An insurance expert has said the risks covering guarantees presented by Power Distribution Service (PDS) for the power concession agreement are in fact “solid as gold.”
Larry Kwesi Jiagge says the companies that fronted for PDS – the Qatari insurance company, Al Koot and Joe Australia – are both A-rated reinsurers who have operated in Ghana for a long time.
"This particular business, for all you know, is all over the world. And I am aware, I can tell you for a fact that even there is a Ghanaian company that is part of the retrocession. I am aware that there is a Ghanaian company which took part of the retrocession — not from Donewell, but from the brokers who placed the retrocession contract," he said Saturday on Newsfile.
The government suspended the concession agreement last week after alleging fraud in the guarantee presented by insurance firm Al Koot to support the takeover of the Electricity Company of Ghana (ECG) by PDS.
Although the entity that supervised the agreement, the Millennium Development Authority (MiDA) maintains it followed due diligence throughout the process, local insurers, Donewell Insurance says Al Koot was not truthful in its communication to ECG.
Mr Jiagge said people are losing sight of the fact that it was CAL Bank, acting as a principal insurer, which approached Donewell Insurance to issue a counter-guarantee to them.
He said CAL Bank in a bid to limit its investment took a counter-guarantee from Donewell.
When asked by the host of Newsfile , Samson Lardy Anyenini, if it will be accurate to say that the risk covering the controversial guarantee has been so diversified that the protection is as solid as gold if PDS defaulted?
The insurance expert answered: “Yes. It’s as solid as gold. Because first, Al Koot is an A-rated re-insurer. They’ve been operating in Ghana and so is Jo Australia. Because they are not frontline insurers the general public may not know anything about them. It is only the insurers or insurance brokers who may have heard about them until this issue proper but they are known. And it [the risk] is widespread.”
He said guarantees are not insurance so if the guarantor pays the guarantor, he can proceed against the guaranteed for reimbursement.“Insurance is a promise that if anything should happen I will pay and that ends it and you don’t have to go back to anybody.“But with bonds, guarantees or surety contracts […]