The Auditor General (AG) has expressed worry about the possible loss of various loans and shareholders’ advances to the Intercity STC (ISTC) totaling GH¢49.5 million, given to the company by the Social Security and National Insurance Trust (SSNIT) since 2010.
The total loan amount received by the ISTC from 2010-2012 was GH¢5,916,352.98. The last loan accessed in 2012, had its expiry date scheduled in December 2016. As of December 2019, total amount of the loan as a result of default was valued at GH¢28,722,473.45.
In addition, SSNIT loaned a total of GH¢20,731,000 shareholders’ fund to the ISTC, with the overall details of loans and advances reaching GH¢49,453,473.45 by end of 2019.
The AG, in its latest report indicated that as of December 31, 2019, SSNIT did not recover the loans and the shareholder advances given to ISTC. It added that the ISTC did not make payments on any of the loans it contracted.
As a majority shareholder of 80 percent in ISTC, SSNIT, according to the report has never received any dividends from the company. Conversely, the ISTC has not presented its audited financial statements over the years to SSNIT.
The precedent, the AG feared, could also affect a recent US$17.5 million loan to the ISTC, which was guaranteed by SSNIT to the company from ADB Bank. The money was to enable the ISTC procure 100 buses to augment its fleet in order to meet competition from private transport firms.
The AG concluded that the implication of the guarantee is that, in the event of ISTC’s default in payment of the money, SSNIT could be called upon to pay.It asked SSNIT to monitor the performance of the loan to avoid possible repayment from contributors’ fund.
AG’s reproach and caution to SSNIT
The AG said the financial lapses are occurring due to the inability of SSNIT’s board to exercise control over ISTC operations. It indicated that the inability of the Trust to ensure that value is obtained from its investment on ISTC is depleting the pension fund. It advised SSNIT to ensure that the appropriate steps are taken to ensure that pensioners’ fund invested in ISTC yield returns.
“To safeguard public funds, 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 ISTC to ensure recovery of the money” the report entreated.
Management responded that the Intercity STC Limited is working on its draft accounts with its external auditors. The company said once they are completed, copies would be made available to SSNIT for approval. It added that the 100 buses are to aid a successful turnaround of the company to enable it perform profitably.