SNNIT paid 58.6b in STC acquisition

Accra (The Crusading Guide.) 07 May 2002 - In the wake of the mounting controversy surrounding the divestiture and acquisition of the State Transport Corporation, The Crusading Guide has unraveled the role played by the Social Security and National Insurance Trust (SSNIT).

The Trust, through a swap with the Divestiture Implementation Committee (DIC) and government, paid ?58.6 billion to DIC on behalf of Vanef Consortium Limited (The company that took over STC) to enable it acquire the transport company which was being run by the government in the year 2000. SSNIT additionally issued the necessary guarantees to DIC to cover the outstanding debts of STC.

Investigations conducted by the Crusading Guide established that all efforts by Vanef Consortium Ltd, owned by Mr James Owusu-Bonsu, to raise a loan through the assistance of Mitan Capital – an American Financial Management Consulting Firm based in New York – and Databank Financial Services Ltd of Ghana to acquire STC had proved futile.

As at 16 December 1999, when Vanef Consortium Ltd executed the Sale and Purchase Agreement, it did not have the needed money to make the first instalmental payment of $2.4 million. It was further gathered that on 28 February 2000, a term loan of $4.4 million was raised from SSB Bank with a 100 per cent guarantee cover, including interest payment, provided by SSNIT.

According to a source at SSNIT, Vanef Consortium once again turned to SSNIT as it could not raise a loan to make subsequent payments. The Trust then issued a guarantee to DIC for the payment of the remaining amount of $9.5 million and ?4.984 billion as well as the outstanding debts of STC, owed to the government- ?12.885 billion, and Bank of Ghana- DM 9.720 million (Deutse Marks).

The source maintained that due to the commitments made by SSNIT to DIC on behalf of Vanef Consortium Ltd, it (SSNIT) acquired 92? per cent of the shares of Vanef Consortium Ltd while it (Vanef) and David Dorte and Company Ltd retained 7 per cent and ? per cent respectively.

The Crusading Guide was informed that Vanef Consortium Ltd and David Dorte and Company Ltd (minority shareholders) had explained that their shareholding represented the time, effort, goodwill and the expenses made by them towards the acquisition of STC. In 1996, DIC advertised the sale of STC and so Mr Owusu-Bonsu, the Chief Executive Officer of Vanef Limited, and his business associate, Mr David Dorte, a lawyer and a Transport Management Consultant, entered into a joint-ventureship to bid for the purchase of the state-owned transport company.

Vanef Consortium Ltd was incorporated by the two men (promoters) with shares of 90 per cent and 10 per cent owned by Vanef and David Dorte and Company Ltd respectively, with the aim of acquiring STC. A bid proposal was subsequently, submitted by Vanef on 21 February 1997 to DIC and other bidders were Yellow Cab and Densu Ventures Ltd.

In fulfillment of one of the DIC conditions, Vanef Consortium Ltd, with the assistance of Lazarus Holdings Inc. of USA and the State Insurance Corporation (SIC), raised a bid bond in the sum of $1.54 million. Another condition was the provision of technical assistance and, in line with that, Vanef signed a Memorandum of Understanding with Greyhound Corporation of USA to provide technical assistance to it (Vanef) in August 1997.

The process of divesting STC came to a standstill between 1998 and 1999 when management and workers of the company demanded to be allowed to bid for the acquisition of STC. When the tender was reopened, two other bids were received by the DIC from Kalahari Investments Limited and STC Management Worker-Buy-Out (MWBO). Vanef Consortium again emerged the preferred bidder.

However, when DIC offered MWBO 20 per cent of equity share in Vanef STC on 13 March 2000, the offer was turned down and so it (DIC) went ahead with the process of selling STC. Eventually, Vanef succeeded in taking over STC. The government/DIC incorporated Vanef STC Limited to take over the assets of STC and some outstanding debts owed by STC to the Accountant-General and Bank of Ghana in respect of buses purchased and guaranteed by government.

Eighty per cent of the shares of Vanef STC was divested by the government/DIC to Vanef Consortium Limited and government retained the remaining 20 per cent. The assets of the Bulk Haulage Division and the ‘Surplus’ assets were sold 100 per cent to Vanef Consortium Limited.

The sale price of Vanef’s 80 per cent share in Vanef STC and the assets of the Bulk Haulage Division and the ‘Surplus’ assets were negotiated at $12.4 million plus ?4.94 billion. Added to these, Vanef Consortium Ltd. owed to government (?12.885 billion) and Bank of Ghana (DM 9.72 million) in respect of 52 Scania buses purchased on credit.

Purchase of STC was to be made thus: 1st instalment- $2.4 million upon execution of sale and purchase agreement (on December 1999) 2nd instalment - $10 million, on or before 17 January 2000 and 3rd instalment- 1554.984 billion on or before 17 June 2000.