The controversies surrounding the Social Security and National Insurance Trust (SSNIT) continues to pile up as investigations reveal that it failed to recover loans in excess of GH¢400million which was granted to eight companies.
The pension scheme has been in the news lately for all the wrong reasons including the purchase of an Operation Business Suit (OBS) system aimed at enhancing its service delivery to customers in all of its 50 branches across the country at a whopping figure of $72million.
According to investigations, the collaterals provided by the eight (Loan defaulters) were not valued so management of the trust “cannot assess whether the loans are recoverable from the sale of the collaterals.”
This, “May cause SSNIT to lose funds which may eventually affect its ability to pay pensions in the future and in a timely manner,” warned the Auditor General in its 2015 report.
List of the defaulters captured by the Auditor General’s 2015 report as at 31 December 2014
|Name of entity||Loan balance as at 31/12/2014(GH¢)|
|FOS Aluminium Limited||1,366,563,79|
|Bridal Trust Limited||1,114,500,23|
|Ghana Leasing Company Limited||5,866,362,68|
|Ghana Road Fund Loan||261,698,706,24|
|Share Holders Advance (Bridal Trust)||193,129,40|
|Shareholder Advance (Intercity STC Coaches)||20,292,258,13|
|Intercity STC Coaches Limited||10,712,512,20|
|Golden Beach Hotels||176,075,168,00|
The report, therefore, directs the management of the pension scheme to take the necessary steps to recover the loans and strengthen its recovery efforts.
“They should also value and perfect the collateral covering these loans, so that recovering can be made from the sale of the collaterals,” further instructed the report.
In their response to the Auditor General, the management of SSNIT said the trust had obtained judgment in court to recover the amount involving FOS Aluminium Limited and Bridal Trust and therefore ordered for judicial sale of the mortgaged properties (land and building).
Also, they said they had obtained judgment against Ghana Leasing Company Limited and ordered for the sale of the leased assets which were acquired with the loan and with Golden Beach Hotels the loan amount had been converted into shares.
“For Ghana Road Fund, a final demand notice had been sent to the Ministry of finance and Ghana Road Fund board to pay the outstanding amount,” the reaction to the Auditor General added.
In another development, the Auditor General said it discovered that the trust’s fixed deposits with Ghana International Bank (GIB) totaling £620,000 (GH¢2, 788, 992, 00) were not supported by a security assignment, contrary to SSNIT’s own practice where fixed deposits are backed by securities.
The anomaly said the report, which is being scrutinized by the Public Accounts Committee of Parliament (PAC), occurred because managers of the trust decided to convert dividend paid by the bank to fixed deposit in order to earn interest.
“In the event of default, SSNIT stands to lose its investments since there was no security to rely on,” warned the report.
Hence, it recommended that managers of the trust should request the GIB to back the fixed deposits with securities, so that in times of default SSNIT can fall on the securities to redeem the amount.