University of Ghana to pay $165m judgment debt for terminating contract
5 August 2021
By Kojo Emmanuel
Global insurer Chubb Limited filed a petition asking a New York court to settle a $165 million arbitration award against the country's premier University for failing to honour its side of a flagship development partnership backed by the U.S. government.
Former Vice-Chancellor, Prof Ernest Aryeetey, through the Public-Private Partnership (PPP) agreement with Africa Integras of $64 million in constructing a new 1000-bed students' hostel on the Legon campus.
The academic refuted claims by his successor, Prof Ebenezer Oduro, that the deal was dubious, describing them as falsehood.
The $64 million deal was signed with a mortgage financing agreement from the U.S State Department's Overseas Private Investment Corporation (OPIC), now Development Finance Corporation, of up to $41 million.
The suit comes shortly after the management of the University debunked reports that it has incurred a $165m judgment debt.
The management said any such statement was untrue and intended to create panic among the University’s stakeholders.
In the statement issued on August 14, 2018, the management said the report was an attempt to force the University to accept a position on the controversial $64m Africa Integras project that was detrimental to the interest of the University.
In a petition filed in the Southern District of New York, W.P Carey investment trust won the award in 2018 after the University of Ghana terminated an agreement to construct and maintain four new facilities and a dormitory on its campus. The award reflects the value of rental income that the new campus facilities would have generated, Chubb told the court.
"SEC reports show that the $64 million partnership was signed in 2016, with a mortgage financing agreement from the U.S. State Department's Overseas Private Investment Corp. (now Development Finance Corp.) of up to $41 million. The project was insured with a Chubb corporate country risk policy. According to a public information summary filed with OPIC, the project would help meet the demand for higher education in Africa. University press releases said the expansion would help attract and accommodate Ph.D. students, transforming the school into a first-class research institution.
The University of Ghana was unable to procure a contractually required letter of credit, according to the Chubb petition, and moved to terminate the contract, triggering arbitration in 2018. The W.P. Carey trust settled with Chubb for $45.6 million later the same year — $10 million more than what it spent on the project — transferring its right to collect tenant default damages, according to company financial records."
The Founder and Managing Principal of Africa Integras LLC, Andrea Pizziconi, stated that the university's Vice-Chancellor Prof. Ebenezer Owusu, was "actually offered several options to obtain the letter of credit."
He refused the strong advice of his own advisers.
Pizziconi noted that the VC's actions seemed personally motivated as even the Ghanaian government, at the time, attempted to intervene to avoid the disastrous termination of the project that ensued.
In 2015, the University of Ghana signed the agreement with Africa Integras, and the $64m project, which was structured as a 25-year Build, Operate and Transfer (BOT), is the first of its kind with a public university in Africa.
It will involve the construction of an expanded facility for the College of Humanities, a new College of Education, a new dedicated facility for the College of Basic and Applied Sciences and the Institute of Technology and Applied Science, as well as a new facility for the College of Health Sciences to be located near the new teaching hospital on campus.
The project will also involve 1,000 new students’ hostel beds, to be divided between undergraduate and graduate students mostly to serve the College of Health Sciences.