NTHC OWES GH¢3.2m... FOR SALE OF CPC, BOPP (FRONT PAGE) 28-01-09

Story: Kofi Yeboah
FOUR years after the sale of government shares in the Cocoa Processing Company (CPC) and the Benso Oil Palm Plantation (BOPP), an amount of more than GH¢3.2 million accruing from the sales is yet to be paid into government coffers.
The principal CPC floatation proceeds from the transaction due the government is GH¢1.95 million, while that of BOPP is GH¢1.25 million.
The National Trust Holding Company (NTHC) which sold the shares has failed to pay the money to the government since the close of transaction on December 31, 2004, which liability had attracted an interest of more than GH¢1.6 million as of June 2007.
According to a final audit report on the transaction prepared by the Ghana Audit Service and dated April 11, 2007, “Interests accruing on the floatation proceeds were illegally transferred, on the instruction of management, to NTHC Ltd’s interest investment account.”
The NTHC Ltd also invested about GH¢1 million of the CPC floatation proceeds with Sterling Security Ltd, with period of maturity ranging between two and half and six months, but the interests derived thereof were not accounted for in the floatation books.
The audit report, which was stumbled upon by the Daily Graphic, further noted that some floatation funds were lodged directly into the NTHC Ltd’s own bank accounts, while other funds were channelled into short-term investments without passing through the floatation bank accounts.
“Management of the NTHC Ltd did not account for the interests accruing from the investments,” the auditors observed.
Again, the auditors detected that an amount of GH¢5 million of government floatation funds was illegally granted as loan to the government to support the national budget, adding that an interest of more than GH¢520,000 was illegally charged against the government funds.
The report identified the major cause of the financial malfeasance perpetrated by the NTHC Ltd as the inability of the Ministry of Finance and Economic Planning (MoFEP) to monitor and exercise the necessary controls on the use of the floatation funds.
“The monitoring role of the Security Exchange Commission (SEC) in initial public offer (IPO), such as that of BOPP and CPC, was ineffective,” the report pointed out, explaining that the commission did not play any effective monitoring role in the trust funds or the public deposits in the two IPOs.
The report also criticised the selected banks for the floatation funds for not ensuring strict adherence to rules on escrow bank accounts, a lapse which the NTHC management took advantage of “to withdraw floatation funds with impunity” and in contravention of Security and Industrial Law, as well as the floatation and listing agreement.
It said record keeping, custody, withdrawal and disbursement of the CPC and BOPP floatation funds were improperly administered by management, adding that there had been clear evidence of financial malpractice.
The auditors observed, for instance, that while the accounting records of the shares had not been well maintained, the floatation proceeds were not classified into various categories of depositors.
In addition, financial statements were not prepared for the BOPP floatation transactions, while in the case of the CPC floatation accounts, although financial statements were prepared for various bank accounts, they did not have any explanatory notes.
“There were a number of financial malpractices bordering on wrongful lodgement of floatation proceeds in NTHC bank accounts, illegal transfer of GoG share floatation proceeds and dissipation of bank and investment interests income,” the report indicated.
Since the transaction on the CPC and BOPP shares was terminated on December 31, 2004, efforts by the government to redeem the floatation proceeds have proved futile.
The MoFEP, in a letter to the managing director of the NTHC, dated July 25, 2007 and signed by the then Minister of State, Dr Anthony Akoto Osei, directed the company to pay the money into the accounts of the Ministry of Finance NTR (Receipt) with account number 0123050012176 at the Bank of Ghana.
That directive followed a letter signed by the Auditor-General, Mr Edward Dua Agyeman and dated July 19, 2007, requesting the managing director of the NTHC to submit a repayment plan on how the company intended to liquidate its liability for consideration by his (Auditor-General’s) office.
In response to the Auditor-General’s letter, the management of the NTHC maintained that it had not received the final audit report on the matter and that it had referred most of the queries raised in the report to the managing director (Dr A. W. Q. Barnor) for further clarification.
“Although we have not received the final audit report, which we hope will discuss the issues referred to the managing director, we are nonetheless going to circulate and discuss your letter regarding our increased outstanding liability to government to the board and the rest of the shareholders,” the NTHC responded in a letter dated July 27, 2007 and signed by the Deputy Managing Director, Mr Michael A. Addo.
However, the audit report pointed out that three officers of the company — Dr A. W. Q. Barnor (Managing Director), Mr Raziel Obeng Okon (Head of Corporate Finance and Research) and Mr Kojo Graham (Head of Operations) — who were at post during the floatation of the CPC and BOPP shares, did not honour invitation and did not co-operate with the audit team for discussions on issues raised.