Ghana Parliament summons 21 firms to explain £112.5m indebtedness to State

Twenty-one companies have been summoned by the Public Accounts Committee of Parliament to explain their inability to repay a government of Ghana guaranteed loan of £112.5 million.

The loan was granted them between 1990 and 1996 for the execution of various government contracts.

The companies are  Marine Construction; Mallam  Issa  Issahaku; Pentrexx Ltd; Yiadom Builders Ltd; Progressive and Modern Co; Eagle Star; Ussuywa Ltd; Kamara Ltd; J. Stanley Owusu; Kasap Ltd; K.E Sons Ltd.

The rest are Wunishi Secretarial Services; Chartworth Carpets; Bascom Ltd;  Daniella & Mabey; Fruits & Flavours, Frandesco, Goi Kposem,T aysec, Mabey & Johnson, J. Adom Ltd.

The companies, according to the Auditor General’s Report on  the Public Accounts of Ghana Consolidated Fund for the year ended December 31,  2009, were required to reimburse the government for payments made on their behalf but had failed to do so.

The report revealed that although GoG had repaid those loans, only one company had fully honoured its obligation under the agreement.

According to the report, no recoveries have been made from six companies, two of which were currently disputing the loans granted them.

It said recoveries of only £35.6 million has been made so far leaving a balance of £86.8million

It attributed the high default rate  to the failure of the Ministry of Finance and Economic Planning to ensure that the beneficiary companies provided some security for the loans including the exchange rate risk which were on the consolidated fund.

The report also stated that a further review of the loan schedule disclosed that the loan balances of the beneficiary companies were significantly understated.

The report stated for instance that the loan balance of Marine Construction Ltd was stated as GH¢3,251,79.30 in the accounts instead of GH¢4,194,751.00 resulting in an understatement of GH¢943,031.70.

Source: Daily Graphic