ELS: MBN360 POLITICS
The Minority in Parliament is questioning the role of the Bank of Ghana in the domestic gold purchasing programme operated in collaboration with GoldBod, particularly the manner in which financial risks associated with the transactions were allocated.
The Minority Leader, Osahen Alexander Afenyo-Markin, says the reported losses linked to the programme expose what he describes as a serious governance and accountability gap between the institution undertaking the commercial transactions and the institution carrying the financial risk.
Addressing journalists in Parliament, Mr Afenyo-Markin said GoldBod cannot distance itself from the financial consequences of the programme merely because the losses were recorded on the books of the central bank.
He described the arrangement as one that requires deeper scrutiny, particularly because GoldBod was involved in critical stages of the gold trade.
“GoldBod participated directly in buying, aggregating, assaying and exporting the gold. Bank of Ghana provided the financing. GoldBod earned fees from the transactions, but when the programme generated substantial financial losses, those losses were not reported on the balance sheet of GoldBod.”
The Minority Leader questioned the rationale behind an arrangement where one institution earns transaction-related fees while another absorbs the bulk of the financial downside.
He said such a structure could create what economists and governance experts would regard as a moral hazard, where the incentives of the institution executing the transactions may not necessarily align with those of the institution providing the financing.
“The structure creates an obvious governance problem, where the entity carrying out the commercial activity receives fees based on transactions, while another institution bears the principal financial risk.”
Mr Afenyo-Markin said the issue goes beyond determining which institution’s balance sheet ultimately carries the loss.
According to him, Parliament must establish who designed the arrangement, who approved it, who executed it, how risks were monitored and why existing safeguards failed to prevent losses of the reported magnitude.
“We must ask who designed the arrangement, who approved it, who executed it, who controlled the risk, and why safeguards failed to prevent losses of this magnitude.”
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He said an agency relationship between GoldBod and the Bank of Ghana cannot completely absolve GoldBod of responsibility for how the programme was implemented.
The Minority Leader is also demanding information on the pricing and commercial arrangements surrounding the transactions.
He said GoldBod must account for the prices at which gold was purchased, how those prices were determined, premiums paid to secure supply, the selection of international off-takers and the discounts, if any, at which gold was sold.
He also wants information on the fees and service charges earned from transactions financed by the Bank of Ghana and the risk-management mechanisms that were deployed.
“Agency does not extinguish operational responsibility. An agent entrusted with billions of cedis of public resources remains responsible for the quality of its execution.”
Mr Afenyo-Markin said the Minority is not opposed to the development of Ghana’s gold industry or the participation of local institutions in the sector.
Rather, he said, its concern is the protection of public resources and ensuring that state institutions operate within transparent and accountable frameworks.
He warned that the reported financial losses should not be allowed to disappear behind technical accounting explanations.
“GoldBod cannot hide behind accounting technicalities.”
The Minority is therefore calling for greater transparency in the operations of the domestic gold purchasing programme and wants Parliament to fully examine the relationship between GoldBod and the Bank of Ghana.
The Caucus says such scrutiny is necessary to safeguard Ghana’s financial system and prevent similar losses in future.
