Tsatsu Tsikata v. The Republic Criminal Appeal No. J3/4/2004

Material Facts:

On 11 March 1991, the appellant, as the Chief Executive of Ghana National Petroleum Corporation (GNPC), signed a Guarantee Agreement between the GNPC and Caisse Francaise. Per this guarantee agreement, GNPC was to act as a guarantor for a loan advanced by Caisse Francaise to Valley Farms Company Ltd. When Valley Farms Company Ltd. defaulted on repaying the loan, GNPC, in fulfillment of its obligations as a guarantor, paid ¢775,126,310 to Caisse Francaise in 1996.

The appellant was charged with wilfully causing financial loss to the State contrary to Section 179A (3)(a) of the Criminal Code Act 1960 (Act 29) as amended by the Criminal Code (Amendment) Act, 1993 (Act 458).

Procedural History:

At the end of the case of the prosecution in the trial court, the appellant made a submission of no case (this may be done when one of the elements of the offence is absent. If successful, the court will hold that there is no genuine case for trial.) This motion was rejected by the High Court. On appeal to the Court of Appeal, the Court of Appeal upheld the High Court’s rejection of the motion of submission of no case. The appellant is appealing against this decision.

Issue:

1. Whether or not the execution of a contract can give rise to criminal liability.

2. Whether or not the act of making payments to Caisse Francaise amounted to financial loss to the state.

Holding :

1. The execution of a contract can give rise to criminal liability.

2. The payments to Caisse Francaise can amount to causing financial loss to the state.

Ratio Decidendi:

In the opinion of their lordships,

The contractual validity of an agreement may be one thing; but the legality of execution of the contractual obligations assumed thereunder may be another.

However, their lordships also agree that:

It is the duty of the prosecution to show why, in a particular case, the execution of a presumably valid contract by a state corporation would amount to a criminal action

On the second issue, their lordships first characterise what it means to cause financial loss to the state as follows:

Without pretending to assume the fine skills of a financial analyst or accountant, we think that when, in respect of a transaction or a related set of transactions, there is a net depletion of the coffers of the state through a deliberate, unauthorized, and criminally reckless, or otherwise illegal act of a public official or other agent of the state, there has been a financial loss to the state.

Essentially, their lordships also agree that the burden of proving the above state of affairs is on the prosecution:

However, in this connection, it needs to be emphasized that it is the duty of the prosecution to lead evidence aimed at establishing the presence of such a state of affairs as background to the making of the controversial payments or corporate investments by officials of GNPC.

…

It is the duty of the prosecution to lead evidence aimed at establishing, not simply that payments were made on a guarantee agreement, but that these payments were made under circumstances amounting to a wilful financial loss to the state as explained above.

Principle in Case:

In a criminal action, the prosecution has the burden of producing evidence to prove the elements of the offence.