Procurement fraud and economic rent-seekers undermining national projects – Dr. Oteng-Gyasi

Statesman and industrialist, Dr. Tony Oteng-Gyasi has called for an end to fees and commissions paid to people and institutions parading as brokers for national projects, explaining that the practice fuels procurement fraud, drains the public purse and undermines the execution of strategic national infrastructure.

Delivering the University of Ghana’s 2023 Alumni Lecture in Accra, the Founder and Chairman of Tropical Cable and Conductor Limited (TCCL) said such agents are only after their personal gain at the expense of the state and its development.

It also undermines state organisations independence and functionality, as the agent system interfers with their ability to independently conceive and execute projects, Dr. Oteng-Gyasi said, urging that: “Vested interests and economic rent-seekers should not be allowed anywhere near the process”.

“Too many of our very well-educated and knowledgeable people seek to make immediate fortunes as commission agents and project promoters, even though they only offer contacts and introductions to high places.

“They call themselves businessmen and hover around decision-makers, seeking to influence decisions in favour of whoever will pay them. They are the economic rent-seekers of our time, just like the import licence purveyors of the early 1960s,” said the former Chairman-University of Ghana.

He said such practices have made it difficult to execute financially feasible projects across the country, resulting in underdevelopment. He said it is obvious that the western railway line from Sekondi Takoradi to Kumasi should be financially feasible, given the volumes of bauxite, manganese and cocoa available to be freighted; but he wonders why the line has been so difficult to build.

“It may be useful to remind ourselves that during colonial times, when the line was originally built, the extension of that line from Tarkwa to Obuasi was made possible because of revenue guarantees in the form of promissory notes given by the then Ashanti Goldfields of £30,000 per annum – which would be about £6million per year today. That made it possible to raise the funds and construct the railway,” the former President-Association of Ghana Industries (AGI) said, quoting Ayowa Afrifa Taylor.

Akosombo Dam

Using the circumstances around construction of the Akosombo Dam to strengthen his case, the Chairman-Ghana Revenue Authority said Ghana’s first President, Dr. Kwame Nkrumah, had to ignore the ill-advice of his negotiating team to accept the ridiculously low price that Kaiser Aluminum insisted on to make construction of the dam possible. “With the benefit of hindsight, the wisdom in that decision is obvious. Why are we finding it so difficult to deliver such game-changing projects in our time?” he asked.

“My proposal is that these national projects should not have commission agents, representatives of foreign companies and project brokers walking the corridors of power seeking their fortunes. Such projects should be open to international competitive bidding, and have the best national teams – made up of seasoned public servants aided by salaried consultants – negotiating best terms for the nation. Period!” Dr. Oteng-Gyasi said.

Dr. Oteng-Gyasi also chairs the Ghana Integrated Aluminum Development Corporation (GIADEC), and said the Ghana Public Service has some of the best-educated people in the country – some of whom are better educated and more experienced than those in the private sector.

He said such talents, together with project-specific salaried consultants – local and foreign – can help the country to structure and execute these transactions in a timely and cost-effective manner. He bemoaned the rising incidence of procurement fraud in the public sector, noting it’s sad that the inadequate value for money in government procurement is a recurrent theme in national discourse.

“It is amazing that a people so used to bargaining in our everyday lives cannot use this skill in service of our nation. All measures from the centralised purchasing days of the Ghana Supply Commission through the Ghana National Procurement Agency, which was used to purchase essential commodities, to the current Public Procurement Authority seem to have failed to protect the public from ravaging private businessmen and their ‘public businessmen’ accomplices.

“Who should we blame for this sad state of public procurement?” he asked. “It is time for behavioural scientists and sociologists to join forces with procurement professionals and our lawmakers, to review the public procurement law and fashion a new one that will better serve our purposes. Game theory and optimisation techniques can help design a more efficient public procurement system and Law,” he said.

Dr. Oteng-Gyasi recalled the days when market women in particular, and traders in general, were accused of being selfish and greedy – leading to coining the word ‘kalabule’ to describe their conduct.

He said after public whippings failed to change their behaviour, a quiet economic liberalisation and floating exchange rate were what it took to end ‘kalabule’ and restore sanity in the markets. “A similar solution may be waiting to bring sanity to public procurement,” the industrialist said.

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