- UG judgement debt Is the trending topic of today.
In recent news, a US Federal Court has awarded a $165 million judgement debt against the University of Ghana for wrongly terminating the Africa Integra Contract in 2018 thus defaulting on a flagship developmental partnership programme.
The University of Ghana had defaulted on a flagship developmental partnership programme backed by the US government; therefore, Global Insurer. Chubb Ltd. asked a New York federal judge to confirm a $165 million arbitration award against the University.
In a Law360 report sighted by FussGhana, 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 rent income that the new campus facilities would have generated, Chubb told the court.
Judgment Debt Discussion
“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 insure with a Chubb corporate country risk policy.
According to a public information summary filed with OPIC, the project would help meet a 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 report stated.
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.
UG Judgement Debt Of $165 Million
The report further explained that while Chubb’s petition stated that the agreement terminated because of the university’s failure to procure a letter of credit. Thereafter, the deal appeared to go sour earlier. When a new vice chancellor took office and openly voiced his opposition to the contract. In a series of inflammatory letters and statements to the press.
According to W.P Carey’s partner, Africa Integras, the companies had already poured tens of millions of dollars into the expansion. And the project was only a year away from construction completion.
Andrea Pizziconi, founder and managing principal, told Law360 that new chancellor Ebenezer Owusu was actually offered several options to obtain the letter of credit. However, against the strong advice of his own advisers, Owusu refused to proceed with any of the options presented to him.”
Pizziconi noted that his actions seemed personally motivated. As even the Ghanaian government, at times, attempted to intervene to avoid the disastrous termination of the project that ensued.
In a 2019 press release, the university denied being subject to any arbitration award. Meanwhile, Owusu personally attacked his predecessor and Pizziconi in the press.
The project would have expanded the university’s facilities by 60%, Pizziconi said.
“As it stands today, I estimate that at least 20,000 additional Ghanaian students were prevented from enrolling at UG because those facilities were not finished,”she said
The Way Forward
The financial default also cast a chill over development projects across the region. “since UG was a flagship project for education public-private-partnerships in Africa generally,
“This impact exacerbated the losses felt across the continent with so many universities keen to access private finance to address their owninfrastructure constraints.”Pizziconi added.
“Now, to make matters worse, if this claim is not paid, the entire insurance industry will become more reticent to ensure key infrastructure projects in Ghana, which will impact the country’s entire development agenda,” she continued. “Also, with an unpaid insurance claim, the U.S. government’s Development Finance Corp. will struggle to proceed in financing other projects in Ghana that require government commitments. Which could cost Ghana billions in development financing.”
Based on the UG judgement debt , the University of Ghana did not immediately respond to requests for comment. Counsel for Chubb declined to comment.
According to Chubb’s petition Thursday, the court has no basis to refuse confirmation of the award, which falls under the New York Convention.
Source : FussGhana