KMA in over GHS119.2m judgement debt scare -- risks losing physical assets to defray debts

May 18, 2017
Source: Kizito Cudjoe l l Ghana
KMA in over GHS119.2m judgement debt scare -- risks losing physical assets to defray debts

It appears that the Kumasi Metropolitan Assembly (KMA) might soon be heading for another standoff with one of its service providers, Meskworld Company Limited, if it failed to settle a debt of about GHS3.1 million owed to the company since 2008, as the financial liabilities of the Assembly reaches over GHS119.2 million, accumulated over the years.

The revelation implies that the Assembly may be heading for a financial meltdown should it debtors come knocking in the midst of other ongoing judgement debt cases and fresh threats of legal action, particularly with a new government in place.

Already, solicitors of Meskworld company, Lithur Brew and company, according to the new Metropolitan Chief Executive, Mr. Eric Osei Asssibey Antwi, has served notice to KMA to sue if it fails to pay what is owed their client.

The developments, is feared could balloon the KMA’s current debt stock which until October 2016 was a little over GHS6.4 million, but has now risen outrageously to over GHS50.6 million, within October to December 2016, if judgement is given in favour of the other plaintiffs in pending cases.

In an ‘SOS’ internal memo written by the Metro Co-ordinating Director to the then Ag. MCE, in October 2016, he said, the initial debt of about GHS6.4 million was borne out of court cases resulting from; abrogation of contracts, failure to meet contract commitments between 1999 and 2012, obstruction of contractors on site, perfunctory handling of court cases among others.

However, the new KMA boss at his maiden session address disclosed that the Assembly’s Financial Liabilities are now GHS119,213,333.22. This includes a GHS63,833,626.73 debt owed to waste management service providers, GHS50,602,874.43 in judgement debt and GHS855,564.42 indebtedness to IGF contractors.

The rest are GHS3,599,717.05 debts also owed to IGF suppliers and GHS321,550.59 owed to Common Fund contractors and suppliers.

It would be recalled that in January this year, management of Freko F. D Enterprise Limited, with the backing of a Kumasi High Court, almost auctioned three buildings belonging to the Assembly to defray a debt owed to them, following a GHS4.3million judgement debt case brought against the Assembly.

This was after some four-wheel pickup vehicles belonging to the KMA had been possessed by Freko, in 2016, in attempt to cover the cost of waste management services rendered to the Assembly to which a judgement debt was duly awarded in their favour when the matter went to court.

B&FT’s sources close to the Assembly say some ‘face saving’ attempts are being made by the current Metropolitan Chief Executive to settle the issue.

Mr. Assibey Antwi at the meeting with Assembly members said “apart from the Sapso Construction Limited judgment debt over alleged non-payment for the construction of market stores at various locations on Build, Operate and Transfer basis (BOT), all the other judgment debts arose out of waste management contracts.”

He maintained that such developments, occurring out of the actions and inactions of the Assembly, serves as a great deterrent to potential investors and must not be allowed to go on.

“We cannot just sweep such unacceptable incident under the carpet and so we shall take the necessary steps to unravel the mysteries surrounding such debts,” he added.

To that end, he promised that a Special Audit Team will be set up to investigate how such issues came about in the first place, while also seeking legal opinion, including the option of resorting to Alternative Dispute Resolution (ADR) to deal with all the outstanding court cases.

He said the Assembly will henceforth be guided by the provisions of the Public Financial Management Act 2016 (Act 921), which seeks to “regulate the financial management of the public sector within a micro economic and fiscal framework; to define responsibilities of persons entrusted with the management and control of public funds, assets, liabilities, and resources, to ensure that public funds are sustainable and consistent with the level of public debt; to provide for accounting and audit of public funds and to provide for related matters.”

“This will be the one sure way of avoiding financial leakages, protecting the public purse and ensuring the judicious use of public funds for the good of our Metropolis.”