The Bond Saga, CHRAJ and the Rules on Conflict of Interest (Part 2)


In the first part of this note, I said I would do a series of notes showing how CHRAJ’s decision on the Bond Saga complaint against the Minister of Finance fails to reflect the evidence it has on record. Thankfully, last night’s festivities went well – I was literally jumping from one party to another. I met with friends I have not seen in a while.

In this second part of the note, I will attempt a simplified explanation of a very difficult subject – conflict of interest. This explanation is to have us on the same page before I attempt a surgery of the report.


Conflict of interest occurs when a person (an agent) is in a position where her personal interest interferes with the interest of another person (her principal) for whom and in whose interest she is supposed to act. In simple terms, conflict of interest occurs when a person finds herself in a position where she may be seen as serving two masters. It is simply a position of divided loyalty.

Personal and Impersonal

The interest may be personal or impersonal, but it is still ‘personal’. It is personal where the interest involves the interest of the actor personally. This happens when, for example, I sell my own car to Marcia who has asked me to by her a car (without me disclosing to her that the car I am selling to her is mine). Here, the car is mine; but the problem is that we won’t really be sure if I’ll be protecting Marcia’s interest or mine. On the other hand, the conflict is impersonal when it involves the interest of an organisation or a person other than the actor’s. Same example, except that the car in question here belongs to my mum or my company. In this case, too, one may not be clear whose interest – Marcia’s or my mum’s – I would protect.

Actual and Potential

Conflict of interest may also be actual or potential. It is actual if the actor did actually act against the interest of the person whose interest he is supposed to protect. Still with the car example, there would be actual conflict of interest if I sold the car to Marcia above the market price (so as to make a secrete profit). On the other hand, it is potential conflict of interest if there is a possibility or probability, no matter how small, that I would fail to protect the interest I’m supposed to protect even though I have not yet done or may , in fact, never even do so. Therefore, in the car example, I’ll be guilty of potential conflict of interest if there is a possibility or probability that I would sell the car to Marcia above the market price. It doesn’t matter that I have not done or may never even do so or that I have in fact sold it to her below the market price.

Whichever way – whether actual or potential – it is still conflict of interest. For, as the courts would say:

“It is not necessary that an officer or director have an intent to defraud or that any injury result for an officer or director to violate his fiduciary obligation.”


“Actual injury is not the principle upon which the law proceeds in condemning such contracts. Fidelity in the agents is what is aimed at, and as a means of securing it, the law will not permit the agent to place himself in a situation in which he may be TEMPTED by his own private interests to disregard that of his principal.” (Caps mine)

In other words, a person needs not actually intend or actually cause an injury to be found guilty of breaching the rules regulating conflict of interest. That, I think, is the true and proper position of the rule on the matter.

Enormity of the Rule

I’m sure you’re by now intimidated by the enormity of the conflict of interest rules. If you are, you’re justified. The rule is, indeed, superimposing. So, a great judge once put it this way:

“A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior… the level of conduct for fiduciaries [has] been kept at a level higher than that trodden by the crowd.”

A fiduciary cannot behave like us, the ordinary people. The standard for her crushes through the roof.

But why? Let me explain: When someone repose trust in you to protect her interest, law and equity would not allow you the space to stab her in the back by sacrificing her interest on the altar of yours. Let’s put it into the context of a public office: when the people of a country entrust you with the power to protect their interest, the law will not allow you to put them in a situation where they can’t be sure whose interest you’re really protecting. It may be that you’re really protecting their interest. But that is not the point, as far as the subject is concerned. The real question is: would they doubt that? It is not whether you “have“, “will” or “would” betray them. It is whether you “could” betray them.

Taken from this perspective, one would easily realise that the rule is an effective tool against corruption. It would, if properly understood and enforced, do away completely with (if not reduce drastically) the cornerstones of corruption – cronyism, nepotism, favouritism, tribalism and whatnots. It would actually “protect the public purse.” The framers of our Constitution knew this pretty well. That is why they wrote in Article 284 that:

“A public officer shall not put himself in a position where his personal interest conflicts or is likely to conflict with the performance of the functions of his office.” (Underlining is mine)

Now read the provision again. Carefully. It would be obvious to you that the Article sets a standard. The standard is “potential” conflict of interest, namely, the officer merely “putting himself in the position.” The standard is NOT “actual” conflict of interest. That is, the officer needs not intend or actually cause an injury or a loss. Indeed, this is the true standard.

The Duty to Disclose

However, the law also acknowledges the limitation of such a rigid application of the rules. For example, the rule in its unbridled form would prevent principals from getting ‘good deals’, if these good deals are from their agents or fiduciaries. For example, going strictly by the rule, I wouldn’t be able to sell my car to Marcia even if my price was below the market price. In a public office context, it would prevent the Republic from benefiting from the acumen of very experienced industry players like Hon Ken Ofori Atta (who has been a top player in the finance and securities industry for over 30 years) from serving us as Finance Minister. Let’s face it: after 30 years in the industry, he would literally be ‘related’ to everyone and every entity in the industry.

The law knows this. So, to avoid this situation, it provides for what is invariably called a “safe harbour.” Safe harbour rules are intended to do 2 main things: (1) allow principals to have ‘good deals’ from fiduciaries; and, at the same time (2) have their interests protected from backstabbing by fiduciaries.

Therefore, while the unbridled rules on conflict of interest would not ordinarily allow me to sell my car to Marcia under the circumstances, it would if and only if 2 things happen: (1) if I disclose all the material facts about the ownership of the car to her without withholding any AND, also, (2) if, consequent upon such disclosure, I allow her to freely decide whether to go ahead and buy it, my ownership notwithstanding. In other words, disclosure of personal interest is an integral part of the conflict of interest rules. This is because the primary aim of the rules on conflict of interest is to prevent what is unfair; and, as the courts and scholars have always maintained, “nondisclosure by an interested director or officer is, in itself, unfair.” This is exactly where CHRAJ tripped.

Up Next

In the next part, I’ll attempt to explain how CHRAJ tripped by cutting the Commission’s report open.

The Bond Saga, CHRAJ and the Rules on Conflict of Interest.


The details of the report on what has come to be known invariably as the #KenBond saga would show that CHRAJ is not a ‘rundown’ institution as we often are made to believe. It really did a thorough job investigating this rather complex complaint; and did so within a relatively short period. However, there seems to be a fundamental problem with its decision, particularly the one in relation to the allegation of a breach of the conflict of interest rules. The problem is that its final decision is at war with the evidence on record.

As you may know, this kind of anomaly is often a function of at least 1 of 2 things: (1) misunderstanding of the relevant legal rules; or (2) misapplication of them. In the coming days (and, of course, depending on how the festivities go for me), I’ll attempt to show the gap between the evidence on the Commission’s record and its decision that allegation of breach of conflict of interest rules have not been substantiated.

I’ll begin by discussing some details of the proceedings, particularly how the Deputy A-G fared in his arguments before the Commission, not least because the Commission’s treatment of those arguments would, in a way, speak to the difficulty with the decision.

On Jurisdiction

The first thing that the Deputy A-G did was to try to make nonsense of the allegation of conflict of interest. He chose to do this, as many a lawyer would do, by trying to excise the conflict of interest issue from the jurisdiction of the Commission. He argued that the propriety or otherwise of the issue of 7-year and 15-year Bonds does not fall within the jurisdiction of the Commission. Unfortunately for the Respondent, the Commission didn’t think the Deputy A-G even understood the very nature of the complaints he seeks to oppose. This is what the Commission said at page 97:

“The Commission considers this submission by the Deputy Attorney-General and Deputy Minister of Justice as lack of appreciation of the nature of the complaint of conflict of interest made against the Respondent … His submission does not also reflect the true position of the law on the mandate of the Commission.”

The Relationship between BOG and the Players

One of the allegations made by the Complainant was that the Minister, in order to cook the deal for his cronies, side-stepped the BOG guidelines for issuing bonds. In order to defend the Minister against this allegation, the Deputy A-G needed, primarily, to demonstrate familiarity with the relationship between the players and the BOG. It appears he wasn’t very strong in this department either. So, the Commission found at page 99 as follows:

“We must point out here again that the Respondent misunderstood the relationship between the BOG and the Bookrunners who were recruited by the MOF after open tender as Transaction Advisors on longer dated bonds (such as the 7-year and 15-year bonds). Therefore, it is inaccurate to state that the “Bookrunners/ Transaction Advisors licensed by the bank of Ghana”. The BOG does not license Bookrunners/ Transaction Advisors. The correct position is that Securities and Exchange Commission licenses financial institutions including banks, some of which (banks) the BOG authorises as “Primary Dealers”, as eligible to participate in the auction of debt securities.”

MOF and the Investors

In his spirited attempt to extricate the Minister from the transactions, the Deputy A-G argued that the Ministry does not transact with any investor; and that “ALL transactions are carried out by Bookrunners designated by the Bank of Ghana as Primary Dealers.” The Commission found this argument, too, very troubling. See what the Commission had to say at page 100:

“The Commission notes a misstatement on the part of the Deputy Attorney-General when he submitted that ‘All transactions are carried out by Book Runners designated by the Bank of Ghana as Primary Dealers.’ As the Commission has explained already, Bank of Ghana only authorises banks as financial institutions to operate as Primary Dealers and to participate in auctions of securities.”

That’s not all, the Commission did a little bit of education as well. It said:

“Bookrunners are different and may not be banks. In fact, in the issuance of the bonds in questions – 5-yar, 7-year, 10-year and 15-year – many players were involved: Debt Management Section of the Ministry of Finance, Bank of Ghana, Primary Dealers and Bookrunners playing different roles. Therefore, ALL the transactions could not have been done any one of them.”

This implies that the Commission did not agree that that the Ministry did not deal one way or the other with the investors.

Up Next

If, (perhaps, when) I return, I’ll attempt an explanation of the nature of fiduciary relationship and conflict of interest rules and how this case is materially different from the Ablakwa case (on which the Commission relied).