Business View: AngloGold can't wriggle out of this - to land Ashanti, it has to bust a gut

Accra is rarely a centre of international finance. But these days you can't move in the Ghanaian capital without tripping over investment bankers as the $1.5bn (£900m) battle for Ashanti Goldfields starts for real. The board of the gold company meets on Wednesday to consider the two bids on the table: AngloGold's $1.25bn original tilt and the impudent rival offer from Randgold, which is worth a good $250m more at today's prices.

Anglo has acted, as Anglo tends to do, like the Ghanaians should be honoured that it deigned to bid for its jewel in the crown, dismissing Randgold's offer as a minor distraction. But as the clock ticks, it is clearly getting more nervous.

On the marvellously named Joy FM in Accra on Friday, Anglo's chief executive, Bobby Godsell, said: "there is wriggle room for restructuring the bid." Wriggle room? That's a pretty euphemistic way of admitting that the mining company will have to sweeten its offer if it is going to land Ashanti.

Mr Godsell's problem is that Randgold's bid looks more compelling by the day. Initially, Anglo argued that the UK-listed gold explorer was too insubstantial to win the day. If there were any prospect of Randgold winning, came the argument, its shares would collapse and the bid with them. But that hasn't happened. Its chief executive, Mark Bristow, says a combined Randgold and Ashanti would be a contender for the FTSE 100, making it the only major corporation in the region outside South Africa that large international investors would want to put in their portfolios. As he says: "This is not a recovery story, it is a releasing value story".

At the same time, the strong rand and the weak dollar are making Anglo's South African mines less profitable - and putting pressure on its share price.

Ultimately, this rather intriguing squabble in a faraway place will be decided by a handful of people. There will be Ashanti's powerful boss, Sir Sam Jonah, who will weigh up selling out to Anglo against playing on in tandem with Randgold. There will be Sir John Craven, chairman of Lonmin, which wants to liquidate its 27.6 per cent stake. He had agreed to sell out to Anglo but says he will support whatever Ashanti's board decides. (However, if I know Sir John, it will not be as simple as that because he will twist anyone's arm around anyone's back to get what he wants.)

And then there are the Ghanaian politicians, who have to decide how they will vote their 16.7 per cent. In effect, they have a blocking vote because no one will want to go against the government.

The mood in Accra, I hear (I'm afraid I haven't had the chance to check it out myself), is that Randgold's appeal to Ghanaian nationalism is winning the day. Anglo will have to put in a massive wriggle to win this one.

Investors balk at Baghdad

The other strange place that is threatening to become a hub of international finance is Baghdad. Well, at least that's the idea. A conference in London tomorrow will try to tempt investors to take a punt on the rebuilding of Iraq, with everyone from Trade Partners UK to secretive US engineer Bechtel making their sales pitches.

Yet life is not that simple. Most potential investors have two serious concerns: legality and security. The latter is obvious. With US soldiers being killed on an almost daily basis, oil pipelines sabotaged and large areas in apparent anarchy, companies like Exxon, Shell and Vodafone are not about to risk their employees' lives for the meagre rewards on offer. Bring Iraq under a decent rule of law, and then the money might start flowing.

That is if the legal situation can be sorted out. The interim government passed the Foreign Investment Act last month, setting the terms for outside involvement in Iraqi business, with straightforward rules on structuring businesses and remitting dividends. But as this government is not elected, and not internationally recognised, foreign companies are wary. What would stop an elected government tearing up the rules and saying all previous contracts are null and void? Nothing in international law.

Detracting from Iraq's attractions further, I was told last week that Bechtel, one of the few companies to brave the country, is essentially having to divvy up all its profits to local Iraqis to stay in business.

Dangerous. Lawless. And unprofitable. And they wonder why so few are rushing to Baghdad.

j.nisse@independent.co.uk