Ghana: SSNIT heads for court to redeem GH¢5.95m treasury bill investment

Posted: February 18, 2010 in Economic Reporting
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The management of the Social Security and National Insurance Trust (SSNIT) has indicated its intention to sue Sterling Securities Limited for the recovery of ¢5,950,568,033.50 billion (GH¢ 5.95m), which is the interest, plus principal amount of GH¢4.5m invested in the company.

This was disclosed by Michael Addo, Head of Investments, SSNIT, at a sitting of the Public Accounts Committee (PAC) of Parliament on Thursday.

The PAC’s sitting was in respect of the Auditor-General’s report on the public accounts of SSNIT for the periods ended December 31st 2004 and December 2005 respectively.

This huge amount is said to have matured on October 17th, 2005, but at the time of auditing by the Auditor-General till date, nothing has been heard of it, raising eyebrows as to whether the money was actually placed in Treasury bills, as intended by the securities company (Sterling Securities Limited), or for a different purpose.

But, according to the Auditor-General in its findings, “the amount was not placed in treasury bills as intended.”

The Committee, chaired by Mr. Albert Kan Dapaah, did not take it kindly with the Trust, looking at the huge amount involved in the said investment, and therefore demanded answers on how the liability arose.

Giving a brief history of the nature of the transaction, Michael Addo told the Committee that back in the 90’s, the Trust was not a primary dealer, and therefore appointed Sterling Securities Limited to act on its behalf.

According to him, it was until the General Manger in charge of Finance was going through some documents of the Trust, that he came across the missing GH¢5.95 million. He said, having identified the anomaly, the Trust decided to pursue legal action against the securities company, by first informing the Securities and Exchange Commission.

But, the audit report revealed that no action had been taken by the Commission on the issue at the time of the audit, even though it was informed on November 15th 2005.

The Auditor-General concerned about the implication of the anomaly, recommended that the management send a reminder to the Commission on the issue, since the Trust stood the risk of losing the said funds, as there would be difficulty in paying benefits due contributors.

It further advised that a provision for bad debts on the said investment be made, since recovery was in doubt, whilst due diligence be performed in detail on all companies in which the Trust intended to invest.

Touching on plans to recoup the money, Michael Addo told the Committee there was hope for the future, as all chances looked positive in redeeming the money.

He said Sterling Securities Limited, upon hearing the Trust’s position on the issue, wrote to inform it to hold on for sometime, to enable its Board decide on the matter.

The Trust also had problems with its corporate loan recovery, as the audit report revealed that an amount of ¢751,835,784,825 was outstanding as at January 1st 2005.

From the report, an additional amount of ¢299,261,079,357 was advanced to some corporate institutions, out of which ¢193,284,466,666 was recovered.

Some the institutions unable to redeem any of the debts during the periods under review, include the National Investment Bank (Metro), with an outstanding amount of ¢42,448,537,958, Fidan Construction – ¢14,895,237,677, Korle-Bu Doctors Flat – ¢31,164,958,685, Kumasi Abattoir Company – ¢19,384,663,690 and Bridal Trust Limited – ¢11,091,452,225.

Looking at the huge amounts involved, the Auditor-General recommended that the management should introduce an aggressive debt collection policy, to ensure recovery of the loans, as poor loan recovery might impact on the cash flow position of the Trust, and could result in non, or late payments of contributors’ benefits.

The Trust, in its response, noted that there were plans to introduce strategies in order to collect the aforementioned debts, and added that provision had been made for non-payments of loans.

Another contending issue that raised talking points among members of the panel, was absconded tenants, who had bolted away with ¢406.7 million (old cedis) belonging to the Trust.

The Committee not happy about this revelation, demanded to know why a good number of people at the Estate Division of the Trust could not take care of collecting the debt, but had left it in the hands of agencies to do so.

“You seem to be putting in money to so many investments which are unprofitable,” Kan-Dapaah averred.

A sum of ¢406.7 million was due from tenants of the Trust Towers, who according to the audit report, had absconded and vacated their premises.

The situation was said to have arose because an agency was previously tasked with the responsibility of overseeing activities of the Trust Towers.

Notable among the tenants who had absconded as at December 31st 2003, include American Telecom Systems – ¢31,335,236, Ghana Air Shuttle Limited – ¢94,233,600, Gold Forms Limited – ¢73,547,906, Life Forms Limited – ¢57,432,000 and May Danielle Designs – ¢119,116,800.

The committee members expressed disappointment in the Trust, since the report did not sight any evidence of action taken to recover the debt, which was a drain on contributors’ funds.

However, the management, in its response to the issue raised told the Committee that it had referred the matter to its Legal Department, and that action was being taken to retrieve the amounts involved.

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