Business News of 2013-08-27

Ghana loses Gh¢8m as DIC fails to trace buyers of divested companies

Eight million, eight hundred and thirty-five thousand Ghana cedis (GHc8,835,000) is owed the government by organisations and individuals to whom 36 state-owned enterprises have been divested. Out of the amount, GH¢891,448 has been settled by the debtors.
In some cases, the Divestiture Implementation Committee (DIC) is unable to reach the debtors to claim what is owed. In others, the DIC cannot tell which individuals or organisations the enterprises have been divested to.
This was brought to the fore by the Head of Finance and Administration at the DIC, Mr Richard Nana Akuffo, when he appeared before the Public Accounts Committee (PAC) of Parliament in Accra yesterday. He was being quizzed by the committee on operations of the DIC as contained in the report of the Auditor-General on its activities for the year ending 2007.
Officials of the Social Security and National Insurance Trust (SSNIT), led by its acting Director-General, Mr Ernest Thompson, also appeared before the PAC to answer questions bordering on its operations from 2005 to 2009. Mr Akuffo said a company named International Generics (IG) which purchased the La Beach Complex and the Star Hotel in 1993 and 1994, for example, owed the government GH¢461,694 but could not be traced.
He said although it had failed to discharge its financial obligations regarding the beach complex, the company sold it to SSNIT, which currently owns the complex. That statement shocked members of the PAC, who wondered how the facility could be sold to SSNIT, a state-owned organisation, when the DIC did not know about the deal and when the company to which it was originally divested had not paid what it owed.
Some members of the PAC suggested the use of INTERPOL to track and arrest the owners of IG, while the Chairman, Mr Kwaku Agyeman-Manu (NPP, Dormaa Central), suggested a takeover of the Star Hotel by the DIC. But Mr Akuffo noted that the matter had been in court for the last 10 years and that since the wheels of justice ground slowly, there was the need to proceed with caution with regard to the suggestions.
But that answer elicited further questions from Mr Agyeman-Manu, who sought to know why, after the case had dragged on at the courts for 10 years, the DIC had not lodged a complaint at the Office of the Chief Justice. He asked Mr Akuffo to present all documents pertaining to the court case to the committee for further action.
With regard to the lack of information on who some of the state enterprises had been divested to, the members said the DIC had failed to discharge its duty effectively and noted that the failure could be tantamount to causing financial loss to the state. Mr Akuffo was unable to state clearly into what account the monies realised from the divestiture of the enterprises had been paid into.
In the case of the National Oil Palm Ltd, which was divested to Norpal A.S.A. Norway, Mr Akuffo said the government was owed GH¢1,366,611 and added that the company had not discharged its financial obligations because the land was in dispute. According to him, as soon as the company was divested, 13 chiefs emerged to claim ownership of the land.
Due to the litigation, the Norwegian company made it clear that it would not make the payments and proceed to begin operations until the issue of title to the land had been addressed.
He stated that one issue which hindered the smooth transfer of some of the state-owned companies was the issue of title of land, adding that it had become clear that the government did not have title to some of the lands on which it sited companies. Mr Akuffo also suggested that some state-owned enterprises were not attractive, hence finding investors had become difficult.
He said some individuals had even suggested that those enterprises should be given away for free. According to him, severance awards paid to staff of some of the divested companies were very huge and drained the government of its finances.
SSNIT
Earlier, the acting Director-General of SSNIT, Mr Thompson, had told the PAC that the scheme was financially sound and that all its investments were viable, except 10 which had encountered some challenges.
He named some of them as the Ghana Agro Food Company Ltd, Dannex Ghana Ltd and the Elmina Beach Resort. At the sitting, it became clear that SSNIT had, for four years, “hidden” under a clause in the Companies Code which requires the shareholders of companies to appoint auditors to audit companies and refused to submit its accounts to the Auditor-General for auditing.
Despite several letters written to the trust by the Auditor-General that the government was the largest shareholder of SSNIT and that since the Auditor-General was the government’s auditor, SSNIT was under an obligation to release documents on its finances, it refused until 2010.
Source: Graphic Business
« Previous | Next »
View Comments
Sponsor Links
News Categories
Site Menu