Venture Capital case: judge throws out agreement with government

The high court has rejected an agreement, reached between the Attorney General and three accused in the case of the Republic v Daniel Duku and five others, relating to the Venture Capital Trust Fund, which would have led to three out of the five accused paying roughly GHC20 million in total to the state, including fines and possible seizure of properties belonging to the accused.

The three accused, Daniel Duku, Irene Anti-Mensah and Frank Aboagye Mensah, entered into negotiations with the Attorney General under Section 35 of the Courts Act 1993 (Act 459), a provision which allows accused people to offer compensation and restitution to the state for loss, harm or damage caused the state.

The court was presided over by Justice Anthony Oppong, a Court of Appeal judge sitting with additional responsibility as a high court judge.

The court first raised objections to the proposed settlement at a hearing on 9 June.

Courts Act provisions

Section 35 of the Courts Act, entitled “Offer of Compensation or Restitution”, states as follows:

“(1) Where a person is charged with an offence before the High Court or a Regional Tribunal, the commission of which has caused economic loss, harm or damage to the State or any State agency, the accused may inform the prosecutor whether the accused admits the offence and is willing to offer compensation or make restitution and reparation for the loss, harm or damage caused.

“(2) Where an accused makes an offer of compensation or restitution and reparation, the prosecutor shall consider if the offer is acceptable to the prosecution.

“(3) If the offer is not acceptable to the prosecution the case before the Court shall proceed.

“(4) If the offer is acceptable to the prosecution, the prosecutor shall in the presence of the accused, inform the Court which shall consider if the offer of compensation or restitution and reparation is satisfactory.

“(5) Where the Court considers the offer to be satisfactory, the Court shall accept a plea of guilty from the accused and convict the accused on his own plea, and in lieu of passing sentence on the accused, make an order for the accused to pay compensation or make restitution and reparation.

“(6) An order of the Court under subsection (5) shall be subject to such conditions as the Court may direct” and

“(7) Where a person convicted under this section defaults in the payment of any money required of the person under this section or fails to fulfil any condition imposed by the Court under subsection (6), any amount outstanding shall become due and payable and upon failure to make the payment, the Court shall proceed to pass a custodial sentence on the accused.”

DPP on filed agreement

In court today, 22 June, the Director of Public Prosecution, Yvonne Attakora Obuobisa, told Justice Anthony Oppong’s court that the state has accepted the offer of the accused persons and has therefore filed the agreement with the three accused persons at the High Court Registry.

She further said that the accused persons have proposed to settle the amount within three months, should the court agree to this.

Offer rejected

After this preliminary submission in open court, Justice Oppong requested lawyers of the accused and the DPP to meet him in chambers.

After 20 minutes of in-camera hearing, the court resumed sitting and ruled that it is not satisfied with the Attorney General’s agreement reached with the accused persons. The court said it finds the settlement particularly unacceptable because the accused are offering to pay back the monies misappropriated by instalment and not in one go.

Consequently, the court rejected the offer and ordered that trial should commence on 3 July 2020.

After the court sitting, Addo Atuah, lead counsel for Daniel Duku, the first accused person in the case, said that his client will appeal against the high court decision.

He argued that the trial court’s decision is completely in breach of the Courts Act.

Fact sheet

The facts sheet of the state as presented in court by the Attorney General states:

“Venture Capital Trust Fund (VCTF) was established in 2004 by the Venture Capital Trust Fund Act 2004 (Act 680) to provide financial support to small and medium-scale enterprises (SMEs) through eligible venture capital financing companies.

“The first accused person, Daniel Duku, was the chief executive officer of VCTF between 2010 and 2015. The second accused person, Richard Lassey Agbenyefia, was a former Member of Parliament and a former member of the board of trustees of VCTF (‘the board’). The third accused person, Irene Anti-Mensah, who doubled as the executive assistant to the first accused person, was an investment officer of VCTF.

“The fourth accused person, Kofi Sarpong, was an investment officer of VCTF. The fifth accused person, Frank Aboagye Mensah, is a businessman and the husband of the third accused person.

“The sixth accused person, Charity Opoku, also known as Charity Ameyaw, was an accountant at VCTF.”

Chief exec’s limited powers

Of the first accused, the record of facts says: “As the CEO of VCTF [he] facilitated the recruitment of the third and fourth accused persons, who were his work colleagues at the Ghana Investment Promotion Authority (GIPA), to join him at VCTF, as his executive assistant and investment officer respectively.

“Upon assumption of office, the first accused person introduced a loan scheme named Development Assistance Fund (DAF) to provide credit directly to individuals and companies in clear contravention of the VCTF Act and contrary to the objects of VCTF. Despite the advice of solicitors of VCTF on the illegality of the proposed loan scheme, the first accused person managed to obtain the approval of the board for the establishment of the DAF scheme.

“The first accused person, by approval of the board, could only approve loans not exceeding GHC30,000. Any loan amount above GHC30,000 was subject to board approval. The board also approved strict guidelines under which the loans were to be disbursed.”

Blank cheques

According to the statement of facts, “An amount of GHC1 million, which was later increased to GHC2,000,000 was approved by the board as a revolving fund for the DAF project. Investigations have revealed that the first accused person disbursed various sums of money under the scheme the total of which far exceeded the approved amount of GHC2 million.

“Prior to the appointment of the first accused as CEO and the establishment of DAF, VCTF operated an existing scheme which gave loans to farmers in the Northern and Brong-Ahafo Regions for the cultivation of sorghum.

“This loan scheme, known as the Special Purpose Vehicle (SPV), gave loans to certain venture capital finance companies (VCFCs), namely SINAPI ABA and Techno Serve Company Ltd, for onward lending to farmers. The SPV had a minimum of GHC50,000 and GHC500,000 as the maximum amount that could be disbursed at a time to the venture capital finance companies.

“This programme ran successfully until the first accused assumed leadership in June 2010 when the project stopped. However, in or about October 2010, the SPV was reintroduced at the instance of the first accused (albeit with board approval) this time to be controlled directly from the office of the first accused. The first accused could however only approve loans up to GHC50,000. Any loan amount above the GHC50,000 threshold required board approval.”

The facts further state that, “Contrary to and in flagrant disregard of the approved board thresholds for the CEO, the first accused person persistently approved loans purportedly under DAF and SPV well above his threshold directly to a number of companies, some of which were non-existent. Some of these fictitious companies bore addresses which belonged to the first accused.

“The accused persons used the names of a number of companies belonging to other persons to obtain loans without the knowledge, permission and or consent of the owners of the companies.

“The sixth accused, who was at all material times the accountant at VCTF and a signatory to the VCTF account, aided the first accused by signing blank cheques to grant loans to some of these companies while on leave. Some of the cheques were issued even before the purported applications for the loans were received.

“The first accused, using these blank cheques signed by the sixth accused, granted loans totalling GHC4.24 million which resulted in a total loss of GHC12,601,796.25, being principal and accrued interest to the Fund.”

More loans

The statement of facts continues: “The board, upon realising the financial challenges facing the Fund in its sustainability, instructed the first accused in 2013 to stop the disbursement of loans under the DAF scheme and to rather concentrate on recoveries.

“However, the first accused misled the board by reporting that he had recovered 81% of the outstanding loans under DAF when he knew that to be false and consequently obtained the board’s approval to resume disbursements under the DAF scheme. At the request of the first accused, the board relying on the false report of the first accused person, increased the DAF Fund from GHC1.5 million to GHC2 million.

“Again, in January 2015, the board instructed the first accused to completely stop the disbursement of loans and focus on the recovery of loans already disbursed. These instructions were ignored by the first accused who authorised the disbursement of more loans without the knowledge or authority of the board.

“In June 2015, even though the appointment of the first accused had been terminated, he remained in office until September 2015, during which period he disbursed some more loans to companies, some of which belonged to his official driver and some cronies. During the period, the first accused obtained an amount of $26,063 to attend an official programme in the United States of America. Even though the first accused did not attend the programme he failed to pay the money to chest and dishonestly appropriated the entire amount.”

“The board, on realising that the first accused did not attend the programme, directed him to refund the $26,063 to VCTF, in response to which directive the first accused issued false cheques to VCTF, which were dishonoured upon presentation at the bank.”

Due diligence

The court papers also say: “The second accused person too obtained loans in the names of companies based on false representations to VCTF without the knowledge, permission or approval of the owners of the companies [and] in other instances the loans were obtained in the names of non-existent companies.

“The third and fourth accused persons, who were responsible for evaluation and processing of loan applications to VCTF, failed to conduct the requisite due diligence on loan applicants but rather facilitated the grant of loans through falsified records by entering false information on the loan application forms.

“It has been established that the fifth accused person used non-existent companies to obtain loans from VCTF and acted together with first, third and fourth accused persons to dishonestly appropriate various sums of money from VCTF in the names of these companies.

“Evidence will show that these and other acts of the accused persons have resulted in the loss of over GHC42,856,470.21 to the Republic. It is for these reasons that the accused persons are being arraigned before this Honourable Court,” the fact sheet said.

Wilberforce Asare

* Asaase Radio 99.5 FM – now live on your radio. Tune in or log on to live streaming.

* Twitter: @asaaseradio995