The Social Security and National Insurance Trust’s (SSNIT) total investment (loan) facility of GH¢49.5 million with the Intercity STC (ISTC) Coaches Limited since 2010, has attracted concerns from the Auditor-General (AG) and other stakeholders over the possible defaults on the loan facility.
The wake-up call by the Auditor general comes in view of the recent debt recovery activities by SSNIT in relation to some US$ 4.15 million, which represents about 35.19% of the total lost funds, that has been recovered from the liquidation of three (3) companies, namely, Ningo Salt Ltd. (NSL), Granite and Marbles Ltd., and Canada Investment Fund for Africa.
In relation to the ISTC’s loan facility, the AG revealed that, “the total amount received by the ISTC from 2010-2012 was GH¢5,916,352.98. This loan accessed in 2012, had its expiry date scheduled in December 2016. As of December 2019, the total amount of the loan as a result of default was valued at GH¢28,722,473.45”.
Also, the AG explained that the total loan of GH¢ 49.5 million at the end of 2019, contains an amount of GH¢ 20,731,000 shareholders’ fund that was channelled to ISTC.
However, the AG disclosed in its report that, by the close of December 31, 2019, ISTC had not made any payments on the “loans and shareholder advances” secured through SSNIT.
Despite SSNIT being a majority shareholder, with about 80 percent stake in ISTC, the AG revealed that SSNIT has not received any audited financial statements from ISTC, much less of annual dividend receipts over the 10-year period.
Meanwhile, the ISTC Coaches Limited disclosed that it is currently working on its accounts with external auditors. And once the audit is completed, “copies would be available to SSNIT for approval”.
ADB, ISTC’s US$17.5 million loan contract
In view of the concerns raised by the AG, the Agriculture Development Bank (ADB) feared that its recent loan of US$ 17.5 million to the ISTC, which was guaranteed by SSNIT, to procure some “100 buses to augment its fleet in order to meet competition from private transport firms”, will be affected.
The procured 100 buses, in addition to the ISTC’s fleet, the ISTC claims would cause a “successful turnaround of the company to enable it perform profitably”.
However, in relation to the contract between ADB and ISTC, the AG disclosed that, SSNIT is acting in the capacity of a guarantor to the loan facility from ADB, so in the event of ISTC defaulting, SSNIT could be called upon to make payment.
Furthermore, the AG disclosed that, SSNIT’s inability to regulate and ensure that value (reward) is derived from the operations of ISTC, has contributed to the recent lapses in its financials.
SSNIT must ensure that pensioners funds invested with ISTC yields prudent returns and are safeguarded from any financial misconducts, the AG revealed.
“To safeguard public fund, we recommend that the board liaise with the ISTC to obtain audited financial statements for the previous years to ensure that dividend due the Trust, if any, is received.
“Management must do its best to investigate the loan outstanding and shareholders’ advances to the company to enable it perform profitably.”
Auditor-General
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