Donewell Insurance Company Limited (DICL) has expressed shock at allegations made by Qatar-based insurance firm Al Koot Insurance and Reinsurance Company in guarantees that saw Ghana’s electricity distribution service ceded to Power Distribution Services Ghana Limited (PDS).
According to Donewell Insurance, due process was followed throughout the agreement to the extent that its brokers, JoAustralia Reinsurance Brokers, secured a cover from Al Koot in accordance with international best practice.
It said in a statement on Friday, August 9 that a total premium of $7 million was received for the lease agreement and the bulk supply agreement for PDS.
“In view of the foregoing, DICL expresses its deepest shock at and disagreement with the allegations made by Al Koot in its letter dated July 16, 2019,” Donewell Insurance said in its statement.
Al Koot had said the official that signed its guarantee was not authorized and had consequently been suspended.
It therefore declared the whole guarantee null and void, triggering the decision by the Government of Ghana to suspend the deal.
But Donewell Insurance stated: “Al Koot’s sudden denial of the fact that it is not permitted by its constitutional documents to underwrite counter party and trade risk when it had in the past accepted such a risk imposed upon it by JoAustralia at the behest of DICL, is most unfortunate”.
Find the full statement below:
Donewell Insurance Company Limited (DICL) has taken note of the recent developments with regards to the Concession Agreement between [the] Electricity Company of Ghana (ECG) and Power Distribution Service (PDS). DICL as a stakeholder issued two counter guarantees – the first was for the periodic payments required to be made by PDS under the Lease Agreement for the lease of the assets of ECG and the second for the bulk supply of electricity sold by ECG to PDS under the Bulk Supply Agreement.
The Guarantee for the Lease Agreement was One Hundred Million United States dollars (USD 100,000,000.00) and that for the Bulk Supply Agreement was Two Hundred and Fifty Million United States dollars (USD 250,000.000.00). The premium received by DICL for both Guarantees was Seven Million United States dollars (USD 7,000,000.00).
The risk covered by DICL was premised on the assumption that should PDS be unable to meet its obligations under the Lease Agreement, ECG would call on the Guarantee and the Bulk Supply Agreement.
A key component of the Agreement was to find an ‘A’ rated Standard & Poor’s company to reinsure the Guarantee and DICL’s brokers, JoAustralia Reinsurance Brokers secured a cover from Al Koot Insurance and Reinsurance Company, an ‘A’ rated company in Qatar, in accordance with international best practices. Prior to the payment of premium to its Broker, DICL sought the requisite approvals from its Regulator to allow for the payment of premium for the reinsurance of the Guarantees which was duly made to the Broker through a Swift Payment to complete the process on March 21, 2019.
In view of the foregoing, DICL expresses its deepest shock at and disagreement with the allegations made by Al Koot in its letter dated July 16, 2019.
It is important to note that in an email dated July 22, 2017 sent by Yahya Ali Al Nouri, the Reinsurance Manager of Al Koot, in which Osman Hassan Hag Musa, the author of the July 16, 2019 letter was copied, Mr Al Nouri is designated as a signatory to the technical documents of Al Koot. On February 26, 2019, Al Koot made a request to JoAustralia to arrange a full retrocession of its share/portion of the risk/guarantee; which request was acceded to by JoAustralia . On April 16, 2019, JoAustralia sent a credit note to Al Koot notifying the latter that in accordance with the mutual agreement between the two companies, JoAustralia had credited Al Koot’s holding( Client) Account as per a credit note dated 16th April,2019.
We state with great dismay that Al Koot has not been truthful in its communications with the ECG by stating that it was shocked and surprised to know of the existence of the said Guarantee, when it had actually received premium for the Guarantee and also, requested a retrocession. It is unfortunate for Al Koot to further allege that its Reinsurance Manager did not have the capacity to act on its behalf when he had held himself out as having the said capacity to do so as far back as 2017. Al Koot’s sudden denial of the fact that it is not permitted by its constitutional documents to underwrite counter party and trade risk when it had in the past accepted such a risk imposed upon it by JoAustralia at the behest of DICL, is most unfortunate.
It is surprising that subsequent to its denial of the knowledge of the existence of the said Guarantee and the description of same as “void ab initio”, Al Koot decided to cancel the non-existent Guarantee and its attendant retrocession in a letter dated July 31, 2019 on the basis of the non-receipt of premium from JoAustralia within a 45-day premium payment warranty.
In the circumstances, DICL as a responsible corporate citizen welcomes the decision of the Government of Ghana to investigate the allegations of fraud related to this transaction.
DICL further assures all stakeholders, including the good citizens of Ghana, that at all material times during this transaction, due process was followed and the company awaits the successful completion of the investigative process.
DICL reserves its right to commence Legal action against Al Koot and any other persons involved.
DONEWELL INSURANCE COMPANY LIMITED