US embassy cable - 05ACCRA1110

UNCLAS SECTION 01 OF 02 ACCRA 001110 
 
SIPDIS 
 
SENSITIVE 
 
TREASURY FOR LUKAS KOHLER 
MILLENNIUM CHALLENGE CORP. FOR ROD NORMAN 
 
E.O. 12958: N/A 
TAGS: ECON, EINV, KMCA, GH, ECPS 
SUBJECT: WESTEL UPDATE 
 
REF: A. TRAVIS/NYLIN EMAIL 051905 
 
     B. SECSTATE 269530 
     C. 04 ACCRA 903 
 
1. (SBU) Summary:  In an effort to avert the high cost of 
arbitration, Westel's Managing Director, Bill Taylor, and the 
GoG are working towards an agreement to end their 
seven-year-old dispute.  According to Taylor, Westel 
submitted a terms sheet acceptable to the GoG in March, but 
Westel's Seattle-based majority owner, Western Wireless 
International pulled it back at the last minute over fears 
that it would endanger WWI's impending merger with 
Tennessee-based Alltel.  WWI instead asked for a draft 
agreement from the GoG based on the terms sheet, which the 
GoG submitted May 22.  While the timing is uncertain, the 
agreement sets the stage for WWI's exit from Ghana.  End 
Summary. 
 
2. (SBU) The first Westel/GoG arbitration meeting was in 
London in February 2005.  According to Taylor, the cost of 
arbitration was far higher than expected, coming in somewhere 
near USD 8,000 per hour, plus expenses for the arbitrators 
and their staff.  When the parties returned to Ghana, serious 
negotiations for a final settlement started between Taylor, 
Minister of Communications, Albert Kan Dapaah, and Attorney 
General Ayikoi Otoo.   Taylor said he submitted the final 
terms sheet to the GoG for signature March 21. 
 
3. (SBU) According to a copy of the terms sheet supplied by 
Taylor, Westel agreed to pay USD 27 million over 12 years for 
both penalty settlement and spectrum fees -- USD 25 million 
less than originally assessed by the GoG.  In exchange, the 
GoG would provide the spectrum Westel contends it bought in 
1996.  In addition, Westel will forgive the USD 6 million the 
parastatel Ghana National Petroleum Company (GNPC) agreed to 
pay for its 30 percent stake in Westel.  GNPC would retain 
its stake unburdened and Westel would be able to sell its 
shares after a 30 day right of first refusal by GNPC. 
 
4.  (SBU) The terms sheet, once signed, was to form the basis 
of a final agreement within 30 days.  Before GoG officials 
could agree, however, WWI called Taylor home to Seattle for 
consultations and pulled the terms sheet back.  Taylor said 
there were fears that the GoG could use the terms sheet to 
place a lien against money set aside to fund WWI's merger 
with Alltel.  WWI was unwilling to admit to a liability on 
paper without a binding agreement from the GoG, and asked the 
GoG to submit a draft agreement based on the terms sheet. 
The GoG submitted its draft May 22.  Taylor expects WWI to 
respond as soon as possible in order to reach an agreement 
before the next arbitration session, currently scheduled to 
begin June 3.  In a telcon with EconOff May 23, Taylor said 
WWI would continue to pursue its arbitration case until an 
agreement has been reached. 
 
5. (SBU) During a meeting with EconOffs April 1, Taylor 
placed great emphasis on the need to restrict GNPC's right of 
refusal on WWI's shares to 30 days. (NOTE: This contradicts 
his prior statements that GNPC had no right of first refusal, 
per ref c. End Note.)  He also asked if there would be any 
USG resentment if WWI pulled out of Ghana in light of Post's 
efforts to facilitate an agreement. 
 
6. (SBU) Comment: Taylor expressed his gratitude for USG 
assistance, citing the December 14 discussion between 
Ghanaian Ambassador Poku and AF/W Office Director Michael 
Arietti in Washington (Ref b) as the turning point in the 
negotiations.  (NOTE: Since March, 2002, post has arranged 
and participated in well over a dozen ministerial meetings, 
demarched the Minister of Communications numerous times, 
arranged one meeting with President Kufuor for WWI 
executives, and drafted 50 cables referring to the Westel 
dispute.  End Note.) 
 
7. (SBU) Comment continued: WWI's insistence on a restricted 
right of first refusal and Taylor's personal comments 
strongly suggest WWI will divest itself of Westel.  Although 
the GoG's handling of the dispute certainly contributed 
heavily to WWI's desire to give up and go home, the decision 
appears to fit WWI's current global strategy.  A recent Wall 
Street Journal report claims WWI is entertaining offers for 
its operations around the globe, including operations -- such 
as Austria -- that WWI previously reported were profitable. 
Post will continue to facilitate dialogue between Westel's 
management and the GoG in order to achieve an amicable -- and 
hopefully, speedy -- resolution of the dispute.  End Comment. 
YATES