiny; and that political decisions over resources may be taken with parliamentary oversight.

In Ghana’s case, the existing sovereign wealth fund provides the mechanism, and the necessary transparency and parliamentary scrutiny, to minimise all such risks. This makes it especially strange to see the government invest so much time, effort and political capital in creating a new structure that appears to raise the risks of illicit flows in each dimension.

We have seen a number of other documents surfacing, related to this deal, but this is enough to highlight the problems. Nothing about this deal makes any sense to us, except under certain logics which we shall not allude to here.


First, the Government of Ghana should urgently cancel and repudiate this entire deal — and investigate all the parties involved for possible corruption and self-dealing. Given the Attorney-General’s silence on this affair, after having initially raised serious concerns, we won’t hold our breath, until at least after the election. However, there is positive news here.

We hear that this deal is politically wobbly, and vulnerable. As a sign of that, yesterday, a senior Ghanaian official announced that the deal had been suspended pending further consultation – but within hours the Finance Minister overruled him, saying it had not been suspended.   It is therefore essential that maximum domestic and international pressure is now exerted, to ensure the deal is cancelled and repudiated.

Second, there is good evidence that one should treat the “transnational network of plunder” as a unit of analysis, including from a legal and criminal perspective. Is Agyapa such a unit? We don’t know, because we don’t have all the details. International legal bodies where Agyapa touches down — and this includes London and Jersey – should open investigations into Agyapa, and if wrongdoing is found, prosecute accordingly.

Third, Jersey should open up further to scrutiny. It should:

  • urgently publish its beneficial ownership registry, and not just in 2023;
  • demand beneficial ownership definitions should include any individual who directly or indirectly owns or controls at least one share, regardless if listed or unlisted;
  • publish all legal owners online even if they own less than 1% of shares immediately, and not only once a year;
  • publish annual financial statements of all companies incorporated in Jersey.
  • Publish details of the directors of all companies

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