SSNIT rebuffs $17.5m ISTC loan guarantor report
The Social Security and National Insurance Trust (SSNIT) has flatly rejected the claim in the 2020 Auditor-General’s report, citing the trust as having served as a guarantor to transport company, Intercity STC for secure a loan of US$17.5m from ADB Bank.
According to the 2020 Auditor-General’s report, SSNIT guaranteed ISTC to take a loan of US$17,500,000.00 from ADB Bank to procure 100 Buses to augment their fleet. The implication of the guarantee is that, in the event of ISTC’s default of the loan, SSNIT could be called upon to pay.
These revelations came up at the Public Accounts Committee (PAC)sitting on Wednesday, when the management of SSNIT together with its sector minister, of Employment and Labour Relations with added oversight role of Pensions, Ignatius Baffour-Awuah appeared before the committee at Parliament House.
A member of the committee, Sam George [MP, Ningo-Prampram] sought to enquire from officials of SSNIT as to how they have served as a guarantor to ISTC as captured in the audit report.
In response to the question, the Director General of SSNIT, Dr. John Ofori-Tenkorang stated that the trust never guaranteed a loan of US$17,500,000.00 from ADB Bank for ISTC to procure 100 Buses to augment their fleet.
“I am challenging the audit report to say that, we have not signed any guarantee to guarantee the facility that was taken by ISTC from ADB, infact when that facility was entered into, ISTC came to SSNIT to give a loan and we declined, the SSNIT board declined because there was outstanding loans that had not been paid so it would not have been prudent to go and extend a further loan, so they got the ministry to help them get the loan from ADB and what we had to do was to give a no objection -so we are not, there is no guarantee document that SSNIT has signed to guarantee that loan and the auditors can produce that document if such exists,” he said.
Further audit finding disclosed that there was the need to protect SSNIT’s investment in Intercity STC totaling GH¢49.5m.
The report also indicated that its review of the performance of the Intercity State Transport Company (ISTC) Ltd disclosed the following challenges of the Company; The ISTC Company has not presented its audited Financial Statements over the years to SSNIT as a majority shareholder.
SSNIT has also not received any dividends from ISTC on their 80% majority shareholding investment. The trust did not recover various loans and Shareholders advances given to ISTC. As at 31/12/19 ISTC did not make payments on any of the 3 loans it contracted.
From SSNIT’s point of view, the Deputy DG in charge of Investments, Mr. Kofi Osafo-Maafo said they are in discussions with the company’s board and management on how the loan will be repaid.
“SSNIT continues to engage ISTC Management with respect to the repayment of the loan and has asked the company to submit a repayment plan. The company is yet to submit their plan for the Trust’s consideration and further action given the lack of visibility in the current market conditions. ISTC Management has however, noted that they will address the payment issue after they meet their commitments to the Government for the supply of buses to them. The current Covid-19 pandemic has made it impossible to meet both commitments. Discussions with the Managing Director are ongoing to have the company submit and commit to a repayment plan.”
The External Auditors of the company have recently completed the audits of 2013 to 2020 financial statements. The audited accounts for the years 2013 to 2020 have been signed by the ISTC Board and approved by Shareholders at an Annual General Meeting held in November 2022.
Background
The company secured a facility from Agriculture Development Bank to acquire 100 new buses and has built a new Driver and Vehicle Licensing Authority (DVLA) Centre with four terminals at the ISTC yard through a public private partnership and which has started operating. These measures would help position the Company to successfully turnaround to perform profitably.
Action Taken
Intercity STC (ISTC): Cash flow of the Company cannot support a loan and its repayment at the moment. This was made worse by the closure of the land borders due to the Covid-19 pandemic, as the company obtains a significant amount of its revenue from cross border operations. Management continues to monitor the company and intends to convert the shareholder advance to an interest bearing loan at the earliest opportunity.
