TELEKOM MALAYSIA PROTESTS, BUT OK’S LOAN FOR GHANA TELECOM
Telekom Malaysia Bhd. said last Tuesday that its appointed directors to Ghana Telecom approved under protest USD130 million of loans to Ghana Telecom after the company said it would face a financial crisis if didn’t get thefunds.
In a statement, Telekom Malaysia said the loan will be obtained from a syndicate of lenders under a financing arrangement with Alcatel S.A. (ALA). In other words, it was vendor financing. "The management of Ghana Telecom, Telenor Management Partners AS - a unit of Telenor ASA (TELN) - told the Ghana Telecom board earlier this month that Ghana Telecom would face severe financial distress if the board did not approve the loans," Telekom Malaysia said. Telenor has been managing Ghana Telecom for over a year.
Six directors of Ghana Telecom are appointed by the government of Ghana and three directors of the company are appointed by G-Com Ltd., a Ghanaian company in which Telekom Malaysia has an 85% stake. "Ghana Telecom insisted that by virtue of the Ghana Telecom regulations, the G-Com appointed directors should approve these loans," Telekom Malaysia added.
G-Com itself, a 30% shareholder in Ghana Telecom, still insists that the loan agreements require some minor amendments, "as the loan purports to dilute certain rights which G-Com states that it has under Ghana Telecom’s regulations," Telekom Malaysia said.
"It is unfortunate that Ghana Telecom is entering into agreements to borrow sums in excess of USD100 million which are contrary to its own regulations and proper corporate governance. The fact that Ghana Telecom’s directors were required to act under protest to rescue Ghana Telecom from a severe financial crisis is a worrying development," Jaffa Sany Mohd Ariffin, Telekom Malaysia’s chief financial officer said.
Telekom Malaysia is currently pursuing an international arbitration against the government of Ghana which is due to be held in The Hague, Netherlands, in July this year.
Under the terms of the World Bank-sponsored privatization of Ghana Telecom, Telekom Malaysia was entitled to have control and management of Ghana Telecom. "The government of Ghana effectively deprived Telekom Malaysia of these rights in 2002," Telekom Malaysia said.As such, Telekom Malaysia is claiming $174 million in the international arbitration.
Last month, the government of Ghana admitted liability and said it will pay Telekom Malaysia USD50 million from its foreign currency reserves, though Telekom Malaysia says it has yet to receive the payment or any part of the sum due.