Minority Leader and Effutu MP, Alexander Afenyo-Markin, has rejected GoldBod’s position that its role as an agent of the Bank of Ghana (BoG) shields it from responsibility for losses arising from the country’s gold trading operations.
Speaking at a press conference in Parliament on Tuesday, August 18, Mr Afenyo-Markin said GoldBod could not rely on accounting classifications or its agency relationship with the central bank to avoid scrutiny over how the transactions were executed.
“Gold Board cannot hide behind accounting technicalities,” he said.
Mr Afenyo-Markin acknowledged that GoldBod could argue that it purchased gold on behalf of the Bank of Ghana, but maintained that the arrangement did not absolve the institution of operational responsibility.
“Gold Board is entitled to make the accounting point that it was purchasing gold on behalf of the Bank of Ghana. But agency does not extinguish operational responsibility,” he said.
He argued that an institution entrusted with billions of cedis in public resources must be accountable for the quality of its execution and the decisions it makes in carrying out its mandate.
“An agent entrusted with billions of cedis or public resources remains responsible for the quality of its execution,” he said.
Minority demands details of gold transactions
Mr Afenyo-Markin said GoldBod’s central role in Ghana’s gold trading system made it necessary for the institution to provide detailed explanations about transactions financed by the Bank of Ghana.
He noted that GoldBod is involved in key stages of the gold trade, including the buying, weighing, grading, assaying, valuation and export of gold.
The Minority Leader therefore demanded explanations on the prices paid for gold and how those prices were determined.
He also wants GoldBod to disclose any premiums paid to secure gold supplies, explain how international off-takers were selected and provide details of the discounts at which the gold was subsequently sold.
Mr Afenyo-Markin further questioned how much GoldBod earned in service and asset charges from transactions financed by the Bank of Ghana.
He said the institution should also explain the commercial and transactional risks it assumed, those transferred to the central bank, and the internal controls it had in place to protect the Bank of Ghana from losses.
He further asked what corrective measures were taken as losses accumulated.
Afenyo-Markin raises ‘moral hazard’ concerns.
The Minority Leader said particular scrutiny should be given to the structure of the arrangement if GoldBod earned transaction-based income while the Bank of Ghana bore the underlying trading losses.
He described such a structure as a potential moral hazard, arguing that it could create incentives to increase transaction volumes even where the transactions did not ultimately generate value for the financier.
“If an institution earns transaction-based income for purchasing, assaying, and aggregating gold, while the financier bears the underlying trading losses, then increasing transaction volumes may increase the agent’s revenue, even where the overall programme destroys value for the principal,” he said.
Mr Afenyo-Markin said the reported losses should therefore trigger an investigation into whether the incentive structure contributed to excessive transaction volumes, weak pricing discipline or insufficient attention to trading costs.
“Any responsible government confronted with these 22 billion losses should immediately investigate whether the incentive structure encouraged excessive volumes, inadequate pricing discipline, or insufficient attention to trading costs,” he said.
He also rejected what he described as attempts to address concerns about the programme by pointing solely to GoldBod’s reported surplus.
“We therefore reject any attempt to answer the public concerns merely by pointing to GoldBod’s reported surplus,” he said.
His comments form part of the Minority’s broader demand for greater transparency and accountability over the financial arrangements between GoldBod and the Bank of Ghana in the country’s gold trading operations.
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