Sunday, 25 February

SSNIT's GH¢2.3bn, US$185m locked up in related loans, housing project – A-G's report

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SSNIT building

The Auditor-General’s 2019 report has said “in contravention of Section 91(1) of Act 921”, the Social Security and National Insurance Trust (SSNIT), “as of 31 December 2018, has not recovered a total of GH¢2,379,233,073.10 loans granted to eight related companies”.

The 1,134-page report blames the situation on “ineffective due diligence on the investment”.

“We recommended to the management to improve on the Trust’s loan granting processes and also ensure that the loans are fully recovered”, the report suggested.

Additionally, it noted that “in spite of the provision of Section 91(1) of the PFM Act 2016”, the management of SSNIT “sunk a cedi equivalent of US$185,250,000.00 in a housing project at Klagon and Sakumono”.

The project, the report noted, “is halted and it is being managed by RSS, a Joint Venture Company belonging to SSNIT and Regimanuel Gray”.

“We urged the Board to consider RSS’s proposal to rent the houses to reduce the losses on the investment”, the Auditor-General proposed, adding: “We further recommended to the Trust to institute an effective project evaluation process in investments of similar nature”.

Read below excerpts of the report regard SSNIT:

255. We noted that the Controller and Accountant-General’s Department (CAGD) as at 31/12/2018 paid only GH¢1,719,627,683.40 out of total bills of GH¢2,492,656,064.00 leaving a difference of GH¢1,264,556,098.49. Management did not also charge the default penalty of 3% on the delayed outstanding contribution. We recommended to Management to enforce Section 64 of the Act 766 and recover all outstanding balances of SSF contributions from CAGD to ensure retirement income security for workers.

256. In contravention of Paragraph 3.1.2 of SSNIT Pension Contribution Collection Services Agreement with 21 Agent Banks, 9 of the Agent Banks did not remit a total of GH¢26,331,114.79 to the designated account at Bank of Ghana (BoG) as at the end of the 2017 and 2018 financial years respectively. We recommended to Management to ensure that the banks transfer the unpaid balances to SSNIT Account at BoG without further delay.

257. Contrary to Paragraph 4.0 of the SSNIT Pension Contribution Collection Services Agreement, Management did not impose on the 9 Agent Banks total penalty charges of GH¢9,252,840.97 for failing to transfer the daily SSNIT contribution collections per the agreement. We recommended to Management to re-compute the penalty and recover same from the Agent Banks and inform our office for verification failing which the authorising and approving officers of these contracts shall be held liable.

258. Contrary to the provisions of Section 63(4) of National Pension Act 2008, Act 766, Management delayed the transfer of the 2.5% National Health Insurance Levy (NHIL) to National Health Insurance Authority (NHIA), for periods ranging from 2 months to 8 months. We recommended to Management to promptly transfer to NHIA all Levies deducted. We also advised Management to sign a memorandum of understanding with the Authority to agree on the specific dates of transfers.

259. Contrary to Regulation 39 (1) of the Financial Administration Regulations (FAR) 2004, the Trust incurred an extra cost amounting to GH¢875,522.15 on the purchase of 22,860,423 shares for failing to participate in the right offer within the offer period. We recommended that Management and the Board must be proactive in its decision-making processes by taking into consideration deadlines to prevent the Trust from loss of funds.

260. In contravention of Paragraph 4.3.1 of the Property Management Agreement, Broll Ghana Limited did not recover a total of GH¢5,590,115.15 as rent arrears from 114 tenants who had vacated the SSNIT commercial properties during the periods under review. We urged Management to impress upon Broll Ghana Ltd to recover the amount from the tenants. Again, we urged Management to revise the agreement with the properties Managers to include clauses that will tie fee payments to the rate of recovery of rent outstanding from the tenants. We further advised Management to be responsive to maintenance needs of the Properties.

261. SSNIT did not recover an outstanding amount of GH¢57,259,666.46 of the Bond purchased from Ghana Education Trust Fund (GETFund) after the expiration of the repayment period on 26th September 2016. We recommended to Management to reach an agreement with GETFund and Ministry of Finance to ensure the repayment of the amount outstanding on the Bond.

262. Management was unable to recover a loan balance of GH¢178,819.05 from Dr. Caleb K. Afaglo who had separated from the Trust since 30th August 2017 in contravention of Regulation 113 (1) FAR 2004. We urged Management to take all necessary steps to recover the remaining loan balance from Dr. Caleb K. Afaglo with interest at the Bank of Ghana prevailing interest rate.

263. Contrary to Section 91(1) of the Public Financial Management (PFM) Act 2016, Management did not collect outstanding Bond amount of GH¢8.7Million from King University College (KUC). The Bond tenure ended on November 11, 2016. We advised Management to ensure that Investment officers effectively perform due diligence on all SSNIT investments. We advised Management to ensure that Investment officers effectively perform due diligence on all SSNIT investment. We also urged Management to recover the GH¢8,708,996.04 from the Kings University College.

264. In spite of the provision of Section 91(1) of the PFM Act 2016, Management of SSNIT sunk a cedi equivalent of US$185,250,000.00 in a housing Project at Klagon and Sakumono. The Project is halted and it is being managed by RSS, a Joint Venture Company belonging to SSNIT and Regimanuel Gray. We urged the Board to consider RSS’s proposal to rent the houses to reduce the losses on the investment. We further recommended to the Trust to institute an effective project evaluation process in investments of similar nature.

265. SSNIT was unable to recover an outstanding loan of GH¢151,944,040 from NTHC after the expiration of the repayment period on 29 May 2017. This was due to the absence of effective due diligence and repayment arrangement with NTHC. We advised Management to ensure that Investment officers effectively perform due diligence on all SSNIT investments. We also urged Management to recover the GH¢151,944,040 from NTHC without further delay.

266. Our comparison of rent receivable balances provided by the Properties Department and Operations Department for 2017 and 2018 revealed a total difference of GH¢61,964,845.93 for 2017 and GH¢39,350,310.49 for 2018. The balances provided by Operations department are represented in the Financial Statements as rent receivables. We recommended to Management to ensure that monthly reconciliations are carried between the Operations and Properties Departments. We also recommended periodic reconciliation between SSNIT and the Property Management Companies. We further urged Management to investigate the respective rent receivable differences and appropriately adjust the Financial Statements.

267. Contrary to the Board approval in its 292nd meeting to convert apportion of CENIT loan into preference shares, in order to eliminate its Thin capitalisation problem, Management of SSNIT could not ensure the completion of the conversion as authorised by the Board. We recommended that Management should follow up and ensure that sufficient amount of the loan is converted to preference share to eliminate the Thin capitalisation.

268. Contrary to the policy on paying Pensioners’ over 72 years, SSNIT paid a total of GH¢153,646,675.30 on 300,967 transactions to pensioners over 72 years who have not renewed their life certificates. We recommended to Management to ensure that the required controls are configured to prevent loss of Pensioners funds.

269. In contravention of Section 91(1) of Act 921, the Trust as of 31st December 2018 has not recovered a total of GH¢2,379,233,073.10 loans granted to 8 related companies. This was due to ineffective due diligence on the investment. We recommended to Management to improve on the Trust’s loan granting processes and also ensure that the loans are fully recovered.

270. Despite the order of the Kumasi High Court in 2007, SSNIT has still not recovered a debt of GH¢1.38 million owed by Fidan Construction Limited as of 31 December 2018. We advised Management to ensure that the court judgment is executed to enable the Trust recover the amount of GH¢1.38 million.

271. Contrary Section 43 (1) of the Public Procurement (Amendment) Act, 2016 (Act 914), Management used single quotation to procure furnishing for qualifying Management officers, instead of obtaining two [2] other alternative quotations for price comparisons and value for money considerations. In order to ensure value for money, we urged Management to ensure compliance with rules and regulations governing procurements of public funds in procuring furnishing for management dwellings meanwhile the officers involved in the breach of the act should be sanctioned in accordance with section 92 (1) of the Public Procurement Act.

272. Eleven (11) members of staff were dismissed in 2017 and 2018 for using forged certificates to gain employment into the Trust. The staffs were paid salaries for periods ranging from 2 to 12 months after their probation periods of 6 months. Also, the dismissed staff received salary and lump sum payment resulting from other staff benefits schemes of the Trust totalling GH¢840,502.38. We recommended that Management should improve its recruitment processes including confirmation of staff certificates during staff probation periods to avoid loss of public funds.

273. Despite the provisions of ISO/IEC 27002:2013(6.1.1) SSNIT Oracle 11g database has five (5) default accounts still opened, the Trust still maintains the default oracle sample schemes SCOTT and OE as well as the Oracle DEFAULT profile account which forgives a user account unlimited password usage, password lifetime, CPU per call or session. Also, the Trust continued to use the Oracle DEFAULT port number 1521 to connect to the Oracle database server, which can easily be known on the internet. We recommended to Management to ensure that these default accounts are locked or the passwords changed. Default profile policies should be reviewed and necessary amendments made to reflect SSNIT’s security policies and ensure that users profile settings have appropriate values set for the particular database and application.

Source: ClassFMonline.com