Bad and doubtful deal with La Palm Hotel

By Kofi Coomson

Accra - Ghana Commercial Bank is under serious financial pressure over an extraordinarily foolish corporate decision to extend a 30 billion cedi loan to one man - who did not provide any security.

The amount is the equivalent of the annual budget of two universities and two ministries. At an extremely generous interest rate of 32 per cent,(at the time the rate was 40 per cent) the loan is gathering interest of some 8.2 million cedis a day, 280 million cedis a month and 3 billion cedis a year - more than the Ministry of Tourism's budget.

That sum is interest only - and does not factor capital repayment at all. The interest has pushed the loan past the 40 billion cedis mark, causing ripples in the boardroom.

"Mr. Panford Bray, how can you justify giving a loan of such size without first charge on the property or any collateral security?", Yours truly queried the Managing Director of GCB Monday night.

But Mr. Bray had just assumed office and could not give any satisfactory response to the question.

"This facility was given by the previous board, he confirmed, but it is not correct to say that we took no security." Pushed to tell what sort of security was offered, Mr. Bray declined to say, seeking refuge in the time-honoured tradition of client confidentiality.

GCB sources suggest that it may have been guaranteed by the bank of Ghana, an absolute abomination since BoG is under strict world Bank instructions never to guarantee any such loans.

The Deputy Managing Director (Operations), Mrs. Matilda Obeng-Ansong, ducked the question when she was also called. She said the subject did not fall under her specific schedule - Credits.

Board Chairman Mr. John Sey, Senior Partner of the accounting firm, Deloitte and Touche, also admitted that he inherited the situation but there is no cause for alarm.

"The loan will be repaid" said Mr. Sey, who is retiring due to age and fatigue soon.

Either the aging accountant is ill-informed or could not care less, because his optimism had absolutely no grounding. Chronicle's own independent investigations and analysis of the current situation on the ground show the hopelessness of the situation..

Yours Truly can report that nearly 20 months since the last tranche of the money was doled out, the beneficiary, Sir Tamman, the Godfather of The First Lady, had paid zero cedis.

Indeed, GCB's debt recovery team has often had to flee in fright at the powerful connections of the foreign businessman and name dropping.

The Board is too scared of Tamman Jr. to take any action that they would ordinarily take against any Ghanaian business loan defaulter.

Last November, some members of the Board which has witnessed the introduction of new faces threatened to resign rather than deal with this scandal.

But it appeared to be an empty bluff as they are still glued to their jobs. Some of them are high ranking members and financiers of the ruling National Democratic Congress (NDC).

The appointment of Mr. Kwame Addo who is on a number of major boards and one of the party's money bags was not welcomed according to insiders. There were quiet protests at his inclusion on the board because Mr. Addo is "such a busy man who cannot even find the time to attend meetings." And he will not be motivated to protest at any thing that will put the NDC in bad light", observed one lady familiar with developments in the corporate rooms of GCB.

Mr. Addo is also on the Board of SSNIT.

Other board members are Mrs. Esi Sutherland Addy, a respected academician of considerable integrity, Felix Ntrakwa, a lawyer, Messrs George Okoh, an accountant, Peter Ocran, D.S. Mahama, Franklin Asamoah, Eric Okai, the two deputy Managing Directors, Mrs. Obeng-Ansong and Kwabena Dapaah-Siakwan and the Managing Director Mr. Bray (He is not a white man).

Chronicle's own intelligence reading of the loan portfolio shows a dismal 2 percent chance of recovery.

La Palm Hotel is leveraged to the hilt. It has developed a solid policy of competitive price cutting. At those levels, it can only be sustained if the hotel is financed with stolen or drug money.

At current gross monthly takings of about $500,000.00, roughly c1.8 billion, La Palm hotel is even reneging on fat salaries it promised staff poached from hotels across the nation's capital, including only a handful (eight) from next door Labadi Beach Hotel.

Huge overheads, other dubious loans, repeat dubious loans Chronicle is investigating makes the chances of redeeming the loan of size qualify for classification as a "bad and doubtful debt".

Not getting the loan should have dire consequences for the national interest, GCB and the staff's long term good.

La Palm is still working to complete 200 more rooms at a time that a decision has already been taken to build another five star beach- front 450 room hotel, three miles away from the same stretch.

The portents are not encouraging. GCB appears to be suffering from internal bleeding which will not show now but may begin to impact negatively on its health in the medium term like the two latest casualties of similarly corrupt credit schemes, BHC and Cooperative Bank.

The nation suffers. Tamman and his sleaze bags go shopping. - Kofi Coomson reporting.