Ripples Over Sale of State Transport

Charles Asare, Agbodo for Court

3 Other exec's to meet in unfamiliar territory

Fraud, misapplication of public funds

The Ministry of Justice and the Attorney General's Department is filing a suit at the Fast Track High Court to prosecute some five top executives who allegedly displayed gross negligence in the divestiture of the State Transport Company (STC).

The Five Top executives are, the Former Executive Secretary of the Divestiture Implementation Committee (DIC), Mr. Emmanuel Agbodo, the Chief Executive of Vanef Consortium Limited (VCL), Mr. James Owusu Bonsu, the former Director General of the Social Security and National Insurance Trust (SSNIT), Mr. Charles Asare, the Chief Executive of Messrs Kwame Asante and Associates, Mr. Kwame Asante, and the Chief Executive of David Dorte Ltd (DDL), Mr. David Dorte.

Chronicle gathered that the suit was because of recommendations in a report compiled by the Serious Fraud Office (SFO) on the questionable divestiture of the STC.

The paper learnt that some of the various offences disclosed by evidence of the Director of Public Prosecutions included misapplication of public funds, stealing and/or corruption of public officer, conspiracy to defraud, causing financial loss and making false representations.

The DPP, Mr Osarfo Sampong told the Chronicle that the Ministry of Justice was working earnestly to bring the culprits to book.

The SFO report indicated that in 1996, DIC advertised to divest STC. Bids were received from three companies namely, Vanef Consortium Limited, Yellow Cab Limited and Densu Ventures Ltd.

Mess Kwame Asante and Associates (KAA) and Magna Consulting of UK carried out the divestiture as consultants to the DIC.

The report said the bid price was US $12.4million(?4,984billion). VCL won the bid but could not pay within the stipulated time so it lapsed.

STC divestiture was re-advertised in 1998 and in October 1998, bids were received from three companies; VCL, the Workers Management Buy Out (WMBO) and Kalahari Investments and was won again by VCL.

The report emphasized that the payment of the total cash offer by DIC was $14.52million.

VCL was to pay as follows, "$2.4million to be paid upon the execution of the Sale and Purchase Agreement (SPA), Within 8weeks of finalizing due on assets to be taken over, another $10million to the DIC and a further $2.12million representing the liability due to the Accountant General should be paid six months after the second payment."

The report revealed that even though the SPA was signed on December 16, 1999, despite these stipulations in it, breach of which meant the abrogation of the agreement and passing on to the next bidder, VCL could not pay a pesewa. Up to March 7, 2000, no such sanctions were applied.

VCL approached the Social Security Bank (SSB) for a loan to pay but SSB would only release any such funding if it had a guarantee from SSNIT.

Unknown to DIC or SSB, on December 14, 1998, there had been a Memorandum of Understanding (MOU) between SSNIT and VCL that SSNIT would purchase STC through its debt swap arrangement with government for VCL.

The report reiterated that a memo dated December 29, 1998 from the Head of SSNIT Investment to the Director General advised against this agreement.

According to the report despite the advise from SSNIT Investment Department, and acting under the so called MOU which had not been made known to the SSNIT board and without any approval from the board, the DG and some other officers guaranteed an initial down payment of ?13.2billion on the 29th February 2000 and a second guarantee of ?5.4billion on April 2000 all in favour of VCL to SSB, bringing the total of SSNIT guarantees to ?18.6billion or just over $4.2m equivalent.

Further a third guarantee of ?4.98billion and $9.8million were paid in favour of DIC to cover the remaining cost of acquisition whiles the DG gave shares to VCL and David Dorte calling it "Sweat and equity."

The report said in return for the guarantees, a Share Pledge Agreement was made between SSNIT and VCL on 28 February 2000 which Awoonor Law were the custodians of the pledge. By this arrangement VCL pledged 80.5% of their shares to SSNIT for the guarantee as security.

The share pledge was subsequently revoked and a new agreement was signed giving SSNIT 97% shares and Vanef Ltd. and David Dorte Ltd 3%.

The report said on November 1999, when the Sales and Purchase Agreement had not been signed and VCL had not even paid a pesewa towards the acquisition but had only been informed they had won the bid, a company Vanef/STC Ltd was formed transferring the Passenger Service Division of STC to that company.

Two officials of DIC namely Richard Akuffo and Thomas Benson Owusu became the first directors, their claim was that they acted on the instructions of Mr. Kwame Asante, the consultant and Mr. Agbodo.

The report noted that this act created a fait accompli.

The effect of this action was that Vanef the prefix name for Vanef Consortium, had been de facto made to be the new name for STC, then still a government wholly owned company, whether VCL was able to fulfill the conditions in the SPA or not.

Surprisingly enough on June 1, 2000, DIC acting by two of its officials, Mr Richard Akuffo and Mr Thomas Benson Owusu who had registered VANEF/STC Ltd as the directors handed over the management of the company to VCL to exercise all powers of management by a resolution until formal transfer was completed under the SPA of December 16, 1999.

At the same time, Mr. Charles Asare appointed Mr. James Owusu Bonsu as the Chief Executive of VCL and VANEF/STC Ltd for a two-year period at a salary of $4,000 a month.

Further, a board of Vanef Consortium Ltd. was constituted by SSNIT with Mr. Charles Asare DG SSNIT as its Chairman.