The recent conviction of an Atlanta woman for embezzling millions of dollars designated for an economic development project in Ghana will not taint prospects for future Georgia investment in Africa, a U.S. Export-Import Bank spokesman in Washington told GlobalFax.
Juliet Cotton, president of Quality Grain Co. Ghana Ltd., a rice grower in Ghana in West Africa was convicted June 17 for squandering half of the $18 million in loans she received for a 20,000-acre rice plantation.
The plantation yield was to alleviate some of Ghana’s rice import costs, but the operation never got off the ground before Ms. Cotton spent $9.5 million of the seed money for personal use, according to Patrick Crosby, public affairs officer at the U.S. Attorney’s Office.
The full loan for the project was guaranteed by the Ghanaian government, and the Ex-Im bank provided insurance for part of it. Government officials in Ghana were also indicted for their cooperation in the scandal.
“This case absolutely does not affect other Georgia companies’ business pursuits in Africa,” an Ex-Im bank spokesman said. “If a Georgia company wants to export its services to any country, we have country economists who investigate the situation to try to make sure this kind of thing does not happen.”
The Ex-Im Bank performs extensive due diligence on all its cases, analyzing borrowers’ credit histories before negotiating a deal and working with local banks and exporters to exchange information throughout a project, he said. The Cotton fraud was an anomaly, he added.
The Quality Grain case is an extravagant example of fraud, but it points to the risks investors should be aware of when dealing with economic development projects in Africa, said Willem Heath, CEO of a South African fiscal investigations agency, in a June 20 email to GlobalFax. He spoke in Atlanta in April about how to minimize U.S. firms’ risk when investing in Africa.
“The misappropriation of financing for agriculture and the poor is typical in African countries, and in particular, Ghana,” Mr. Heath said. “People get away with their illegal and immoral action all the time. The conviction of an Atlanta woman is therefore not only an exception but also an important example of what action should be taken.”
Of course, fraud occurring in one African country does not mean the same fraud is prevalent in another country, but the Cotton case demonstrates the need for hiring anti-corruption experts to ensure fair business dealings in some African countries, he added.
For further information on the Cotton case, contact Patrick Crosby at the U.S. Attorney’s Office at (404) 581-6016. Visit the Ex-Im Bank’s website at www.exim.gov. Contact Mr. Heath at email@example.com