Obroni and the Chocolate Factory

by Steven Wallace

One early morning, the incoming fax demanded that I punch Kojo Bamford’s landline phone number immediately. I waited for the canticle of whirrs, clicks, and rings. “Hey, Steve! What took you so long?” I could hear Kojo smiling.

  “So, what is this?” I unfurled the fax, like a scroll of papyrus, and tried to make out the return address: the Johannesburg office of a global investment bank. The author was a banker with a recognizable surname, the Ghanaian equivalent of “Smith” or “Jones.”

  “This chap Kofi Danquah keeps calling me—must be the fourth or fifth time—and now this letter arrives DHL,” Kojo said. I pictured him at his office, cradling the phone receiver under his chin, overlooking the production floor of his family’s aluminum-fabrication plant. “Yes, of course, I’ve told him to contact our attorneys. Many times. This guy is a rascal. He refuses to deal with any American law firm. Full stop!”

  “Well, you can give him my number, and he can call me direct.”

  “He doesn’t want to talk to you, either. He only wants to deal with me and Omanhene’s Ghana office. He won’t say who he represents.” I wondered whether Kofi Danquah knew that Omanhene’s Ghana business office was Kojo’s living room.

  “Okay, I’ll prepare a response and fax it to you to send to Kofi.”

  “Hey, Steve, you know these rascally banker types, these Wall Street boys! Better watch out!” I grinned; Kojo disdained those Ghanaians who studied abroad and then took jobs with investment banks where they trafficked in flotations, mezzanines, debentures, and sovereign guarantees. In Kojo’s view, they were paper-pushers—merging companies one year, only to split off divisions the next—and taking hefty fees with every transaction. Precocious, yes, but engaged in nothing more than pedestrian financial engineering and adding no real value at-TALL! In Kojo’s mind, they trafficked in the ether, doing nothing near as adamantine as making biweekly payroll in Accra.

  I prepared a letter welcoming Danquah’s interest and asking that all future correspondence be sent to Omanhene’s lawyers, the firm where, it so happens, my wife worked as a young associate. Linda had kept her surname, and her relationship to me by marriage would not be obvious. To the outside world, it appeared that Omanhene was a client of one of the largest law firms in the country—and this was technically true. I wondered, as I inserted my letter into the fax machine, what role, if any, prescience played in Linda’s desire to keep her surname. Her individualism made it certain that she would never take the name of her spouse even if she had married into the Rockefellers or von Furstenburgs. But meticulous lawyer that she is, did she at some point entertain the possibility that her husband might, someday, land himself in hot water? And by keeping her surname, she could neatly distance herself from any misadventures of mine?

  I called Kojo back. He had received my fax and approved. But he had bigger news. He had just called Danquah in Johannesburg and asked him, Ghanaian to Ghanaian, who his client was. “Are you sitting down?”

  I was in fact standing in my bathrobe, shivering in the icy room.

  “His firm represents MacFinn.”

  I was too stunned to say anything.

  “We are playing with the Big Boys, Steven! Steven, can you hear me?” Static percolated through the line.

  MacFinn, with annual revenues of some $67 billion, was the privately held (and therefore secretive) multinational commodity-trading and processing firm—and one of the three largest cocoa processors on the planet, along with its competitors, V.S. Hope & Company and Roissy-Doucette. MacFinn had also voluntarily settled—without admitting guilt—a number of investigations with the SEC regarding improper trading activity and alleged price fixing. At least one voluntary settlement was for $100 million. The company’s cocoa operations alone realized one billion dollars annually. Why would MacFinn, with processing operations on several continents, engage a law firm in Johannesburg to contact the Omanhene Cocoa Bean Company?

  It turned out that Kees Mesman, the head of MacFinn’s global cocoa operations, as well as its European brand, called Broekhuisen Cacao, had engaged Danquah to contact me. After some wary circling between us, at last Danquah invited me to fly to Amsterdam, Mesman’s headquarters, for a meeting to discuss the divestiture.

  This was intriguing. If the Government of Ghana wanted to simply sell Portem to the highest bidder, it could have done so without any regard for Omanhene. I concluded that someone did not want Omanhene to become a casualty of divestiture. It was complicated, opaque: I didn’t know who or why exactly, but two possibilities emerged. First, it was possible that someone actually liked what Omanhene had accomplished, perhaps felt invested in our modest success, or had made Omanhene’s survival a conditionality of their own. (“If you want to buy Portem for pennies on the dollar, then you better show us how Omanhene survives.”) Bonsu-Mensah was out of the picture so I wasn’t certain who at the Ghana Cocoa Board or the Castle wanted Omanhene to survive the divestiture.

  The second possibility was that the Government of Ghana had no intention of complying with the World Bank’s divestiture conditionalities at all—especially when it came to prized cocoa assets. If this was the case, then assuring Omanhene’s survival was simply a delaying tactic to stall the inevitable Portem sale, in the hope that no credible bidder would put up with the procedural delays, the Omanhene handcuffs, or the meanderings of the Government of Ghana’s negotiating behavior. If the government frustrated all the bidders until none remained, then it could say to the World Bank, “I beg of you. We tried to sell our assets, but no one wanted them. So we simply can’t comply with your ‘conditionalities.’”

  I had yet to meet the Ghanaian who would not exult in such a clever outfoxing of arrogant outsiders. Yaw Brobbey would roast an entire herd of goats and invite every man, woman, and child in Brong-Ahafo to the celebration, if he ever pulled off a coup like that.

  * * *

  Mesman’s office cantilevered over a canal on the outskirts of Amsterdam, looking out on Broekhuisen Cacao’s flotilla of barges, which shuttled cocoa butter and liquor from one processing facility to the next, all located along the canal. Floor-to-ceiling windows ran on two sides of his corner office, permitting me to digest the vast, impressive view of a vast, impressive company. Devoted to the manufacture of cocoa powder, the factory gleamed with European splendor—glass and stainless-steel fixtures made this look like a cross between a pharmaceutical company and a modern art museum. The production floor was so highly automated that it employed only twelve people; robots blew air into empty fabric “super sacks” prior to filling them with two thousand pounds of cocoa powder in a matter of seconds. Owing to a malfunction in the computer that controlled every facet of production, the factory was eerily quiet today.

  I turned my gaze from the barges below to Mesman. He drummed his fingers on his glass-topped desk. Omanhene was trying the patience of Kees Mesman, who was used to getting his way; he worked for a privately held company that didn’t brook any sort of joint venture or strategic partnership nonsense. This secretive, hundred-year-old company never had to answer to nonfamily shareholders or please Wall Street analysts. Mesman and MacFinn played for all the marbles, all the time. He was steaming mad that someone in the Government of Ghana had compelled him to incorporate Omanhene in any Portem asset takeover that his billion-dollar company might contemplate. I was sure he could not believe he was devoting so much time to Kojo, me, and our newly engaged Ghanaian lawyer, Gyamfi Sarbah. Yet we had all come to Amsterdam at his invitation. I conclude that some puppet master at DIC or in the Ghana Cocoa Board persuaded him to try and effect a joint bid with Omanhene—either because Omanhene’s business plan was esteemed on its merits or because I represented a potential collaborator who could be relied upon to complicate and thereby delay the divestiture process. The longer Mesman and I continued talking in Amsterdam, the longer Ghana could delay the sale of Portem. Omanhene was the gift that kept on giving.

  For Mesman, bidding on Portem was almost certainly a low-cost fishing expedition. Not only did he
want to buy nearly new machinery if the price was right, most importantly he also coveted strategic, long-term access to the world’s second-largest supply of cocoa beans—for his new Portem factory in Ghana, of course, but also for his factories in Amsterdam and elsewhere around the globe. It was understood that no one would buy a cocoa-processing factory in Ghana or the Ivory Coast unless it came with a guaranteed supply of local cocoa beans. And not only would Big Cocoa negotiate for local beans for their local processing, they’d insist on a clause allowing them to export Ghanaian cocoa beans to their offshore processing facilities, as well. Finally, Big Cocoa would bargain for a discount on their purchases of local beans—say a 10 or 20 percent discount from the world market price. And rising from the negotiating table, Big Cocoa would make their way to the door, pause briefly, turn to their Ghanaian counterparts, and ask for one more thing: a first option to buy the late-season “light crop” beans that traditionally are considered too small for export but can be extremely profitable for domestic processing if the price is adequately discounted. Game, set, match.

  I wanted Portem, too. Not because I was in any position to challenge the likes of MacFinn, V.S. Hope & Company, and Roissy-Doucette in the manufacture and sale of cocoa butter or liquor, but because these products are the ingredients needed to produce Omanhene chocolate. For me, the theme song was “Stayin’ Alive.”

  A brutal negotiator, Mesman fell suspiciously silent when I asked how MacFinn and Omanhene might work together in a postdivestiture world. Mesman wanted us to get out of his office and out of his deal. It was all he could do to tolerate the legal fiction that Omanhene would voluntarily withdraw its bid on the condition of working with MacFinn postdivestiture. MacFinn’s cocoa operations alone realized over a billion dollars annually. Why would Mesman give a damn about Omanhene?

  I suggested, as artfully as I could, ways in which Omanhene and Broekhuisen might prevail in the bidding for Portem by working together. Mesman was having none of it. Finally, in frustration, he pushed a slip of folded paper across the table and said, “Here’s what I’m authorized to give you to withdraw your bid from this deal.” Handwritten on the paper was the figure $250,000.

  Omanhene’s annual revenues at the time were less than $36,000.

  I excused myself to confer with Kojo Bamford and Gyamfi. Our “conference” was purely for show; I had read in The Idiot’s Guide to Negotiation that you never accept the first offer. While I was confident in my ability to analyze the situation from a macro point of view—understanding the relative merits of each side of the argument—I was much less sure about my ability to out-negotiate this Dutchman who was an expert commodity trader.

  I allowed ten minutes to elapse—a period appropriate to give the illusion we were involved in deep reflection and intense number-crunching—before returning to Mesman’s office. “We’ve decided to decline your offer,” I said, waiting for him to up the ante. But despite his Hanseatic reserve, I could tell Mesman was livid.

  “The offer is $250,000,” he says. “Take it or leave it.”

  The Idiot’s Guide did not prepare me for this. But this partnership could never work. Mesman had no interest in a production partnership with Omanhene going forward. MacFinn’s preferred divestiture acquisition strategy, from what I had researched, precluded any minority partners. In any case, I believed Omanhene was worth far more than he offered, despite our annual revenues. Only later did it occur to me why Mesman didn’t raise his offer. He didn’t raise the amount because he couldn’t. He had no authority to increase the offer. For any transaction over $250,000—a fitting round number—perhaps he needed board approval, and he was unwilling to share with his board or superior the messy details necessary to close a deal in Ghana. Mesman bet the house limit on the very first shuffle of the deck. I also concluded that his insistence on using the South African office of his investment bank and his obstinacy in corresponding only with Omanhene’s Ghana office—avoiding any direct contact with me or Omanhene USA—might have something to do with his willingness to engage in behavior that might be illegal in the US.

  I declined Mesman’s offer to withdraw Omanhene’s bid, though I left open the possibility that MacFinn could join Omanhene’s bid. I had yet to secure a strategic production partner for purposes of the divestiture, but I had one last card to play, one I kept secret from Mesman. Just before leaving for Amsterdam, I made a call to V.S. Hope & Company, a Big Three cocoa processor, and MacFinn’s bitter rival.

  Ti nyinaa sε, na emu asεm nyε pε.

  All heads may look the same, but the thoughts inside of them are not the same.

  “Conduct and character differ.”

  CHAPTER 14

  Bannerman’s Hope

  Growing up in Milwaukee, I associated commerce not with the color of money, but with the smell of it. Driving east, toward the lakefront from the old County Stadium, you’d first inhale the musk of the Froedtert malting operation that for decades had served the city’s brewing industry. I’d sit with my brother in the back seat of the Pontiac station wagon, holding our breath and pulling faces, as we next passed the Red Star Yeast factory with its decidedly unpleasant odor, made worse on hot summer days. Turning north, toward Green Bay, we’d be rewarded, at long last, by the glorious Ambrosia chocolate factory, with its magnificent aroma rising from what my brother and I imagined were copper vats full of burbling, viscous chocolate.

  Ambrosia was sold to the V.S. Hope & Company food conglomerate in 1964. V.S. Hope & Company later closed its downtown Milwaukee plant and in 1992 built a $90 million factory in an industrial park just west of the city. Between the move and the advent of new air-quality emissions regulations, there is no longer the intoxicating aroma of chocolate permeating downtown Milwaukee.

  The head of V.S. Hope & Company was Gareth Bannerman, a soft-spoken Englishman who rose to leadership from the manufacturing side of the business. This fact alone made him something of an outsider in a world of corporate leaders increasingly composed of finance or marketing types: people who were deal makers, not chocolate makers. Bannerman was also a champion of youth and a man unimpressed with either pedigree or formality. These character traits help to explain why he retained as his personal accountant a high school classmate of mine, Jeffrey Frank, who worked in a two-person practice with his father. Jeffrey was instrumental in helping me launch Omanhene. Gareth could have hired any white-shoe accountancy firm, but instead he chose a small Milwaukee firm. The first time I learned that I had even a tenuous connection to V.S. Hope & Company or to Bannerman was in 1994, when I confided in Jeffrey my concerns about the divestiture situation and my distaste for doing a deal with MacFinn. Jeffrey offered to set up a meeting with his client, Gareth Bannerman.

  Bannerman oversaw the construction of V.S. Hope & Company’s new factory in Milwaukee. During an early meeting and tour of this facility, he showed me the trading floor—a diminutive version of the Chicago Mercantile—where Hope’s traders bought and sold cocoa futures to supply factories across the globe.

  I showed Gareth a few snapshots of our modest factory floor in Ghana.

  “You see these rollers?” he asked, pointing to my photo of a five-roller mill, a thin ribbon of ground cocoa running along the center of the platen. “The alignment is wrong. The cocoa mass should be evenly dispersed across the full length of the roller. You are wasting 70, maybe 80, percent of your production capacity.”

  He flipped through the other half-dozen photos and with each suggested an improvement. I wondered how many CEOs had such a deep knowledge of machinery calibration. My admiration for him swelled.

  “Mr. Bannerman,” I ventured, “would V.S. Hope & Company have an interest in partnering with Omanhene on a divestiture bid in Ghana?”

  Intrigued by the Portem possibility, Bannerman was happy to entertain a place at the table for Omanhene’s chocolate operations in a postdivestiture world. Bannerman at least understood and accepted that the table stakes for the divestiture included Omanhene’s survivability
. “Steven, this is a fascinating company you’ve built. What an incredible idea! I admire your perseverance. That said,” he reflected soberly, “I probably would have fired you long ago. It’s just not how we would have done things.” But the allure of securing a steady supply of premium beans, plus the chance to add production capacity, proved a strong incentive.

  Bannerman arranged a meeting at the New York headquarters of V.S. Hope & Company, and I flew out with the most senior corporate-transaction attorney at my wife’s firm. Hope seemed to be everything that MacFinn was not; Hope executives were communicative, and they displayed cultural competence and an interest in operating in Ghana. Above all, they were genuinely enthusiastic about keeping Omanhene in the deal, and they had maintained minority partners before in other acquisitions. I allowed myself to revel briefly in the knowledge that I’d brought two billion-dollar companies to the divestiture bargaining table for the ultimate benefit of the Government of Ghana.

  Bannerman was true to his word, delivering a letter of intent from V.S. Hope & Company to partner with Omanhene for purposes of the Portem divestiture.

  A few days later, I get a call from Bannerman’s secretary. I returned to his office. “I’m terribly sorry, Steven,” Bannerman said, “but Hope cannot proceed with this transaction after all. V.S. Hope & Company has just decided to accept a $430 million offer to sell its global cocoa operation to the privately-held commodities giant, Bowman-Lyons-Eastman, known as BLE.”

  Mintumi mmorsa nom a, mεnom ahai.

  If I cannot drink fine rum, then I will drink beer.

  “If I cannot accomplish greatness, then I will focus on more modest achievements, according to my capabilities.”

  CHAPTER 15

  Mr. Wallace Goes to Washington