Friday, May 05, 2006

ThinkGhana-Vrs-SEC,Ghana :Affidavit in Support of Mandamus Application

ACCRA A. D. 2006

SUIT NO. AP22/2006


C/o SEC Bldg, Ministries } RESPONDENT
Accra }
(Applicant will direct service)

Ex Parte ThinkGhana }
C/o 28/1 Castle Road, Adabraka, Accra } APPLICANT


I, Joe Aboagye Debrah, of F119B, Palm Avenue, Ashongman Estates, Accra, Chief Executive/Founder of ThinkGhana, do make oath and say as follows:

1. That I am the Deponent herein and have the authority and consent of the Applicant organisation to depose to these facts which are also within my personal knowledge.

2. That ThinkGhana is a private company limited by guarantee established and dedicated to inter alia, upholding the best practices and principles of corporate governance and securities regulation in Ghana.

3. That on December 18, 2005, the Applicant filed a complaint with the Respondent in respect of the takeover by Guinness Ghana Limited (GGL) which later changed its name to Guinness Ghana Breweries Limited (GGBL). The said complaint is attached hereto as exhibit “TG1”.

4. That the said complaint demanded an investigation into the acquisition of GBL by GGBL and the role played by all major actors in the process to determine whether Ghana’s securities laws had not been breached and whether the interests of shareholders were and have been adequately protected by the regulatory institutions involved in the acquisition.

5. That on January 16, 2006, the Respondent wrote to the Applicant stating that the complaint was a catalogue of unproven allegations and was without merit and declined to investigate the complaint but requested for cogent and credible evidence. The Respondent’s letter is attached as exhibit “TG2”.

6. That the Applicant forwarded an initial response dated January 17, 2006 (attached hereto as exhibit “TG3”) to the Respondent and stated inter alia, that the Respondent’s action was an abdication of responsibility under the Securities Industry (Amendment) Act, 2000 (Act 590) and to other relevant legislation. It further stated that the Respondent had neither investigated the complaint as required by law nor was willing to do same.

7. That the Respondent has a legal duty under section 9 of Act 590 to investigate the complaint in order to make a determination whether it is unmeritorious.

8. That the Respondent also has a legal duty under the Securities Industry Law, 1993 (PNDCL 333) to regulate the securities industry of Ghana and to assure compliance with the law, rules and regulations of the securities industry.

9. That the contents of the Respondent’s letter of January 16, 2006, (that is exhibit TG2) shows that no investigation was conducted as the Respondent had regrettably repeated the same false information and untrue statements being published through the regulators by GGBL, a situation which necessitated the complaint in the first place.

10. That per letter dated January 24, 2006, Applicant forwarded a detailed response to the Respondent (attached as exhibit “TG4”) which also annexed a 15-page appendix (attached hereto as exhibit “TG5”).

11. That the Respondent is the only public body tasked with regulating the securities industry in Ghana and cannot abdicate its responsibilities to any other entity.

12. That the Respondent therefore has regulatory oversight over the Ghana Stock Exchange (GSE) and GGBL in accordance with the law.

13. That the abdication of responsibility by the Respondent compelled the Applicant to write to both GSE and GGBL to request for copies of specified documents and information that the Respondent would have needed to make a fair determination of the matter if it had been minded to do its legal duty. Relevant copies of the said letters are attached as exhibits “TG6A” and “TG6B”.

14. That whereas GGBL refused the Applicant’s request for disclosure on stated grounds, (which is attached hereto as exhibit “TG7”), the GSE has provided access to the requested public documents but not the purported valuation report neither did it acknowledge receipt of the said report.

15. That by the GSE’s rules and according to the Securities and Exchange Commission Regulations, 2003 (LI 1728), all listed companies have a duty to file quarterly financial reports with the GSE and copies lodged with the SEC as appropriate.

16. That there are defined sanctions under law to be applied by both the GSE and the Respondent in the event of non-compliance with the rules and regulations.

17. That in the lead up to the takeover of GBL, GGBL failed to file its 1st quarter financial results 2004 by the legally stipulated deadline of October 2003, which is a breach of LI 1728.

18. That the penalty for the said breach is ¢2,000,000.00 for each day that the default persists.

19. That till date, GGBL has never provided the said results and neither the GSE nor the SEC has imposed the requisite penalties under law.

20. That in the lead up to the takeover of GBL, GGL further was obliged to file its half-year results by January 2004, by which time the announcement of the takeover had been made on the market.

21. That GGBL filed its half-year results but not in compliance with LI 1728 as being a condensed financial statement which was not in compliance with regulation 56 of LI 1728 but again, the Respondent and the GSE allowed it to be published on the market in purported compliance with the securities laws.

22. That GGBL has issued a press release on the GSE to the effect that it has merged with GBL and also published through the media communication to cement that wrong impression in the minds of unsuspecting shareholders and investors. The said press release is attached hereto as exhibit “TG8”.

23. That publication of false and untrue information on the stock market is a breach of the Securities Industry Law, 1993 (PNDCL 333) which carries a penalty of 500 penalty units or two years imprisonment.

24. That all of these actions were calculated to prevent full disclosure of the true financial state of GGL prior to the takeover and were a fundamental breach of Ghana’s securities laws.

25. That yet again, the Respondent and the GSE have refused to do their legal duty by acting to prevent or punish the breaches of securities law which continue on the market.

26. That the Respondent in official communication to the Applicant has made the following statements:

a. That GBL and GGL have merged to form GGBL.
b. That GGL submitted a valuation report underpinning the Takeover Offer to both the GSE and the Respondent.
c. That the High Court of Ghana determined the Offer price during the Takeover.

27. That all the above statements in paragraph 26 made by the Respondent itself in official communication are false and untrue in material particular and carry sanctions under applicable securities legislation even if they had been made by any other capital markets operator.

28. That GGBL is communicating on a letterhead of an entity known as Guinness Ghana Breweries Group (GGBG) which entity was used to call the Annual General Meeting of GGBL and copies of the Annual Report were lodged with the SEC in which the Chairman of GGBG states clearly that GBL and GGBL have not merged.

29. That a copy of the GGBG letter head and the relevant portions of the Annual Report of GGBG 2004 are attached hereto as exhibits “TG9” and “TG10” respectively.

30. That a search at the Registrar-General’s Dept. revealed that the said entity, GGBG does not exist and was not even registered in compliance with the Registration of Business Names Act, 1962 (Act 151). The search is attached hereto as exhibit “TG11”.

31. That GGBL has made untrue statements through press releases on the GSE and in the press including a report on the launch of Guinness Ghana Breweries Group in the Daily Graphic newspaper of October 13, 2005 to the effect that it is the merged company but the Respondent has not applied any sanctions but has rather adopted the infractions and put them out in the public domain itself on the SEC’s own letterhead. A copy of the said publication in Daily Graphic is attached as exhibit “TG12”.

32. That at the time the SEC was communicating to the Applicant that GBL and GGL had merged, it was privy to all the information exhibited in exhibits TG9, TG10, TG11 and TG12 but woefully failed to perform its regulatory functions assigned to it by law to either prevent breaches of the law or to sanction offenders for breaches of the law.

33. That on February 3, 2006, the Applicant wrote to the Minister of Finance to use his powers under section 140 of PNDCL 333 to order an investigation into the matter. The letter is attached as exhibit “TG13”.

34. That on February 13, 2006, a reminder was sent to the Minister of Finance but till date, no response has been forthcoming. The reminder is attached as exhibit “TG14”.

35. That the actions of the Respondent are unwarranted under law and a continuing assault on its obligations under law to regulate the securities industry in Ghana and would only act if compelled by an order of mandamus.

36. That under law, the Respondent has a legal duty to investigate a complaint that alleges inter alia, breaches of securities laws such as stock manipulation and insider dealing and to work to secure an enforcement of Ghana’s securities laws regardless of the financial clout of the entities in breach.

37. That during the Takeover, the parent company of GGBL engineered a sale of shares to itself at ¢5400, the prevailing share price on December 17, 2003 to the exclusion of all other shareholders.

38. That this purported sale of GGBL shares to Diageo was approved by GGL shareholders on July 20 2004, about seven months after the deal had been announced and after the price of Guinness had mysteriously risen by approximately 136% to ¢12,750 in the intervening period before the said sale.

39. That in any other jurisdiction and on any other securities market except Ghana, this would warrant an investigation by the securities regulator itself without any prompting from any individual or organisation.

40. That in the late 1980’s, Guinness Plc undertook a similar takeover of Distillers Plc in the United Kingdom which deal was investigated by the Department of Trade and Industry in the United Kingdom and the investigations established malfeasance and breaches of United Kingdom securities laws and the then Chairman of Guinness Plc, Ernest Saunders together with three other directors were sentenced to various terms of imprisonment for their roles in the said transaction.

41. That I have been informed by Counsel and verily believe same to be true that the actions of the Respondent are erroneous in law and constitute an assault on the principles of securities regulation and an affront to all Ghanaians and a complete abdication of responsibility under law.

42. That I have been advised by Counsel and verily believe same to be true that the High Court has authority to order the SEC to do its legal duty by way of mandamus.

43. That it is the Applicant’s prayer that the Respondent be ordered to investigate the acquisition by GGBL of GBL and the role played by all major actors in the process including the SEC itself, to determine whether Ghana’s securities laws have not been breached and whether investor’s interests have been protected by the regulatory bodies.

44. That further, all the sanctions applicable under law be applied by the GSE and the Respondent without fear or favour to all defaulters.

45. That unless this Honourable Court so orders the Respondent to do its legal duty, Ghana will become the laughing stock of the international financial community and much needed portfolio investment will be diverted from Ghana to other countries where regulators are ready, able and willing to do their legal duty to regulate their securities industry according to law.

WHEREFORE I swear to this affidavit

DAY OF MARCH, 2006 ] ……………………………




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