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General News Thu, 13 May 2004

SSNIT, Obotan jaw jaw over ?202bn

The Social Security and National Insurance Trust (SSNIT) is said to be negotiating with the promoters of the Obotan Developers Limited for a full restitution of SSNIT?s investment of $2.244 million (about ?202 billion) in the controversial Obotan project, a hotel/ residential scheme in which it had controlling shares.

Obotan, which was to have been launched in April 1999, has remained in abeyance ever since, following intense media scrutiny and subsequent CHRAJ investigation into the circumstances of SSNIT?s participation.

Officials of SSNIT said in answer to a questionnaire by The Chronicle that SSNIT was reviewing a number of proposals that had been put forward by its partners in Obotan.

The officials stated that until a satisfactory resolution of the matter was achieved, SSNIT still remained the majority shareholder of the company and would enforce its rights as such.

A document sighted by the paper titled ?Facts of the Transaction?, confirmed that in November 2000, Enterprises Insurance Company (EIC), one of the other two shareholders, offered to buy SSNIT out so that the project could be revitalized. According to the document SSNIT, however, did not respond to the offer. Again in April 2002, Databank, developers of the Obotan project concept, subsequently made another offer which sought to ensure the security of SSNIT?s investment but which is yet to be responded to.

The contribution of SSNIT represented 55% of the equity portion of the project financing of $4 million and a loan portion of $3 million.

This however raised the alarm bells and the subsequent statutory investigation into SSNIT?s involvement in the transaction.

The report of the investigation noted that the Investor Participation Memorandum was not dated and the identities of the authors were not stated.

The report said the document should have stated whom the promoters were, what their relationship was to the enterprise being promoted and what they themselves stood to gain in the project.

It concluded that the absence of those facts was an indication of an intention on the part of the promoters - EIC and DATABANK- not to fully disclose their aims in the project.

It said the fact that EIC acquired the property for ?300 million should have been stated in the memorandum and in the invitation letter to SSNIT to invest in the project.

The report stated that the names of the directors and shareholders of the companies involved in the Obotan Project indicated very close business relationships among the companies, the directors and the shareholders.

Ken Ofori-Atta and Keli Gadzekpo were identified as shareholders and directors in all the companies, i.e. Databank, EIC, Ventures and Acquisition Limited, adding that acts of the companies in the Obotan Project were effectively the acts of these two persons.

The report stated that the fact that EIC bought the property at ?300 million and valued it at ?8.5 billion without any improvements or additions and without any independent valuation at the time of transfer to Obotan, was an act of fraud.

Source: Chronicle