Another story that illustrates well the dicey new world of state in development is that of WESTEL, an American telecom company operating in Ghana. As part of the process of creating the duopoly in the telecom sector, the Ghana government in 1996 announced the offer for sale of a Second National Operator license (SNO license) for the provision of telecommunication services. As was the case with the GT license, the SNO would provide domestic and international telecom services. These included voice telephony, leased lines, public pay phones, telegraph and telex, data, mobile and value added services. Like the case of GT, the new SNO was to be given a 20-year initial period with the possibility of renewal at the end of the initial duration. But during the first five years these two were to have exclusivity over fixed line telecom services in the country. The SNO was to have the opportunity of providing services throughout the country (Telecommunications in Ghana 1996).
One of the signs of a weak and helpless regulatory regime in the telecom industry recently emerged when the president of Ghana, John Kufour, revealed that his government did not even know the names of the shareholders of WESTEL, the SNO.19 WESTEL has two American shareholders who own 56 percent, one of them being Western Wireless. Meanwhile, the NCA had categorically stipulated the conditions under which a telecom company can be licensed to operate in Ghana. These include a mandatory dossier that contains company profile listing evidence of incorporation and certificate to commerce business, list of shareholders, technical and organizational capability and evidence of ability to perform such as agreement drawn up with principals and technical arrangements. Then again, when the Ministry of Communications announced the qualities of the prospective SNO in 1996, it added that due diligence will be done to ensure that the bidding process is transparent (Telecommunications in Ghana 1996). If what the president said is true and not a politically motivated statement to throw a jibe at the previous government under whose administration WESTEL was licensed
19 The President made the revelation when a deputy chief of mission at the US embassy in Accra called on him at his office on Wednesday 19th June 2002. Daily Graphic 20.June.2002 “Kufour to send protest letter to Bush.”
to commerce business, then it means that WESTEL subverted the laws of Ghana on two instances, first at the office of the Register General, where WESTEL was supposed to have registered, and then at NCA. The Register General requires that all names of founding shareholders be made known before a certificate of incorporation can be issued. Assuming WESTEL produced a certificate, which no one at NCA was ready to confirm to me, then it got the license without following due process laid down by the state. And then again at the NCA, it displayed the same abuse of the rules and got away with it.
But the events leading to the president’s admission of WESTEL’s act of commission is even more damning on the ability of the state and the NCA to regulate the sector. It all started when WESTEL, failed to meet its contractual obligation of supplying 4,000 lines within five years.
It could only deliver 2,000 lines and restricted itself to only the Accra and Tema Metropolitan areas where businesses are concentrated. The NCA responded by slapping a 70.5 million US dollar penalty on the company. In May 2002, at the celebration of the 34th World Telecommunications Day in Accra, the acting Director-General of NCA, J.R.K. Tannoh announced that his office will resort to a court action to compel WESTEL to pay, insisting that
“We are mandated to instill discipline in the telecommunications sector to ensure that customers have value for money, and any operator who does not conform to the rules will have to be sanctioned.”20 These are strong words from a regulator not known for its ability to bite.
WESTEL petitioned the Minister of Communication for moderation, but the minister insisted culpable WESTEL should dance to its own music.
While this drama was unfolding, I sampled opinion on some selected Ghanaians known locally as IT experts. I also talked to some journalists known for reporting on IT issues in the country. The impression I gathered was that the government wanted to use that penalty as an excuse and shut down WESTEL so that it will have the opportunity to advertise for a new SNO.
“WESTEL is fronting for the NDC (former government) so the NPP want to disrupt it and then start all over with a new company” said Samuel Adjei, a computer programmer who is passionate about government legalization of VoIP. Apart from this conspiracy theory about the motive of NCA and the government in pursuing WESTEL with a penalty that would likely make the company file for bankruptcy, some sections of government had been calling for reverting to the old system of natural monopoly for the sector. That is asking WESTEL to pack and leave the sector to GT only. One person noted for this view was Senior Minister and Chairman of the Government Economic Management Team, Mr. J H. Mensah.
Mr. Mensah will publicly express his wish to see AT&T become the strategic investor in a GT with a natural monopoly. “I have a friend who worked with the American AT&T for many years, he is a very senior manager. On a visit I talked to him about inviting foreign partners into telecom here. He came here himself and decided that the Ghana market AT&T was not willing…from then on he talked to me, we have communicated and he is coming back to see me very soon because they have seen new potential in the market, so you know the companies are all making calculations.”21 The “new potential in the market” that the minister was
20 Daily Graphic 13th May 2002 “National Communication Authority threatens to sue WESTEL.”
21 Ghanaian Chronicle 30th January 2002 “AT&T shows interest in Ghana Telecom.”
talking of was the announcement that the government made to the effect that it would abrogate the GT agreement with G-Com (Telekom Malaysia).22 G-Com had outbid AT&T in the initial privatization of GT five years earlier. What one quickly gathers from the disclosure from Mr.
Mensah, the senior minister is that the business of telecom regulation is no longer the exclusive business of the NCA. Nor is it now the ministerial responsibility of the sector ministry. This shows how murky the telecom policy scene is in Ghana. But that is not all the story.
As the clouds were gathering on WESTEL and the sword of Damocles was hanging over the company’s head, Ghanaians least expected that the US government will intervene in a rather hawkish manner to “discipline” the anti-global market stance of the Ghana government.
At least this is how the Americans interpreted the legitimate penalty on WESTEL. The US Assistant Secretary of Commerce for Market Access and Compliance, William Henry Lash III visited the country ostensibly to meet with government official and private sector businesses on trade between his country and Ghana. But he committed the undiplomatic practice of going on an Accra local FM station to lambaste the NPP government for its allegedly unfriendly attitude to foreign investors. Referring to the penalty on WESTEL, he accused the government of acting irrationally. The passion with which he attacked the government on radio made a lot of observers to conclude that Mr. Lash was purposely sent to Ghana to do a damage control for WESTEL and chose to play the role of the agent provocateur.
Mr. Lash’s tantrums shocked the government, making president Kufour to announce that he was sending a protest letter to president Bush.23 “Obviously, Mr. Lash lost his balance in talking the way he did,” president Kufour would grumble. He said it is very strange for the US government to acknowledge the efforts his government was making to rebuild the shattered economy, only for Mr. Lash “to come here and make very disparaging remarks about the government and people of Ghana,” adding, “we will not allow anybody to dictate to us on how to run our economy.” The president was speaking to a US diplomat when the latter called at his office.24
What is revealing about this whole telecom disciplinary measure turned a diplomatic row is that the government announced shortly after the Lash attack that the president had personally intervened to reduce the WESTEL penalty from 70.5 million US dollars to 28 million US dollars. Whether this presidential pardon was done before or after the Lash visit is something I could not verify. But then it does show the status of the postcolonial state in telecom regulations when it comes to policing big business backed by an imperializing state in the form of United States. In all this process, the World Bank, known for having opinion on every policy issue on the economy never commented on the issue. But the president’s unilateral action to reduce the penalty attracted negative comments from the local Ghanaian opposition and certain sections of the media.
22 Ghanaweb.com Business News of 4th December 2001 “Malaysian Management Contract of Ghana Telecom to End Next Year” available at: http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=20047.
23 Daily Graphic 13th May 2002 “National Communication Authority threatens to sue WESTEL.”
24 Ibid.
The main opposition NDC party issued a statement in Accra and condemned the president’s unilateral action to waive more than half of the penalty. The statement signed by the Minority Chief Whip in parliament, Doe Adjaho stated: “It will appear that a pattern of executive interference in independent and autonomous institutions is being established
…The NCA has commenced the process of imposing the full penalty of 71 million US dollars and has held a hearing on the matter at which WESTEL presented its case. While the process is ongoing, it will appear that the President has unilaterally negotiated a 50 million-dollar (sic) reduction of the penalty against the public interest.”25 At a public lecture organized by the Socialist Forum, a small but committed group of Marxists, in Accra, the Editor of an Accra Weekly, The Insight, Kwesi Pratt condemned the action of the president. The forum was attended by some key opposition figures, including a former presidential candidate, academics and workers. What was visibly clear was a sort of collective angst against big business. And one should expect such an atmosphere at such a Marxist gathering. But also, some of the people I talked to suggested that there was most likely a kind of international diplomatic arm-twisting involving the president and forcing him to intervene and act on behalf of the NCA. But this is not an allegation that one can easily verify when no one in government would comment.
The story of WESTEL’s intransigence is a case to show how the postcolonial state is at the mercy of the big business. Not only was it a clash between the state and a multinational company, it was a clash between the postcolonial state and an imperializing state (the US) with Lash acting as the agent provocateur.