Exposing the failures of the Gold for Oil programme

By Korsi DZOKOTO

According to the 2023 Auditor General’s report, the Gold for Oil (G4O) programme, has been plagued by reckless financial mismanagement, raising serious questions about the competence and integrity of those in charge. While the initiative was designed to strengthen Ghana’s economy by securing cheaper oil through gold swaps, it has instead been riddled with significant lapses in financial management, transparency, and accountability. This article examines these critical failures, holding Dr. Bawumia responsible for the missteps that have tainted this high-stakes program.

 Lack of formal agreements: A recipe for chaos

One of the most alarming issues with the Gold for Oil program is the absence of formal agreements governing critical transactions. The Bank of Ghana enlisted the Precious Minerals Marketing Company (PMMC) to purchase and sell gold on its behalf, yet no formal contract was established to outline the terms of this engagement. Without a written agreement, there is no transparency regarding fees or commissions paid to PMMC, leaving the entire transaction open to mismanagement, corruption, and abuse.

This lack of formalization creates a breeding ground for financial irregularities and undermines the integrity of the process. Despite the obvious need for such agreements to ensure accountability and transparency, the management under Dr. Bawumia’s leadership failed to secure this basic safeguard, thereby exposing the program to potential corruption.

 Misguided gold swap transactions: Ignorance or indifference?

The Bank of Ghana’s decision to engage in a Gold Swap transaction with the Bank for International Settlements (BIS) serves as another glaring example of gross mismanagement and a further gateway to corruption within the Gold for Oil program.

Instead of developing a specific agreement tailored to the complexities of this financial arrangement, the Bank inexplicably relied on the generic International Swaps and Derivatives Association (ISDA) Master Agreement. This decision was not only inappropriate but also perilous, as the ISDA agreement was ill-suited to address the unique requirements of a gold swap transaction.

The absence of a tailored agreement mirrors the same lack of formalization that plagued the Bank’s dealings with the Precious Minerals Marketing Company (PMMC). Just as with the PMMC transactions, the failure to secure a proper contract for the gold swap exposes the entire process to corruption and financial mismanagement. The lack of clarity on crucial details—such as the amount involved, the duration of the swaps, and the specific terms of engagement—leaves the transaction open to manipulation and exploitation. This oversight not only places the Bank at unnecessary financial risk but also creates opportunities for corrupt practices to flourish.

Dr. Bawumia, as a leading figure in this initiative, bears responsibility for allowing such reckless financial practices to proceed unchecked. By not ensuring that these high-stakes transactions were governed by clear, specific agreements, he has contributed to a climate where transparency is compromised, and corruption can thrive. The parallels between the absence of formal agreements in both the PMMC and BIS transactions highlight a disturbing pattern of negligence that undermines the integrity of the entire Gold for Oil program.

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The Absence of a Dedicated Account: A Breeding Ground for Errors

Another serious flaw in the management of the Gold for Oil program is the failure to establish a dedicated offshore bank account for the program’s transactions. Instead, the proceeds and disbursements were channelled through the Bank of Ghana’s Citibank New York account, mingling the program’s finances with the Bank’s regular operational activities. This lack of segregation not only complicates accounting and reconciliation processes but also increases the risk of errors going undetected. Proper financial management necessitates the separation of such large-scale, specialized transactions from day-to-day operations, yet this was blatantly ignored in the G4O program. This negligence has undermined the program’s financial integrity and cast doubt on the capability of those at its helm.

Violations of financial management laws: An abuse of power

The numerous lapses in the Gold for Oil program also reflect a disregard for the Public Financial Management Act, 2016 (Act 921). The Act mandates the establishment of effective systems of risk management, internal control, and internal audit in handling public resources. However, under Dr. Bawumia’s leadership, these safeguards were either inadequately implemented or entirely overlooked.

The absence of formal agreements, the misuse of a generic ISDA Master Agreement for gold swaps, and the failure to establish a dedicated account all indicate a severe lack of proper financial oversight. Such violations not only contravene the law but also represent an abuse of power and a betrayal of public trust.

Conclusion: A call for accountability

The Gold for Oil program, despite its noble intentions, has become a symbol of reckless financial management under Dr. Bawumia’s leadership.

The absence of formal agreements, the inappropriate use of generic financial instruments, the failure to segregate accounts, and the blatant violations of financial management laws all point to a program that was doomed from the start due to poor leadership and oversight.

It is imperative that those responsible, particularly Dr. Bawumia, be held accountable for these failures. The people of Ghana deserve better—better management, better transparency, and above all, better leadership.

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