# Journal of Energy & Natural Resources Law

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Articles

# Sovereign wealth funds in developing countries: a case study of the Ghana Petroleum Funds

Pages 33-59
Received 08 Aug 2016
Published online: 05 Jun 2017

The Petroleum Revenue Management Act, 2011 established the Ghana Petroleum Funds (GPF) for the purposes of investing and saving petroleum revenues. This article argues that, while the Act provides clear legal and governance frameworks for the GPF, the effectiveness of the GPF could be hindered by certain flaws inherent in the Act. The Act does not sufficiently empower some of the oversight mechanisms that are vital for the efficient management of any sovereign wealth fund. Moreover, the Act appears to place needlessly broad discretionary powers on the Minister of Finance by empowering the Minister to declare information relating to the GPF as confidential if they think that disclosure of such information would prejudice the performance of the GPF.

## 1. Introduction

Ghana’s Petroleum Revenue Management Act, 2011 (PRMA) provides a framework for the ‘management of petroleum revenue in a responsible, transparent, accountable and sustainable manner for the benefit of the citizens of Ghana’.1 The PRMA establishes specific rules governing the collection, utilisation, saving and investment of petroleum revenues. The expectation is that these rules will promote prudent and responsible management of Ghana’s petroleum revenues, thus avoiding the so-called ‘resource curse’.2

In order to ensure effective management and investment of petroleum revenues, the PRMA establishes the Petroleum Holding Fund (PHF) and the Ghana Petroleum Funds (GPF).3 The PHF is an intermediary fund designed to receive and disburse petroleum revenues accruing to the government of Ghana from both upstream and midstream petroleum operations,4 while the GPF is a sovereign wealth fund charged with responsibility to invest and save petroleum revenues.5

Sovereign wealth funds (SWFs) are defined under the Santiago Principles as ‘special-purpose investment funds’ created by national governments for macroeconomic purposes and tasked with the responsibility to ‘hold, manage, or administer assets to achieve financial objectives, and employ a set of investment strategies which include investing in foreign financial assets’.6 The Santiago Principles, a soft-law instrument enunciated by the International Working Group of Sovereign Wealth Funds, provide ‘a framework of generally accepted principles and practices’ relating to the governance and accountability of SWFs as well as ‘the conduct of investment practices by SWFs on a prudent and sound basis’.7 More specifically, the Santiago Principles cover four key areas: the legal framework for SWFs; institutional governance of SWFs; the investment framework; and transparency and accountability of SWFs.

The PRMA mirrors several aspects of the Santiago Principles. It provides a clear legal framework for the GPF. In addition, it provides for the institutional governance of the GPF by vesting broad powers in the Minister of Finance who, in turn, is statutorily obliged to delegate the operational management of the GPF to the Bank of Ghana. Moreover, the PRMA provides a clear mandate for investing the funds and assets of the GPF and establishes a framework for the transparency and accountability of the GPF.

However, as argued in this article, the effectiveness of the GPF could be hindered by certain flaws inherent in the PRMA. While the PRMA vests oversight responsibilities in a number of institutions, including the Public Interest and Accountability Committee (PIAC), it does not sufficiently empower some of these institutions in performing their oversight responsibilities. For example, under the PRMA, the PIAC lacks the power to initiate investigations into the management of the GPF and the PRMA fails to provide a clear mechanism for enforcing the findings and recommendations of the PIAC. In addition, the PRMA appears to place needlessly broad discretionary powers on the Minister of Finance by empowering the Minister to declare information relating to the GPF as confidential if they think that disclosure of such information would prejudice the performance of the GPF. As argued in this article, this provision is susceptible to abuse by the Minister because the Minister retains sole discretion to determine whether a piece of information would be prejudicial to the GPF. Left unchecked, the Minister’s discretion could be counterproductive to the transparency of the GPF, a key prescription of the Santiago Principles.

## 2. The Ghana Petroleum Funds

The GPF consists of the Ghana Stabilisation Fund and the Ghana Heritage Fund.8 Whereas the Ghana Stabilisation Fund is intended to ‘cushion the impact on or sustain public expenditure capacity during periods of un-anticipated petroleum revenue shortfalls’,9 the purpose of the Ghana Heritage Fund is ‘to provide an endowment to support development for future generations when petroleum reserves have been depleted’.10 In essence, the GPF not only provides financial stability for Ghana in times of economic stress, but it also saves and invests excess revenues arising from petroleum operations for current and future generations of Ghanaians.

Funding for the GPF is derived from petroleum revenues accruing to the government of Ghana. In this regard, the PRMA casts a wide net in terms of the petroleum revenues payable to the government. Petroleum revenues include:

(a) royalties from oil and gas, additional oil entitlements, surface rentals, other receipts from any petroleum operations and from the sale or export of petroleum;

(b) any amount received from direct or indirect participation of the government in petroleum operations;

(c) corporate income taxes in cash from upstream and midstream petroleum companies;

(d) any amount payable by the national oil company as corporate income tax, royalty, dividends, or any other amount due in accordance with the laws of Ghana; and

(e) any amount received by government directly or indirectly from petroleum resources not covered by paragraphs (a) to (d) including where applicable, capital gains tax derived from the sale of ownership of exploration, development and production rights.11

As indicated earlier, all petroleum revenues accruing to the government of Ghana are paid directly into the PHF.12 In turn, the PHF transfers to the GPF a percentage of petroleum revenue which Parliament determines to be savings under the Act.13 In addition, where the petroleum revenue received in any quarter of a financial year exceeds one-quarter of the Annual Budget Funding Amount for the financial year, the excess revenue is transferred from the PHF into the GPF.14 At least 30 per cent of the excess revenue transferred from the PHF into the GPF each quarter is paid into the Ghana Heritage Fund, while the balance is paid into the Ghana Stabilisation Fund.15

### 2.1. Operational management of the Ghana Petroleum Funds

The operational management of SWFs in developing countries varies depending on the legal status of the SWFs.19 Some SWFs are vested with a separate legal personality either by their constitutive statute or through incorporation as a legal entity. For example, both the Nigeria Sovereign Investment Authority and the Sovereign Fund of Angola are statutorily vested with legal personality including the capacity to sue and be sued in their corporate names.20 Usually, SWFs with separate legal personality are managed by a board of directors, thus ensuring their independence from the government.21 Other SWFs, usually referred to as the ‘manager model’, are managed by a government agency or Central Bank but they lack a separate legal personality.22 The GPF falls under the latter category, meaning that it lacks a separate legal personality.

It is unclear why the government of Ghana chose not to vest the GPF with a separate legal personality, but speaking generally, economic and administrative factors may have informed the government’s decision. For example, it is more cost-effective to rely on existing institutions such as the Bank of Ghana to manage the GPF, particularly because of the small size of the GPF.23 Besides, rather than duplicating public agencies by creating a distinct management agency for the GPF, it makes economic sense to tap into the expertise of the Bank of Ghana which, in any event, is largely responsible for the foreign investments undertaken by the government of Ghana.

That being said, the vesting of a separate legal personality in SWFs has the unique advantage of promoting operational independence on the part of SWFs because it allows governments to better delineate the SWFs from other government agencies.24 The vesting of a separate legal personality in SWFs also allows governments to separate ownership of SWFs and control of SWFs, thus insulating the SWFs from political interference on the part of the ruling elites.

The Minister of Finance is vested with broad power to manage the GPF under section 25 of the PRMA, which provides that the Minister shall:

(a) develop an investment policy for the investment of the Ghana Petroleum Funds;

(b) be responsible for the overall management of the Ghana Petroleum Funds and shall oversee the transfers into and disbursements from the Ghana Petroleum Funds;

(c) make decisions in relation to the investment strategy or management of the Ghana Petroleum Funds after seeking the advice of the Investment Advisory Committee and the Governor [of the Bank of Ghana], subject to the provisions of section 38; and

(d) enter into an Operations Management Agreement with the Bank of Ghana for the operational management of the Ghana Petroleum Funds, in form and substance similar to the format in the Second Schedule.

In discharging these obligations, the Minister is assisted by the Investment Advisory Committee (IAC). The IAC formulates investment policies with regard to the GPF; advises the Minister on broad investment guidelines and overall management strategies taking into account international best practice; and develops the benchmark portfolio, the desired returns from investment of petroleum revenues, and the risks associated with the GPF.25

However, the Minister may, in consultation with the Governor of the Bank of Ghana, take unilateral decisions where the IAC is unable to provide advice to the Minister within ten working days after the Minister’s request for advice or within a shorter period as determined by the Minister.26 In addition, the Minister may make investment and management decisions in circumstances requiring urgent action or where there is insufficient time to seek the advice of the IAC.27 In the latter case, however, the Minister is obliged to inform the IAC in writing within 48 hours of such unilateral decision.28

Although the Minister of Finance is charged with the statutory duty to manage the GPF, in practice, the Bank of Ghana is responsible for the day-to-day operational management of the GPF.29 In making management and investment decisions, the Bank of Ghana is obliged to take into account the investment guidelines used by the Bank for investments of a similar nature; established and internationally recognised principles of good financial governance; and the need to support Ghana’s national currency against destabilising factors.30

#### 2.1.1. Investment framework

The Santiago Principles enjoin that the investment policy of any SWF ‘should be clear and consistent with its defined objectives, risk tolerance, and investment strategy’ and that ‘[t]he SWF’s investment decisions should aim to maximize risk-adjusted financial returns in a manner consistent with its investment policy, and based on economic and financial grounds’.31 Generally speaking, the investment mandate of SWFs in developing countries falls into two categories: SWFs vested with broad powers to invest their funds in any instrument they deem appropriate, and SWFs that can only invest in specific investment instruments prescribed by their constitutive statutes or by executive order.32

The latter approach, which could be referred to as the ‘legal list’ approach, is adopted by the PRMA, that stipulates that revenues paid into the GPF must be invested only in ‘qualifying instruments prescribed by Executive Instrument’.33 In this regard, ‘qualifying instrument’ means:

(a) a debt instrument denominated in internationally convertible currency that bears interest or a fixed amount equivalent to interest,

1. that is of an investment grade security; and

2. that is issued by or guaranteed by the International Monetary Fund, World Bank or by a sovereign State other than the Republic of Ghana, if the issuer or guarantor has investment grade rating; or

(b) an internationally convertible currency deposit with, or a debt instrument denominated in, any internationally convertible currency that bears interest or a fixed amount equivalent to interest issued by

1. the Bank for International Settlements;

2. the European Central Bank;

3. the Central Bank of a sovereign State, other than the Republic of Ghana, with a long-term investment grade rating; or

(c) a derivative instrument

1. that is solely based on an instrument that satisfies the requirements of paragraphs (a) and (b); and

2. where its acquisition reduces the financial exposure to the risks associated with the underlying instruments prescribed by the Minister.34

However, ‘qualifying instruments’ are not static because the range of instruments designated as ‘qualifying instruments’ is reviewable every three years or sooner by the Minister of Finance acting on the advice of the IAC.35

The definition of ‘qualifying instrument’ under the PRMA focuses primarily on foreign or offshore instruments. Hence, the Bank of Ghana has invested the funds and assets of the GPF primarily in foreign bonds and treasury bills.36 This focus on foreign instruments is dictated by economic and political realities in Ghana. Economically speaking, it is safer to invest in foreign instruments in developed economies because such instruments attract lower risks than domestic instruments in Ghana.37 In this sense, the restriction on investment instruments under the PRMA could help to prevent excessive risk-taking by the Bank of Ghana. Moreover, the restriction ‘allays concerns there might be bias in investment choices (for example, political elites investing in family businesses)’.38 It is not uncommon for SWFs in developing countries to politicise their domestic investment to the benefit of the ruling elites.39 In addition, investing in foreign instruments helps to mitigate corruption which would most certainly occur if petroleum revenues were permitted to be invested freely and without hindrance in domestic investment instruments in Ghana.40

To be sure, ‘qualifying instruments’ under the PRMA have yet to be interpreted by Ghanaian courts as excluding domestic investment instruments. However, the investment of petroleum resources in domestic instruments in Ghana could be counterproductive to the prudent management of the GPF. It could increase political influence peddling, particularly with regard to the choice of investment instruments.41 Political elites are likely to exert pressure on the Bank of Ghana to invest petroleum revenues in companies with which they (politicians) have affiliations.

This explains why some authors have suggested that SWFs in developing countries should be prohibited from investing ‘in the country, or in domestic enterprises or enterprises controlled by nationals of the country’.42 This is the position adopted by Sao Tome and Principe where

[i]t is prohibited to invest the Oil Revenues deposited in the Oil Accounts in investments domiciled in Sao Tome and Principe, or in any investments controlled directly or indirectly, totally or partially, by any national Person, whether or not resident of Sao Tome and Principe.43

While there are legitimate reasons for adopting the ‘legal list’ approach, the restriction placed on the power of the Bank of Ghana to invest petroleum funds could hamper the maximisation of returns on Ghana’s petroleum revenues. This statutory restriction on investment instruments could potentially prevent the Bank of Ghana from taking advantage of new investment opportunities to the extent that these new investment opportunities are not designated as ‘qualifying instruments’. The Minister of Finance could assuage this concern by designing a long list of ‘qualifying instruments’ coupled with an annual review and update of the list of designated qualifying instruments to cater to emerging trends on the international investment market.

That being said, the ‘legal list’ approach is not peculiar to Ghana. For example, Timor-Leste’s Petroleum Fund Law requires investment of petroleum revenues in qualifying instruments as designated in Article 15 of the Law. However, unlike Ghana, Timor-Leste has a statutory exception to the provision that petroleum revenues are to be invested in ‘qualifying instruments’. In Timor-Leste, up to ten per cent of petroleum revenues may be invested in financial instruments other than the qualifying instruments specified in the Petroleum Fund Law.44 However, investment in non-qualifying instruments can be made only if such instruments are issued abroad, are liquid and transparent, and are traded in a financial market of the highest regulatory standard.45

The Timor-Leste position is preferable because, by allowing investment of a specific percentage of petroleum revenues in non-qualifying instruments, it offers more flexibility to investment managers to react to market situations. Although such non-qualifying instruments attract higher risks, the advantage is that they yield more returns on investment than the less risky and low-yield bonds in which the funds and assets of the GPF are currently invested.46 As indicated in Tables 2 and 3, investment returns for the Ghana Stabilisation Fund and the Ghana Heritage Fund are, for the most part, paltry.47 It is hardly surprising then that Ghana’s Ministry of Finance and Economic Planning has proposed a review of ‘qualifying instruments’ to include higher yielding instruments.48

### Table 2. Performance of the Ghana Stabilisation Fund (US$). ### Table 3. Performance of the Ghana Heritage Fund (US$).

#### 2.1.2. Does the Bank of Ghana owe a duty of prudence?

Many developing countries impose the ‘prudent investor standard’ on the managers of their SWFs. For example, Sao Tome and Principe’s Oil Revenue Law enjoins managers of petroleum revenues to observe the ‘prudent investor rule’,49 while the Petroleum Fund Law of Timor-Leste provides that ‘[t]he Petroleum Fund shall be managed prudently in accordance with the principle of good governance for the benefit of current and future generations’.50 The ‘prudent investor standard’ imposes an obligation on fund managers to exercise the standard of care that a reasonably prudent investor would exercise in similar circumstances.51 It requires fund managers to invest the assets of SWFs prudently in a manner that not only generates income but also conserves ‘the value of the original assets’.52

Although Ghana’s PRMA imposes a duty to manage the GPF on the Minister of Finance and the Bank of Ghana, it does not specifically mention the ‘prudent investor standard’ as the standard of care to be observed in managing the GPF. However, it could be argued that the PRMA indirectly imposes the ‘prudent investor standard’ on the Bank of Ghana by providing that the Bank of Ghana shall manage petroleum revenues ‘prudently within the framework of the operational and management strategy provided by the Minister’, while taking into account a number of factors including ‘established and internationally recognised principles of good governance’.53 Arguably, ‘internationally recognised principles of good governance’ are broad enough to encompass the ‘prudent investor standard’. The problem, however, is that the PRMA does not define ‘internationally recognised principles of good governance’. In the absence of a specific statutory provision requiring observation of the prudent investor standard, it may be difficult to hold the Minister of Finance and the Bank of Ghana to the legal standard of the prudent investor.

Read literally, the Act provides that the Minister sets the framework for the prudent management of petroleum revenues, thus they are able to dictate the level of prudence to be observed by the Bank of Ghana. It is preferable to impose on the Bank of Ghana a more explicit obligation to observe the ‘prudent investor standard’. As Bell and Faria have argued, ‘portfolio managers should be held to appropriate standards of care when carrying out management duties and exercising whatever discretion with which they are vested’.54 The imposition of the ‘prudent investor standard’ on managers of petroleum revenues is based on the premise that such managers are trustees acting for and on behalf of citizens of the country who are the ultimate beneficiaries of the revenues entrusted to the care of the managers.55

### 2.2. Withdrawal of funds from the Ghana Petroleum Funds

The maintenance of any SWF depends in large part on its ability to retain and invest its funds. Thus, the Santiago Principles recommend that the policies, rules, procedures or arrangements regarding the funding of SWFs, as well as withdrawals from SWFs, should be clearly stated by the government and disclosed to the public.56 Usually, the rules governing withdrawals of funds from SWFs are set out in statutory instruments but these rules differ depending on the type of SWF.57 The rules aim primarily to ensure that SWFs remain solvent, thus enabling SWFs to accomplish their investment objectives.

The PRMA establishes specific rules for the withdrawal of funds from the GPF. These rules impose certain restrictions on the power of the government to withdraw funds from the Ghana Stabilisation Fund and the Ghana Heritage Fund – the two Funds constituting the GPF. The government can withdraw from the Ghana Stabilisation Fund only where the petroleum revenue collected in a given quarter is less than one-quarter of the Annual Budget Funding Amount for the financial year in question.58 Even then, the amount withdrawable from the Ghana Stabilisation Fund is not limitless. In fact, the withdrawable amount is ‘the lesser of (a) seventy-five percent of the estimated amount of the shortfall for that quarter; or (b) twenty-five percent of the balance standing to the credit of the Ghana Stabilisation Fund at the beginning of the financial year’.59 However, the amount withdrawable from the Ghana Stabilisation Fund increases drastically where there are shortfalls in petroleum revenue for a sustained length of time. For example, where there are shortfalls in petroleum revenue in the second and third quarters of the same financial year, the government is allowed to withdraw from the Ghana Stabilisation Fund an amount that is ‘double the allowable amount of the third quarter shortfall’.60 And, where there are successive shortfalls in any of the preceding quarters in the same financial year, the government may withdraw from both the Ghana Stabilisation Fund and the PHF an amount that is ‘enough to meet the Annual Budget Funding Amount approved in the Appropriation Bill for that financial year’.61

The restriction on withdrawal of funds is even stricter in the case of the Ghana Heritage Fund. Withdrawals from the Ghana Heritage Fund can be made only after Ghana’s petroleum reserves are depleted.62 However, the Parliament of Ghana, by resolution supported by a majority of its members, may ‘review the restriction on transfers from the Ghana Heritage Fund and authorise a transfer of a portion of the accrued interest on the Ghana Heritage Fund into any other fund established by or under’ the PRMA.63 Parliament could conduct such review and order a transfer from the Ghana Heritage Fund only ‘at intervals of fifteen years from the date of commencement of’ the PRMA.64 The strictness of the procedure for withdrawing funds from the Ghana Heritage Fund helps to preserve the essence of the Fund which is to save excess petroleum revenues for future generations.

That being said, there is evidence that the rules governing withdrawal of funds from the Ghana Stabilisation Fund are already being circumvented by the government. As mentioned previously, the Minister of Finance has power to cap the Ghana Stabilisation Fund, albeit with the approval of Parliament.65 In July 2014, the Minister capped the Ghana Stabilisation Fund at US$250 m.66 As a result, as of ‘May 2014, an excess of US$176 million had been realized [out of which] US$16 million was lodged into the newly established Contingency Fund and the difference of US$159 million is being used for debt repayment’.67 The cap was imposed unilaterally by the Minister, apparently to circumvent the withdrawal rules.68 As the PIAC has reported, as a result of the capping of the Ghana Stabilisation Fund, the Minister was able to withdraw US$305.68 m from the Ghana Stabilisation Fund in 2014, an amount ‘representing the excess over the capped amount’.69 A more worrisome observation is that the Minister capped the Ghana Stabilisation Fund apparently without prior parliamentary approval, thus acting in breach of the PRMA.70 Although the PRMA empowers the Minister to cap the Ghana Stabilisation Fund, it does not authorise the Minister to act unilaterally. Rather, section 23(3) of the PRMA provides simply that ‘[t]he accumulated resources of the Ghana Stabilisation Fund shall not exceed an amount recommended by the Minister and approved by Parliament’. Thus, the Minister’s power is restricted in that they can only make a recommendation that the Ghana Stabilisation Fund be capped. The Minister’s recommendation becomes effective only if it is approved by Parliament. Until then, the Minister’s recommendation remains a mere recommendation. It is also disturbing to note that the Minister capped the resources of the Ghana Stabilisation Fund in a retrospective manner.71 As the PIAC has noted, under the PRMA ‘the capping is supposed to be done prospectively and not retrospectively as has happened in this instance’.72 A further concern is the Minister’s penchant for capping the Ghana Stabilisation Fund. Between 2014 and 2016, the Minister capped the Ghana Stabilisation Fund at least four times. As mentioned earlier, the Minister unilaterally capped the Ghana Stabilisation Fund at US$250m in 2014.73 In 2015, the Minister capped the fund at US$300m albeit with the approval of Parliament.74 Surprisingly, during his 2015 Mid-Year Budget Review, the Minister further reduced the cap to US$150m.75 And, yet again, the Minister set a cap of US$200m for the Fund in the 2016 national budget.76 The incessant capping of the Ghana Stabilisation Fund creates uncertainty for fund managers and it could have a negative impact on its investment activities because it hinders long-term planning. We may already be witnessing such negative impacts. For example, it could be argued that, as indicated in Table 2, the Ghana Stabilisation Fund’s returns on investment decreased from US$1.5m in 2014 to a derisory sum of US$531,818.13 in 2015, partly as a result of the Minister’s depletion of its capital through incessant capping of the Fund. Moreover, the capping of the Ghana Stabilisation Fund weakens the ability of the Fund to perform its primary task to insulate Ghana’s economy from economic volatility and shocks which could readily occur because Ghana relies heavily on resource revenues.77 The cap amount of US$200m set under the 2016 national budget is too little to insulate Ghana’s economy from volatility.

## 3. Transparency of the Ghana Petroleum Funds

Transparency is essential to the effective management of resource revenues.78 However, transparency can hardly be achieved without disclosure of requisite information to the public.79 Hence, a multitude of international initiatives including the International Monetary Fund’s Guide on Resource Revenue Transparency;80 the Extractive Industries Transparency Initiative;81 and the Publish What You Pay campaign82 urge governments and companies to publish all payments and receipts arising from resource exploitation.

The Santiago Principles are also designed in part to ensure that SWFs are accountable and transparent. The Santiago Principles urge SWFs to publicly disclose the policies, rules and procedures governing their activities.83 The Santiago Principles recommend that ‘[a]n annual report and accompanying financial statements on the SWF’s operations and performance should be prepared in a timely fashion and in accordance with recognized international or national accounting standards in a consistent manner’;84 and that ‘[r]elevant financial information regarding the SWF should be publicly disclosed to demonstrate its economic and financial orientation, so as to contribute to stability in international financial markets and enhance trust in recipient countries’.85

In line with the Santiago Principles, Ghana’s petroleum revenues are managed on the premise of transparency, accountability and public oversight. The triple goals of transparency, accountability and public oversight may not be achievable if the Ghanaian public is unaware or uninformed about the true state of affairs with regard to petroleum revenues. In view of this, the PRMA seeks to promote public education and awareness with regard to the management of petroleum revenues. As discussed below, one of the duties of the PIAC is to sensitise and inform the Ghanaian public about petroleum revenue management.86

More significantly, the PRMA imposes specific reporting and disclosure obligations on the managers of petroleum revenues from the stage of revenue collection right up to the final utilisation of petroleum revenues. The PRMA stipulates that all records of receipts and payments into the PHF shall be published by the Minister of Finance in the Gazette, two state-owned daily newspapers and on the website of the Ministry of Finance and Economic Planning.87 The Minister of Finance is also obliged to publish the total petroleum output lifted as well as the reference price for petroleum.88

Furthermore, the Minister is obliged to submit to Parliament an annual report regarding the operations and activities of the GPF.89 The Minister’s annual report, which is prepared in a manner that allows for easy dissemination to the public, includes an audited financial statement of the previous year comprising (i) the receipts and transfers to and from the PHF; (ii) the deposits into and withdrawals from the Ghana Stabilisation Fund and the Ghana Heritage Fund; and (iii) a balance sheet, including a note listing the qualifying instruments of the GPF.90 The report also describes investment activities of the GPF undertaken in the course of the financial year and the income derived from such investment.91

These reporting and disclosure requirements are significant because, as discussed below, they aid the Parliament of Ghana in performing its oversight responsibilities regarding the management of petroleum revenues. Reporting and disclosure requirements equally assist civil society at large in monitoring the management of petroleum revenues.92

In addition to these reporting and disclosure obligations, the PRMA requires managers of the GPF to observe at all times ‘the highest internationally accepted standards of transparency and good governance’.93 Institutions and persons charged with managing Ghana’s petroleum revenues are enjoined to ‘take the necessary measures to entrench transparency mechanisms and free access by the public to information’.94 In fact, failure to comply with an obligation to publish information regarding the management of petroleum revenues is an offence under the PRMA.95 The problem, however, is that the phrase ‘the highest internationally accepted standards of transparency and good governance’ is vague. Section 61 of the PRMA, which deals with interpretation of the statute, neither defines the phrase nor attributes any particular meaning to it.

Although the PRMA promotes transparency in managing Ghana’s petroleum revenues, it appears to undermine the transparency of the GPF in one sense. It confers on the Minister of Finance the discretion to declare certain information or data as confidential where the Minister determines that disclosure of the information or data could ‘prejudice significantly the performance of the Ghana Petroleum Funds’.96 Although exercise of the Minister’s discretion is subject to parliamentary approval and while the Minister is obliged to ‘provide a clear explanation of the reason for treating the information or data as classified’,97 the Minister’s open-ended discretion could be counterproductive to the goal of financial transparency which the PRMA seeks to promote. To paraphrase Bell and Faria, the Minister’s discretion is so broad that ‘a determined government could use [it] to prevent almost any meaningful disclosure’ of petroleum-related information.98 For example, confidentiality clauses in contracts between the government of Ghana and international oil companies could provide justification for the Minister to classify certain information as confidential. There may well be instances where the Minister could justifiably use her/his discretion to classify information as confidential, such as where the information is proprietary in nature.99 However, transparency is better promoted through disclosure of all non-proprietary information and through access by the public to pertinent information regarding petroleum revenues.

Worse yet, while the PRMA anticipates the disclosure of confidential information three years after the date of classification of the information as confidential, the Minister is permitted to withhold information from the public for a period longer than three years provided the reason for classifying the information as confidential ‘is still valid’.100 The question is, who determines whether the reason for the Minister’s classification of confidential information ‘is still valid’? Given the context of the PRMA, it seems that the Minister makes that determination. This being the case, the Minister is ‘judge and executioner’, a situation that does not bode well for financial transparency.

The position in Ghana contrasts sharply with the situation in Sao Tome and Principe where ‘[a]ll payments, management, use and investment of Oil revenues or Oil resources [are] subject to the transparency principle’ and the ‘transparency principle implies disclosure of, and public access to’ all information regarding oil revenues including payments, receipts, management, debit and credit transactions, and balances of the oil accounts.101 More significantly, in Sao Tome and Principe, all information pertaining to oil revenues is subject to mandatory disclosure, although information concerning industrial property rights may not be disclosed ‘to the extent that confidentiality in such cases is protected by’ domestic law, treaty or international law.102 Even then, the exemption of information concerning industrial property rights from the scope of the mandatory disclosure provision does not ‘apply to any financial information’.103 Underlying Sao Tome and Principe’s resolve to ensure that all oil-related information is disclosed to the public is the provision in the Oil Revenue Law declaring confidentiality clauses in oil contracts null and void and contrary to public policy.104

It should, however, be observed that, although under Ghana’s PRMA the Minister of Finance may declare certain information as confidential, such declaration of confidentiality does not prevent Parliament and the PIAC from accessing the information.105

## 4. Accountability and oversight mechanisms

The prudent management of resource revenues requires accountability on the part of managers of resource revenues.106 In this context, accountability means the duty of managers of resource revenues to explain or justify their actions and give reasons for taking any particular decision or course of action. As observed by Colin Scott, the concept of accountability encompasses ‘the duty to give account for one’s actions to some other person or body’.107 In the legal sense, the concept of accountability holds public officers and agencies ‘to the democratic will’ and promotes ‘fairness and rationality in administrative decision making’.108

With regard to SWFs, a plethora of accountability mechanisms are adopted by resource-rich countries for the purpose of monitoring the performance of their SWFs. These mechanisms include the judiciary, legislature, regulatory agencies, external auditors and civil society organisations.109 The accountability framework for SWFs is usually prescribed in the constitutive documents of the SWFs, such as legislation, charter or management agreement.110

The PRMA creates a multi-layered accountability framework for the GPF. The PRMA vests the Parliament of Ghana and the Auditor-General of Ghana with specific oversight functions with regard to the management of the GPF. As well, the PRMA establishes the Investment Advisory Committee and the PIAC, both of which perform oversight and monitoring functions over the GPF. These oversight mechanisms are meant to ensure that managers of the GPF are accountable to the citizens of Ghana, who are the ultimate beneficiaries of the GPF. However, as noted below, in order to effectively monitor and oversee the activities of any SWF, oversight mechanisms must be independent of both the SWF and the government.

### 4.1. Parliamentary oversight

As discussed above, the PRMA obliges the Minister of Finance to submit to the Parliament of Ghana an annual report on the activities of the GPF.111 The essence of this report is to assist Parliament in undertaking its statutory role as an oversight body. The problem, however, is that the ability of Parliament to perform its oversight function is undermined by the infrequency of the Minister’s report. The PRMA requires the Minister to submit a report to Parliament once a year ‘as part of the annual presentation of the budget statement and economic policies’.112 A matter of public and national significance, such as the management of the GPF, ought to attract the attention of Parliament on a more frequent basis than the solitary report required by the PRMA. Much could go wrong in the course of one year and Parliament may not be aware of any deficiencies in the management of the GPF unless it has access to information regarding petroleum revenues on a more frequent basis.

That being said, a solitary yearly report by the Minister may have been prescribed because, elsewhere in the PRMA, the Bank of Ghana is obliged to submit to Parliament semi-annual reports on the activities of the GPF.113 A better arrangement would be that reports are made to Parliament on a quarterly basis. This is the more so because the Minister receives quarterly reports on the activities of the GPF from the Bank of Ghana.114 Quarterly reports are the norm in the financial world, both globally and domestically. For example, Securities Commissions in many countries including Ghana require public companies to submit quarterly reports on their financial dealings and status.115

The author is not suggesting that Parliament lacks power to request information on the GPF at any time it deems appropriate. However, transparency and accountability would be enhanced if the Minister were statutorily obliged to report to Parliament on a more frequent basis. The frequent and consistent exercise of parliamentary oversight of petroleum revenue management is required if Ghana is to avoid the fate of countries such as Angola and Nigeria which, though rich in petroleum resources, suffer economic hardships due to the mismanagement of petroleum revenues.116

Perhaps more fundamentally, the PRMA does not vest any specific remedial powers in Parliament regarding its oversight role. For example, the PRMA does not specify what Parliament ought to do with the report submitted by the Minister. Of course, on the basis of its general powers under the Constitution of the Republic of Ghana 1992, Parliament could debate the contents of the report, conduct investigations and hold hearings on the report, but it is unclear whether Parliament, where it finds deficiencies in the Minister’s report, can impose sanctions on the Minister or the Bank of Ghana. The PRMA ought to vest specific powers in Parliament to sanction the managers of the GPF.

### 4.2. Investment Advisory Committee

The Investment Advisory Committee (IAC) consists of seven members with ‘proven competence in finance, investment, economics, business management or law or similar disciplines’.117 The IAC advises the Minister on matters pertaining to the management of petroleum revenues, including the formulation of investment policies for the GPF.118 The IAC is also responsible for ‘the general performance monitoring of the management of the Ghana Petroleum Funds’.119 In essence, the IAC acts as a watchdog and performs oversight functions with regard to the management of the GPF.120

The oversight role of the IAC is hindered by several factors. First, there is a lack of specifics regarding the oversight role of the IAC in the sense that, while the PRMA provides that the IAC is responsible for general performance monitoring of the GPF,121 the Act does not specify how and by what means the IAC is to conduct its monitoring duty. Second, the restrictions on eligibility for membership of the IAC do not go far enough. Although the PRMA prohibits certain persons from membership of the IAC, bankrupt persons, that is, persons who are unable to meet their financial obligations as they fall due, are not specifically excluded from membership of the IAC.122 Thus, it is quite possible for bankrupt persons to be appointed to the IAC. The appointment of bankrupt persons to the IAC would be counterproductive to the attainment of the lofty objectives of the PRMA, that is, the prudent management of Ghana’s petroleum revenues. A bankrupt appointee could be swayed easily by the possibility of monetary gains arising from any matter before the IAC. This could exacerbate corruption which, as we all know, plagues public institutions in Ghana and other African countries. It should, however, be said that elsewhere in the PRMA, bankrupt persons are disqualified from membership of the PIAC.123

Third, the PRMA does not mandate diversification of membership of the IAC. Save to the limited extent that the PRMA requires at least two members of the IAC to be female,124 the President of Ghana retains an unfettered discretion to appoint members of the IAC. Such unfettered discretion is problematic because, although Ghana has practised democracy for several decades, Ghana’s democracy can hardly be said to be responsive. For the most part, political appointments in Ghana are based on party loyalty and party interest because Ghana operates what some have termed a zero-sum political system in which the ‘winner takes all’.125 Thus, it is often the case that Ghanaian Presidents appoint members and supporters of their ruling party to public positions.126 It is hardly surprising then that opposition parties are excluded from membership of the IAC. In this regard, it is also worth noting that members of the opposition parties in Ghana were similarly excluded from the consultation process leading to the creation of the GPF.127

It is preferable for the PRMA to require diversification of membership of the IAC in terms of party affiliation as well as the geographic regions from which members of the IAC hail. Such diversification could engender ‘buy-in’ from Ghanaian citizens and political elites, thus enhancing the potential for successful outcomes.128 It could also enhance the legitimacy of the IAC because, as Julia Black argues, ‘to be legitimate to a wider section of civil society’ decision-making bodies should be composed of a wider range of representatives.129 Moreover, broad membership of the IAC could discourage corruption on the part of members of the IAC. For example, members of the IAC who are from the opposition parties or civil society would be reluctant to collude with ruling party members who may be tempted to engage in corrupt practices in the knowledge that the ruling party would not investigate or hold them accountable for corruption.

### 4.3. Public Interest and Accountability Committee

The Public Interest and Accountability Committee (PIAC) is charged with three key duties, viz:

(a) to monitor and evaluate compliance with this Act by government and other relevant institutions in the management and use of the petroleum revenues and investments as provided in this Act;

(b) to provide space and platform for the public to debate whether spending prospects and management and use of revenues conform to development priorities as provided under section 21(3); and

(c) to provide independent assessments on the management and use of petroleum revenues to assist Parliament and the executive in the oversight and performance of related functions respectively.130

The PIAC is enjoined to publish semi-annual and annual assessment reports on the management of petroleum revenues,131 submit these reports to Parliament and the President of Ghana,132 and hold public meetings twice each year so as to facilitate its engagement with the general public.133

The PIAC consists of 13 members including representatives of the private sector, civil society, trade unions, professional bodies and religious groups.134 Members of the PIAC are appointed by the Minister of Finance for two- or three-year terms.135 While those appointed to a two-year term are eligible for reappointment for a further term of two years, members appointed to a three-year term are ineligible for reappointment.136 However, certain persons are not eligible for appointment to the PIAC, including: persons adjudged or declared bankrupt under Ghanaian law who have not been discharged; persons of unsound mind or persons detained as offenders with a mental disorder under any law in force in Ghana; persons convicted of certain offences including treason and electoral offences; and persons found by a committee of inquiry either to be incompetent to hold public office or, while being a public officer, to have acquired assets unlawfully or defrauded the state or misused or abused their office, or wilfully acted in a manner prejudicial to the interest of the state.137

In order to ensure that members of the PIAC discharge their duties without fear of retribution by government officials, members of the PIAC are guaranteed security of tenure.138 Thus, ‘unless otherwise provided for by law, or for medical reasons’, members of the PIAC may not be suspended, retired or removed from office.139

The PIAC was constituted in 2011 and since then it has discharged its monitoring and oversight responsibilities in an admirable manner. It has issued semi-annual and annual reports for the years 2011, 2012, 2013, 2014, 2015 and 2016.140 For the most part, these reports contain comprehensive and in-depth analysis of the management of the GPF. The PIAC’s reports are ‘uncharacteristically bold in raising critical issues’ regarding deficiencies in the collection, management and utilisation of petroleum revenues in Ghana.141 In addition, the PIAC has publicly denounced certain actions taken by the Minister of Finance or the government with regard to the GPF.142

However, the PIAC is handicapped by lack of financial and material resources. The PIAC reports that, for the greater part of 2013, it ‘operated with no funding for any of its planned programmes and activities’ and that ‘[n]ot only were Secretariat staff and Committee members not paid any remuneration but also operations came to a halt for about six months’.143 The lack of funding causes delays in the preparation and publication of the PIAC’s annual reports.144 In fact, since its inception, the PIAC has been unable to meet the statutory deadlines for publication of its annual reports due to lack of funding.145 The PIAC also reports that lack of funds ‘led to the PIAC having only one public meeting’ in 2013.146

Although the PIAC’s budget was incorporated in the national budget for 2013, the government failed to approve or allocate funds for some of the activities indicated in the PIAC budget.147 Even in the instances where the government allocated funds for PIAC’s activities, release of funds is usually delayed by the government148 and, in some instances, the amount released to the PIAC falls far short of the amount allocated in the budget. For example, although the government allocated 500,000 Ghana Cedis to the PIAC in 2014, only half of that amount was actually released to the PIAC.149 Failure by the government to fund the PIAC has compelled the PIAC to rely partly on funds and other resources provided by organisations such as the United Kingdom Department for International Development and the Natural Resource Governance Institute.150

The PIAC’s funding problem was addressed recently by Parliament when it introduced a new provision in the PRMA requiring the government to fund the PIAC’s activities.151 This new provision mandates the PIAC to submit an annual budget to the Minister of Finance for inclusion in the annual national budget and, when so submitted, the PIAC’s budget ‘shall be a charge on the Annual Budget Funding Amount for each financial year’.152 This amendment provides a measure of financial autonomy for the PIAC and potentially ensures that the PIAC discharges its statutory duties in a timely manner. However, whether or not this new provision will have such positive impacts depends on how faithfully it is implemented by the government. These impacts are unlikely to materialise if the government refuses to release funds to the PIAC or if there is a delay in releasing funds to the PIAC.

An equally troubling observation is that the PIAC is not sufficiently empowered to perform its statutory functions.153 For example, the PRMA does not vest the PIAC with the power to compel production of documents and information regarding the management of the GPF.154 Moreover, the PIAC lacks the power to initiate or conduct investigations into the affairs of the GPF even if it reasonably suspects mismanagement of the GPF.155 In the absence of such powers, it is doubtful that the PIAC can achieve the statutory aim of providing ‘independent assessments on the management and use of petroleum revenues’ in Ghana.156 This situation contrasts sharply with the position in Sao Tome and Principe where the Petroleum Oversight Commission, an independent body charged with responsibility to monitor and oversee the management of oil revenues,157 has the power to request relevant information and documents regarding the National Oil Accounts; inquire about violations of any nature regarding oil revenues; initiate investigations and inquiries where it suspects violation of the Oil Revenue Law; and carry out searches, inspections and seizure of any documents in the course of performing its statutory duties.158

Moreover, the PRMA does not provide a clear channel for implementing or enforcing the findings and recommendations of the PIAC.159 The PIAC is not vested with power to enforce its findings and recommendations and, while Parliament has come to be regarded ‘as the sole enforcement outlet for PIAC’s findings and recommendations’,160 the problem, as noted earlier, is that Parliament itself lacks a clear mandate to impose sanctions on the managers of the GPF. Parliament is also highly partisan161 and, because the governing party is often the majority party in Parliament, Parliament is unlikely to enforce any hostile finding or recommendation against the government. It is hardly surprising then that the PIAC’s reports are rarely considered or debated by Parliament.162 The PRMA’s failure to provide a clear enforcement mechanism for the PIAC weakens the PIAC’s utility as an accountability mechanism and, as some observers have noted, it could also render the PIAC a mere façade behind which mismanagement of petroleum revenues could occur.163

That being said, since its establishment in 2011, the PIAC has earned a good reputation as an independent oversight institution.164 It has been noted, for example, that the PIAC provides a significant amount of transparency in the allocation and utilisation of petroleum revenues in Ghana.165 The PIAC’s reputation appears to be ruffling some feathers, hence Ghana’s political elites and, in particular, government officials are increasingly resentful of the PIAC.166 Such resentment manifests itself in the form of ‘suspicion and cynicism’ on the part of government officials as well as intimidation of the PIAC through threats of lawsuits against individual members of the PIAC.167

Finally, there is a real potential for role conflict between the PIAC and the IAC regarding their statutory functions because the PRMA vests overlapping powers in the PIAC and the IAC to monitor and oversee the GPF.168 Moreover, the scope of the oversight functions of the PIAC and IAC is not clearly delineated by the PRMA. This could create a problem of redundancy ‘in which overlapping (and ostensibly superfluous) accountability mechanisms reduce the centrality of any one of them’.169 The oversight functions of the PIAC and IAC must be clearly delineated if Ghana is to avoid role conflict between these institutions. Such delineation could be achieved by expressly limiting the oversight mandate of the IAC to the supervision of implementation of the GPF’s investment policies which, in any event, were formulated by the IAC.170

### 4.4. The Auditor-General of Ghana

The PRMA requires internal and external audit of petroleum revenues.171 The PHF and the GPF are audited internally by the Bank of Ghana and externally by the Auditor-General of Ghana.172 However, the Auditor-General of Ghana may appoint an independent external auditor to conduct such audit for a non-renewable three-year period.173 The Auditor-General is obliged to submit their audit report to Parliament.174

The Auditor-General’s audit determines whether (a) the accounts of the Petroleum Funds have been properly kept; (b) the payments due to and disbursements from the Petroleum Funds have been made; and (c) the Petroleum Funds have been managed in accordance with the provisions of the PRMA.175 Furthermore, the Auditor-General’s audit identifies any irregularities in the books and records of the Petroleum Funds which, in the opinion of the Auditor-General, ought to be drawn to the attention of Parliament.176 The Auditor-General is obliged to make their audit report available to the general public within 30 days after submission of the report to Parliament.177 In addition to the annual audit of the Petroleum Funds, the Auditor General may conduct a special audit or review of the Petroleum Funds if they determine that it is in the public interest to do so.178 For example, the Auditor-General could conduct a special audit of the Petroleum Funds if they suspect on reasonable grounds that the Funds are being mismanaged.

While the PRMA vests the Auditor-General with clear oversight and audit functions, it is doubtful whether the Auditor-General could have a significant impact on the prudent management of the GPF. This is because the Office of the Auditor-General of Ghana lacks some of the basic prerequisites for an effective public audit institution. The International Organization of Supreme Audit Institutions (INTOSAI) has identified eight core principles as essential requirements for an effective public audit agency. These are (1) the existence of an appropriate and effective constitutional or statutory framework; (2) the independence of the audit agency, its head and staff, including security of tenure and legal immunity in the normal discharge of their duties; (3) a sufficiently broad mandate and full discretion in the discharge of their functions; (4) unrestricted access to information; (5) the right and obligation to report on their work; (6) the freedom to decide the content and timing of audit reports and to publish and disseminate the reports; (7) the existence of effective follow-up mechanisms on the recommendations of the audit agency; and (8) financial and administrative autonomy including the availability of appropriate human, material and monetary resources.179

The Auditor-General of Ghana lacks independence from the executive arm of the government of Ghana. The Auditor-General is a public official who serves at the mercy of the President of Ghana. Under the Constitution of the Republic of Ghana 1992, the President appoints the Auditor-General albeit in consultation with the Council of State.180 This creates the perception ‘that the Auditor-General who is responsible for the audit of the accounts of Government is an appointee of the President just like Ministers of State’.181 Moreover, the salary, allowances and other emoluments of the Auditor-General are determined by the President of Ghana ‘on the recommendations of a committee of not more than five persons appointed by the President, acting in accordance with the advice of the Council of State’.182

The President’s power to determine the salary of the Auditor-General hinders and compromises the independence of the Auditor-General because it tempts the Auditor-General ‘to please the President or the Executive [arm of government] in order to secure his salary and conditions of service’.183 Although the Constitution of the Republic of Ghana 1992 provides that ‘[i]n the performance of his functions under this Constitution or any other law the Auditor-General shall not be subject to the direction or control of any other person or authority’,184 the Auditor-General’s lack of independence from the government or the President of Ghana means that, in practice, they are not insulated from the control of the government. Thus, it is quite conceivable that political elites in Ghana could exert influence on the Auditor-General.

The author recognises that, as a public officer, the Auditor-General cannot be completely independent of the government of Ghana. However, in order to ensure that the Auditor-General discharges their duty to audit the GPF without fear or favour, the Auditor-General ought to be granted functional independence, including financial independence as well as independence of the staff of the Office of the Auditor-General of Ghana.185 As rightly noted by INTOSAI, public audit agencies ‘can accomplish their tasks objectively and effectively only if they are independent of the audited entity and are protected against outside influence’.186

Speaking more generally, current constitutional and statutory regimes in Ghana do not insulate or protect the Auditor-General from civil liability or criminal prosecution for acts occurring in the course of discharging their statutory duties. Given the sensitive nature of an audit, it is conceivable that the Auditor-General’s audit of the GPF could have a negative impact on the government, particularly the Minister of Finance, who is charged with overall responsibility for managing the GPF. Thus, there is a potential for acts of reprisal by overzealous or unscrupulous government officials against the Auditor-General. In fact, the Office of the Auditor-General is cognisant of the potential for reprisals; hence it has recently recommended a constitutional amendment to the effect that:

The Auditor-General or any person serving in his Office or acting on his behalf shall not be subject to prosecution in civil or criminal proceedings or be personally liable for any act or omission done or omitted to be done in good faith in the exercise of the functions of the Office of the Auditor-General or carrying out any duty, or exercising any power under the Constitution.187

That being said, it is to be noted that the Constitution of the Republic of Ghana 1992 provides a measure of security for the Auditor-General. Under that Constitution, the Auditor-General cannot be dismissed or removed from office arbitrarily by the President of Ghana. Rather, the Auditor-General may be removed from office in the same manner that a Justice of the Superior Court of Judicature may be removed from office.188 Thus, the Auditor-General may be removed from office on grounds only of misbehaviour, incompetence or inability to perform the functions of their office as a result of infirmity of body or mind.189 Even then, the due process prescribed under section 146 of the Constitution must be observed in the course of removing or dismissing the Auditor-General from office.

## 5. Conclusion and recommendations

A well-crafted resource revenue management law is a condition precedent to the efficient management of resource revenues. Revenue management laws can curtail the excesses of fund managers to the extent that these laws provide for accountability, transparency, audit and public oversight of government agencies charged with managing resource revenues. In addition, by requiring disclosure of information regarding resource revenues, revenue management laws aid public interest advocacy groups in overseeing the management of resource revenues.

In this regard, Ghana must be commended for enacting the PRMA. The PRMA could promote prudent management of petroleum revenues provided it is effectively implemented and enforced.190 As discussed in this article, the Act establishes requisite mechanisms for effective management of the GPF. The Act promotes transparency and accountability not only by requiring publication of petroleum-related information but also by creating specific oversight mechanisms for the GPF.

However, neither the enactment of revenue management laws nor the mere establishment of an SWF such as the GPF guarantees the prudent and efficient management of petroleum revenues. This is particularly the case in countries with weak institutional foundations.191 Effective management of resource revenues requires a strong institutional foundation in terms of both human capital (that is, the capacity of the personnel charged with managing resource revenues) and the independence of the institutions vested with power to oversee the management of resource revenues. Regrettably, oversight institutions such as the office of the Auditor-General lack independence from the executive arm of government and are thus not insulated from government interference.

There are two other significant defects in the PRMA which could undermine the effectiveness of the GPF. First, the Minister of Finance is vested with too much discretionary power under the PRMA. As discussed previously, the Minister has power to classify information relating to the GPF as confidential if they think that disclosure of such information would prejudice the performance of the GPF. As argued in this article, this provision is susceptible to abuse by the Minister because the Minister retains sole discretion to determine whether the disclosure of a particular piece of information would be prejudicial to the GPF. Second, save to the extent that it specifies that at least two members of the IAC shall be female, the PRMA does not promote in any significant manner the notion of diversity in the composition of the IAC.

Some of these deficiencies could have been avoided through widespread consultation prior to the enactment of the PRMA, but as some observers have noted, the consultation process ‘was very limited’ in terms of civil society participation while opposition parties were excluded from the process altogether.192 The consultation process was equally ‘highly controlled’ by the government, hence the suspicion that some of these deficiencies may have been deliberately designed by the ruling political elites.193 To be sure, a number of civil society organisations participated in the consultation process leading to the enactment of the PRMA.194 However, many of these NGOs focus almost exclusively on transparency and accountability issues and they do not appear to possess expertise regarding other aspects of the petroleum industry including resource revenue management.195

The foregoing analysis provides a platform to make certain recommendations regarding amendments to the PRMA.

1. The PRMA should impose on the Bank of Ghana and other managers of the GPF an express duty to observe the ‘prudent investor standard’.

2. The PRMA should provide in express terms for diversification of the IAC, such that multiple stakeholders are represented on the committee, including at least one member representing opposition parties.

3. The oversight functions of the PIAC and IAC should be clearly delineated by expressly limiting the oversight mandate of the IAC to the supervision of implementation of the investment policies of the GPF.

4. The PIAC should be strengthened in two specific ways: it should be empowered to initiate investigations and inquiries into the management of the GPF; and it should be granted the power to compel the government, the Bank of Ghana and oil companies to produce information and documents relating to petroleum payments, revenues and receipts.

5. The provisions of the PRMA (s 49(3–6)) empowering the Minister of Finance to declare petroleum-related information and data as confidential should be repealed because they are counterproductive to the transparency and accountability of the GPF. A repeal of these subsections would ensure that Ghanaians have unfettered access to information relating to petroleum revenues and receipts, thus aiding Ghanaian citizens in holding managers of the GPF accountable for their actions.

## Notes

1 Petroleum Revenue Management Act, 2011 (Act 815), Preamble.

2 On the concept of ‘resource curse’ see Richard M Auty, Sustaining Development in Mineral Economies: The Resource Curse Thesis (Routledge 1993); Terry Lynn Karl, The Paradox of Plenty: Oil Booms and Petro-States (University of California Press 1997); Michael L Ross, ‘The Political Economy of the Resource Curse’ (1999) 51 World Politics 297.

3 Petroleum Revenue Management Act, 2011, ss 2(1) and 4.

4 Ibid, s 2.

5 Ibid, s 11.

6 See International Working Group of Sovereign Wealth Funds, Sovereign Wealth Funds: Generally Accepted Principles and Practices, 27 (hereafter ‘Santiago Principles’).

7 Ibid, 4.

8 Petroleum Revenue Management Act, 2011, s 11(1).

9 Ibid, s 9(2).

10 Ibid, s 10(2) (as amended by the Petroleum Revenue Management (Amendment) Act, 2015, s 3).

11 Ibid, s 6.

12 Ibid, s 3(2).

13 Ibid, s 9(3) and s 10(3).

14 Ibid, s 23(1)(a).

15 Ibid, s 23(1)(b).

16 Ibid, s 23(3).

17 Ibid, s 23(4).

18 Bank of Ghana, Petroleum Holding Fund & Ghana Petroleum Funds Semi Annual Report: January 1 – June 30, 2016, 4 www.bog.gov.gh/public-notices/2656-petroleum-holding-fund-phf-a-gpfs-semi-annual-report last accessed 25 October 2016.

19 See Evaristus Oshionebo, ‘Managing Resource Revenues: Sovereign Wealth Funds in Developing Countries’ (2015) 15 Asper Review of International Business and Trade Law 217, 224–35.

20 See Nigeria Sovereign Investment Authority (Establishment, Etc) Act, 2011 (Act No 15), s 1(2) and Angola’s Presidential Decree No 48/11, Article 1(2).

21 Oshionebo (n 19) 226–30.

22 Ibid, 230.

23 Abdullah Al-Hassan and others, ‘Sovereign Wealth Funds: Aspects of Governance Structures and Investment Management’ (2013) IMF Working Paper WP/13/231, 11 www.imf.org/external/pubs/ft/wp/2013/wp13231.pdf last accessed 9 February 2016.

24 See Santiago Principles (n 6) 15 (stating that SWFs that are established as separate legal entities tend to ‘have a governance structure that clearly differentiates an owner, a governing body, and management of the SWF’).

25 Petroleum Revenue Management Act, 2011, s 30(1).

26 Ibid, s 38(1).

27 Ibid, s 38(2).

28 Ibid, s 38(3).

29 Ibid, s 26.

30 Ibid, s 26(2).

31 Santiago Principles (n 6) Principles 18 and 19.

32 Oshionebo (n 19) 235–39.

33 Petroleum Revenue Management Act, 2011, s 27(1).

34 Ibid, s 61.

35 Ibid, s 27(2).

36 See Report of the Auditor-General on the Management of the Petroleum Funds for the Period 1 January 2013 to 31 December 2013, 38–39 www.wgei.org/wp-content/uploads/2015/09/Petroleum-Fund-2013.pdf last accessed 10 April 2016 (hereafter ‘Report of the Auditor-General 2013’).

37 See Jennifer Drysdale, ‘Five Principles for the Management of Natural Resource Revenue: The Case of Timor-Leste’s Petroleum Revenue’ (2008) 26 Journal of Energy & Natural Resources Law 151, 165.

38 Ibid, 164.

39 See Kyle Hatton and Katharina Pistor, ‘Maximizing Autonomy in the Shadow of Great Powers: The Political Economy of Sovereign Wealth Funds’ (2011) 50 Colum J Transnat’l L 1, 12 and 26.

40 See Drysdale (n 37) 164.

41 See Joseph C Bell and Teresa M Faria, ‘Critical Issues for a Revenue Management Law’ in Macartan Humphreys, Jeffrey D Sachs and Joseph E Stiglitz (eds), Escaping the Resource Curse (Columbia University Press 2007) 286, 299 (arguing that the prohibition of domestic investment ‘helps limit political influence in the funds’ choice of investments … ’).

42 Ibid, 299.

43 Law No 8/2004, Oil Revenue Law, Article 13(5).

44 Petroleum Fund Law, Law No 9/2005, Article 14.2.

45 Petroleum Fund Law, Law No 9/2005, Article 14.2.

46 See Report of the Auditor-General 2013 (n 36) 17–18.

47 See Business & Financial Times, ‘Investing Petroleum Fund in Foreign Portfolios Questioned’ (4 September 2015) http://thebftonline.com/commodities/oil-gas/15161/investing-petroleum-fund-in-foreign-portfolios-questioned.html last accessed 25 October 2016; Business & Financial Times, ‘Petroleum Funds Disappoint … Heritage Fund Yields Negative Returns’ (18 August 2015) http://thebftonline.com/business/economy/14956/Petroleum-Funds-disappoint-Heritage-fund-yields-negative-returns.html last accessed 8 November 2016.

48 Public Interest and Accountability Committee, Report on Management of Petroleum Revenues for Year 2013: Annual Report, 54 http://piacghana.org/resources/2013PIACAReport239.pdf last accessed 6 April 2016 (hereafter ‘PIAC, Annual Report 2013’).

49 Law No 8/2004, Oil Revenue Law, Article 11.

50 Petroleum Fund Law, Law No 9/2005, Article 11.4.

51 See generally Stewart E Sterk, ‘Rethinking Trust Law Reform: How Prudent Is Modern Prudent Investor Doctrine?’ (2010) 95 Cornell L Rev 851; Philip J Renaud, ‘Alberta’s “Prudent Investor” Rule’ (2003) 22 Estates, Trusts & Pensions Journal 309.

52 Stephen M Penner, ‘International Investment and the Prudent Investor Rule: The Trustee’s Duty to Consider International Investment Vehicles’ (1995) 16 Mich J Int’l L 601, 610.

53 Petroleum Revenue Management Act, 2011, s 26(2).

54 Bell and Faria (n 41) 297.

55 Oshionebo (n 19) 240.

56 Santiago Principles (n 6) Principle 4.

57 Ibid, 14.

58 Petroleum Revenue Management Act, 2011, s 12(1).

59 Ibid, s 12(2).

60 Ibid, s 12(3). However, ‘a withdrawal from the Ghana Stabilisation Fund for the purpose of alleviating a shortfall in actual petroleum revenue shall not exceed 75% of the balance standing to the credit of the Ghana Stabilisation Fund at the beginning of the financial year’. Petroleum Revenue Management Act, 2011, s 12(6) (introduced by the Petroleum Revenue Management (Amendment) Act, 2015, s 5(b)).

61 Petroleum Revenue Management Act, 2011, s 12(4).

62 Ibid, ss 13 and 20(1).

63 Ibid, s 10(4).

64 Ibid, s 10(4).

65 Ibid, s 23(3).

66 Public Interest and Accountability Committee, ‘Position of the Public Interest and Accountability Committee (PIAC) on Placement of Cap by the Minister of Finance on the Ghana Stablisation Fund’ (Press Release, 7 August 2014) http://piacghana.org/resources/PressStatementII253.pdf last accessed 6 April 2016 (hereafter ‘PIAC, Press Release, 7 August 2014’).

67 Ibid.

68 Africa Centre for Energy Policy, Three Years of Petroleum Revenue Management in Ghana: Transparency without Accountability (Public Interest Report No 2, July 2014) (arguing at iv that ‘the cap of US\$250 million was without any basis except to deny the Fund money’ and at 37 that the Minister undermined the Fund in favour of expanding the government’s fiscal space) http://s3.amazonaws.com/acep-static/reports/ACEP-Report-PRMA-Final.pdf last accessed 11 May 2016.

69 Public Interest and Accountability Committee, Report on Management of Petroleum Revenues for Year 2014: Annual Report, 49 http://piacghana.org/resources/2014PIAC252.pdf last accessed 6 April 2016 (hereafter ‘PIAC, Annual Report 2014’).

70 See PIAC, Press Release, 7 August 2014 (n 66) (stating that ‘[i]n the case of the Ghana Stabilisation Fund, Parliament was not informed about the amount that was expected to be in excess and therefore specific approval was required before the amount could be moved out of the Ghana Stabilisation Fund’).

71 PIAC, Press Release, 7 August 2014 (n 66).

72 Ibid.

73 Ibid.

74 2015 Reconciliation Report on the Petroleum Holding Fund (submitted to Parliament by the Minister for Finance, March 2016) 20 www.mofep.gov.gh/?q=petroleum-reports last accessed 4 April 2016.

75 Ibid, 20.

76 Bank of Ghana (n 18) 4.

77 On resource dependency see generally, Morgan Bazilian and others, ‘Oil, Energy Poverty and Resource Dependence in West Africa’ (2013) 31 Journal of Energy & Natural Resources Law 33.

78 See Bell and Faria (n 41) 305; Abdullah Al Faruque, ‘Transparency in Extractive Revenues in Developing Countries and Economies in Transition: A Review of Emerging Best Practices’ (2006) 24 Journal of Energy & Natural Resources Law 66; Philippe Le Billon, ‘Securing Transparency: Armed Conflicts and the Management of Natural Resource Revenues’ (2006–07) 62 International Journal 93; Alexandra Gillies and Antoine Heuty, ‘Does Transparency Work? The Challenges of Measurement and Effectiveness in Resource-Rich Countries’ (2011) 6 Yale Journal of International Affairs 25.

79 Philip Swanson, Mai Oldgard and Leiv Lunde, ‘Who Gets the Money? Reporting Resource Revenues’ in Ian Bannon and Paul Collier (eds), Natural Resources and Violent Conflict: Options and Actions (The World Bank 2003) 43 (arguing that disclosure of information ‘is a means to achieve transparency’).

80 International Monetary Fund (IMF), Guide on Resource Revenue Transparency (IMF 2007) 9 www.imf.org/external/np/pp/2007/eng/101907g.pdf last accessed 7 June 2016.

81 See http://eiti.org last accessed 7 June 2016.

82 See www.publishwhatyoupay.org last accessed 7 June 2016.

83 Santiago Principles (n 6) Principles 2, 4, 5 and 17.

84 Ibid, Principle 11.

85 Ibid, Principle 17.

86 Petroleum Revenue Management Act, 2011, s 52.

87 Ibid, s 8(1–2).

88 Ibid, s 8(3).

89 Ibid, s 48(1).

90 Ibid, s 48(2)(a).

91 Ibid, s 48(2)(c) and (d).

92 See Swanson, Oldgard and Lunde (n 79) 43.

93 Petroleum Revenue Management Act, 2011, s 49(1) and (2).

94 Ibid, s 49(7).

95 Ibid, s 50.

96 Ibid, s 49(3).

97 Ibid, s 49(3) and (4).

98 Bell and Faria (n 41) 307.

99 Ibid, 306.

100 Petroleum Revenue Management Act, 2011, s 49(6).

101 Law No 8/2004, Oil Revenue Law, Article 17(1) and (2).

102 Law No 8/2004, Oil Revenue Law, Article 20(2).

103 Law No 8/2004, Oil Revenue Law, Article 20(3).

104 Law No 8/2004, Oil Revenue Law, Article 20(1) providing that:

Confidentiality clauses or other mechanisms included in Oil Contracts or in any other transaction instrument concerning any Oil Revenue or Oil Resource that prevent or attempt to prevent access to documents and information pursuant to Article 17 of this law shall be null and void, and contrary to public policy.

105 Petroleum Revenue Management Act, 2011, s 49(5).

106 See Rhuks Ako and Nilopar Uddin, ‘Good Governance and Resource Management in Africa’ in Francis N Botchway (ed), Natural Resource Investment and Africa’s Development (Edward Elgar 2011) 21, 24–25.

107 Colin Scott, ‘Accountability in the Regulatory State’ (2000) 27 Journal of Law and Society 38, 40.

108 Ibid, 39.

109 Andrew Bauer, ‘Independent Oversight of Natural Resource Funds’ (Policy Brief, Revenue Watch Institute & Vale Columbia Center on Sustainable International Investment, April 2014) 1 www.resourcegovernance.org/sites/default/files/NRF_RWI_BP_Oversight_EN_fa.pdf last accessed 14 July 2016.

110 See Santiago Principles (n 6) Principle 10.

111 Petroleum Revenue Management Act, 2011, s 48(1).

112 Ibid, s 48(1).

113 Ibid, s 28(2).

114 Ibid, s 28(1).

115 See Securities and Exchange Commission of Ghana, Securities and Exchange Commission Regulations, 2003 (LI 1728), s 55(1) which provides that:

An issuer of corporate securities to the public shall make available to the Commission, shareholders and bondholders and the Stock Exchange on which it is listed before the expiry of one month from the end of each quarter, financial statements for the quarter which contain the particulars specified in this regulation and any other information that may be specified by the Commission …

116 See BBC, ‘Nigeria: Oil-gas Sector Mismanagement Costs Billions’ (25 October 2012) www.bbc.com/news/world-africa-20081268 last accessed 24 October 2016.

117 Petroleum Revenue Management Act, 2011, s 31(1).

118 Ibid, s 30(1).

119 Ibid, s 29.

120 Ibid, s 29.

121 Ibid, s 29.

122 Persons prohibited from membership of the IAC are: non-citizens; persons convicted of a felony or an offence involving dishonesty; persons adjudged to be of unsound mind; and persons disqualified or suspended from practising their profession by order of a competent authority. See ibid, s 31(2).

123 Petroleum Revenue Management Act, 2011, s 55(5).

124 Ibid, s 31(1) as amended by the Petroleum Revenue Management (Amendment) Act 2015, s 10. Prior to this amendment, section 31 of the Act provided that at least one member of the IAC shall be female.

125 Dominik Kopinski, Andrzej Polus and Wojciech Tycholiz, ‘Resource Curse or Resource Disease? Oil in Ghana’ (2013) 112 African Affairs 583, 587.

126 See George M Bob-Milliar, ‘Party Factions and Power Blocs in Ghana: A Case Study of Power Politics in the National Democratic Congress’ (2012) 50 Journal of Modern African Studies 573, 581 (indicating that during Kufour’s presidency his faction of the ruling National Democratic Congress monopolised all the key sectors of the state apparatus particularly in terms of allocation of ministerial portfolios).

127 Ransford Gyampo, ‘Saving Ghana from Its Oil: A Critical Assessment of Preparations So Far Made’ (2010) 4(3a) African Research Review 1, 6.

128 Bell and Faria (n 41) 295 (arguing that membership of such committees ‘should be broad enough to ensure political support from the different branches of government and political constituencies’).

129 Julia Black, ‘Constructing and Contesting Legitimacy and Accountability in Polycentric Regulatory Regimes’ (2008) 2 Regulation & Governance 137, 153.

130 Petroleum Revenue Management Act, 2011, s 52.

131 Ibid, s 56(a) and (b).

132 Ibid, s 56(d).

133 Ibid, s 56(c).

134 Ibid, s 54(1) (as amended by the Petroleum Revenue Management (Amendment) Act, 2015 (Act 893), s 12). Currently, the PIAC’s members consist of representatives of the Ghana Academy of Arts and Sciences; civil society and community-based organisations; Trades Union Congress; think tanks; National House of Chiefs; Association of Queen Mothers; Association of Ghana Industries and Chamber of Commerce; Ghana Journalists Association; Institute of Chartered Accountants; Ghana Extractive Industries Transparency Initiative; Christian groups; Federation of Muslim Councils; and the Ghana Bar Association. See PIAC, ‘Members’ http://piacghana.org/members.php last accessed 24 October 2016.

135 Petroleum Revenue Management Act, 2011, s 55(1).

136 Ibid, s 55(2–4).

137 Ibid, s 55(5).

138 Ibid, s 55(6).

139 Ibid, s 55(6).

140 The reports are available at http://piacghana.org last accessed 26 May 2017.

141 Nelson Oppong, ‘Ghana’s Public Interest and Accountability Committee: An Elusive Quest for “Home-grown” Transformation in the Oil Industry’ (2016) 34 Journal of Energy & Natural Resources Law 313, 335.

142 See, for example, PIAC, Press Release, 7 August 2014 (n 66).

143 PIAC, Annual Report 2013 (n 48) 65.

144 Public Interest and Accountability Committee, Report on Management of Petroleum Revenues for Year 2012: Annual Report, at ii http://piacghana.org/resources/2012%20PIAC%20Annual%20Report236.pdf last accessed 6 April 2016 (hereafter ‘PIAC, Annual Report 2012’). See also PIAC, Annual Report 2014 (n 69) 72.

145 PIAC, Annual Report 2013 (n 48) viii; PIAC, Annual Report 2014 (n 69) 72.

146 PIAC, Annual Report 2013 (n 48) 65.

147 Ibid, 64.

148 Ibid, 64 (indicating that funds for PIAC’s 2013 activities were released by the government in December 2013). See also PIAC, Annual Report 2012 (n 144) ii.

149 PIAC, Annual Report 2014 (n 69) 72.

150 PIAC, Annual Report 2014 (n 69) 73; PIAC, Annual Report 2013 (n 48) viii; PIAC, Annual Report 2012 (n 144) 35.

151 Petroleum Revenue Management (Amendment) Act, 2015 (Act 893), s 13.

152 Petroleum Revenue Management Act, 2011, s 57 (as amended by Petroleum Revenue Management (Amendment) Act, 2015 (Act 893), s 13).

153 See Oppong (n 141) 326–67.

154 The Africa Centre for Energy Policy, The Centre for Public Interest Law and Friends of the Nation, ‘Review of the Petroleum Revenue Management Act 2011 (Act 815), Proposals Presented to the Ministry of Finance and Economic Planning’ 12 http://acepghana.com/wp-content/uploads/2013/12/ATT00051.pdf last accessed 7 June 2016.

155 Ibid.

156 Petroleum Revenue Management Act, 2011, s 52(c).

157 Law No 8/2004, Oil Revenue Law, Article 23.

158 Law No 8/2004, Oil Revenue Law, Article 24(2).

159 Oppong (n 141) 333.

160 Ibid, 333.

161 Ibid, 319.

162 Ibid, 333.

163 Kopinski, Polus and Tycholiz (n 125) 597.

164 Oppong (n 141) 335 (arguing that the ‘PIAC’s participatory roots have contributed greatly to an enhanced legitimacy that is unrivalled by other “good governance” initiatives in the oil industry’ and that the ‘PIAC is arguably the body that has solely appropriated the narrative of representing the “public interest” in the oil industry’).

165 James G Simpson, ‘Ghana and the Ideal of the Citizen-Shareholder: A Corporate-Law Response to the Resource Curse’ (2016) 65 Duke Law Journal 1281, 1299.

166 Oppong (n 141) 332.

167 Ibid, 332 and 336.

168 See Petroleum Revenue Management Act, 2011, ss 29 and 52.

169 Scott (n 107) 52.

170 Bell and Faria (n 41) 295.

171 Petroleum Revenue Management Act, 2011, ss 42–47.

172 Ibid, ss 44 and 45.

173 Ibid, s 45(3).

174 Ibid, s 46(2).

175 Ibid, s 46(3).

176 Ibid, s 46(5).

177 Ibid, s 46(4).

178 Ibid, s 47.

179 International Organization of Supreme Audit Institutions, Mexico Declaration on SAI Independence, www.nku.gov.sk/documents/10272/98330/Mexico+Declaration.pdf last accessed 14 July 2016.

180 Constitution of the Republic of Ghana 1992, s 70(1).

181 Office of the Auditor-General, Paper on Proposals for Amendment of Constitutional Provisions on the Office at 5 www.ghaudit.org/reports/Proposal+for+Constitutional+Amendment.pdf last accessed 26 May 2017 (hereafter ‘Proposals for Amendment’).

182 Constitution of the Republic of Ghana 1992, s 71(1).

183 Office of the Auditor-General, Proposals for Amendment (n 181) 6.

184 Constitution of the Republic of Ghana 1992, s 187(7).

185 International Organization of Supreme Audit Institutions, The Lima Declaration, section 5(2) www.intosai.org/issai-executive-summaries/view/article/issai-1-the-lima-declaration.html last accessed 14 July 2017.

186 Ibid, section 5(1).

187 Office of the Auditor-General, Proposals for Amendment (n 181) 10.

188 Constitution of the Republic of Ghana 1992, s 187(13).

189 Constitution of the Republic of Ghana 1992, s 146(1).

190 Kopinski, Polus and Tycholiz (n 125) 599 (observing that the Act ‘represents a prudent attempt to avoid one of the main consequences of the resource curse – waste and financial mismanagement’).

191 See Drysdale (n 37) 159.

192 Gyampo (n 127) 3 and 6.

193 Oppong (n 141) 336.

194 Joe Amoako-Tuffour, ‘Public Participation in the Making of Ghana’s Petroleum Revenue Management Law’ (October 2011) www.resourcegovernance.org/sites/default/files/documents/ghana-public-participation.pdf last accessed 1 November 2016.

195 Oppong (n 141) 318.