Peprah in Trouble - Could Face Another FTHC

Mr. Kwame Peprah, former Minister of Finance in the National Democratic Congress (NDC) administration is in more trouble. A Ghana News Agency report filed yesterday said he has been charged by the police for causing financial loss to the state while in office to the tune of 24 million pounds sterling.

Mr. Peprah, who is already before a Fast Track High Court under different charges would no doubt find these new charges irksome.

The Attorney General's Department has not yet fixed a date to put him before another Fast Track High Court for this brand new charge.

Making reference to "reliable security sources" the Ghana News Agency reported that "in 1994 Dr. Kwesi Botchwey, then Minister of Finance and Economic Planning, secured an Export Credit Guarantee Department Loan Facility of 32 million pounds sterling from the Bank of Scotland in the United Kingdom."

Out of the amount, "the source said 16,233,450 pounds sterling of the loan was credited to the La Palm Royal Beach Hotel, while 15,766,550 pounds sterling went to Coco Palm Limited to build five star hotels at La and Cantonments. The Government of Ghana through the Bank of Ghana guaranteed the loans, which the two companies were to repay the principal amount in seven years by 14 equal, consecutive and semi annual installments from July 1996 to January 15, 2003."

The report said, in January 1997 Coco Palm paid 5,066,883.23 pounds sterling, while La Palm paid 8,401,301.93 pounds sterling making a total repayment of 13,468,185.16 pounds sterling. This figure was unacceptable because it was far below the amount expected to be paid. Based on that default, the Bank of Scotland served the Bank of Ghana with a default repayment notice, which was subsequently referred to the Ministry of Finance. "Mr Peprah, who had then assumed the post as Minister of Finance, authorized the Bank of Ghana and the Controller and Accountant General to start servicing the debt with moneys from state coffers." The Bank Of Ghana paid 20,014,000 pounds sterling.

Mr. Peprah again authorised the Ghana Commercial Bank (GCB) and the National Investment Bank (NIB) to advance a loan of 13 million pounds sterling and 2,711,846.89 pounds sterling, respectively, to the two companies. The NIB in compliance credited 1,919,792.13 pounds sterling to Coco Palm Limited and 792,355.76 pounds sterling to La Palm. GCB gave six million pounds sterling to La Palm and seven million pounds sterling to Coco Palm.

By advancing the loan to the companies, Ghana Commercial Bank contravened Section 11 of the Banking Law of 1989, since the amount constituted 47 per cent of its net worth as at 31st December 1995.

For NIB, it did not follow its normal procedure for granting loans. There was no formal application for the loan, neither was there an appraisal report nor an Executive Committee approval. There was, however, an approval from the Board of Directors.

Even with all that accommodation, "the two companies again defaulted with the repayment schedule of the two local banks.

Mr Peprah again authorised the BOG and Controller and Accountant General to pay 2,590,041.21 pounds sterling and 1,300,813.00 pounds sterling to the NIB and GCB, respectively."

The Ghana News Agency says its own "investigations revealed that Coco Palm did not put up any hotel for which it took the loan, instead it built chalets and sold them to the public and repatriated the money to its mother company in the United Kingdom. The sale of the chalets was fraudulent since they were supposed to be part of the assets of the company that was used to indemnify the government against liabilities with respect to the company's obligations under the agreement with the Bank of Scotland."

Not to be left out , the Social Security and National Insurance Trust (SSNIT) waded in and became a shareholder in La Palm and used its dividend of 650,000 pounds sterling and interest of 350,000 pounds sterling to pay off part of La Palm's debt to the GCB.

This latest revelation must be most worrying to the former finance minister who is still grappling with another accusation, the likely outcome of which should be made clear in the coming weeks.