International arbitration backs cancellation of ‘fraudulent’ NDC Bank of Ghana contract
A tribunal constituted by the London International Court of Arbitration (LCIA) has backed the decision of the Akufo-Addo government to abrogate an outrageously overpriced $1.2b contract awarded Sibton Switch Systems Limited by Bank of Ghana under the John Mahama-led NDC administration.
The controversial contract for inter mobile money connection, was awarded by the Mahama administration for $1.2b but industry players questioned the outrageous contract sum. And following the removal of the Mahama government from office after the 2016 elections, the new Bank of Ghana management, under the new Akufo-Addo administration, abrogated, what the Central Bank now describes as “fraudulently acquired contract.”
The new Bank of Ghana management executed the same project through its subsidiary GHIPSS, at $4.5m dollars, over 300% less than the original contract awarded by the previous NDC regime.
However, Sibton Switch Systems sued Bank of Ghana for wrongful termination, seeking relief in the sum of USD 478 million.
The London International Court of Arbitration has, however, ruled in favour of Bank of Ghana in its judgement.
The controversial contract became one of the references of several overpriced contracts by the Mahama administration.
Many were stunned how $1.2 billion was awarded as contract sum by the NDC, when even an upgrade of the the same job was eventually executed at a paltry sum of $4.5 million.
Below is a full press release issued by the Bank of Ghana on the issue:
BANK OF GHANA WINS ARBITRATION AGAINST SIBTON SWITCH
LIMITED: TRIBUNAL’S AWARD DISMISSES ALL CLAIMS AND ORDERS SIBTON TO PAY COSTS
A Tribunal constituted under the auspices of the London International Court of Arbitration (LCIA) has issued an award in favour of the Bank of Ghana dismissing all claims brought by Sibton Switch Systems Limited (“Sibton Switch”) in relation to the termination by the Bank of the Master Agreement for the Ghana Retail Payment Systems Infrastructure in 2017. The Tribunal also ordered Sibton Switch to make a substantial payment to the Bank in respect of its legal fees and costs of the arbitration.
On the 9th of April 2018, Sibton Switch filed a Request for Arbitration with the LCIA against the Bank of Ghana for breaching the Master Agreement for the Ghana Retail Payment Systems Infrastructure entered into by the two parties.
Following the 2016 elections and on the appointment of a new Management of the Bank of Ghana, it became necessary to review the terms of the contract entered into by the previous administration.
In reviewing the contract, the new Management of the Bank reached the conclusion that Sibton had neither acquired the licence nor fulfilled the condition precedent for the effectiveness of the rights and obligations of the parties. The Agreement, which dealt with the grant of exclusive rights to Sibton Switch to build, operate and own the Ghana Retail Payment Systems Infrastructure was therefore terminated on the basis that it never came into effect.
The Claimant, Sibton Switch, went to the LCIA seeking relief in the sum of USD 478 million from the respondent, Bank of Ghana.
The contract awarded to Sibton Switch was one-sided in favour of Sibton Switch and was severely detrimental to the interests of Bank of Ghana. For example, the Public Procurement Authority approval for the project provided that the Bank of Ghana’s maximum liability was to be GH¢300,000. Contrary to this approval, the corruptlyprocured contract with Sibton Switch provided that the Bank of Ghana had a huge potential liability of USD $478 million (GH¢2.6 billion).
In addition, the tender price of Sibton Switch was more than 33 times more expensive than the next most expensive bid.
Following the termination of the contract with Sibton Switch in 2017, the Bank of Ghana’s subsidiary, GhIPSS, was able to deliver mobile payment systems interoperability at a small fraction of the cost, saving the Ghanaian taxpayers billions of Cedis.
Arbitration Award issued in favour of the Bank
On 28th July 2021, a panel of three distinguished arbitrators issued an award in favour of the Bank of Ghana in the LCIA arbitration, dismissing all the claims brought by Sibton Switch Systems Limited. The claims were dismissed due to the failure by Sibton Switch Systems Limited to comply with the orders of the Tribunal including an earlier interim award made by the Tribunal on 25th of June 2019 in favour of the Bank of Ghana, which required Sibton Switch to make an interim award payment for security of costs.