The Auditor-General's 2015 Audit Report to Parliament says the collaterals provided by the defaulting institutions have not been assessed by SSNIT for it to know whether or not the collaterals can offset the loan amounts.

The report, signed by the outgone Auditor-General, Mr Richard Q. Quartey, was for audited accounts of SSNIT for the period January 2013 to December 2014.

“We noted that loans granted to eight private, public institutions and organisations were not paid back.  We also noted that collaterals provided by these loan defaulters were not valued and so management cannot assess whether the loans are recoverable from the sale of the collaterals,” it said

Defaulters

 The list of defaulters, as of December 31, 2014, are: FOS Aluminium Limited - GH¢1,366,563,79; Bridal Trust Limited - GH¢1,114,500.23; Ghana Leasing Company Limited - GH¢5,866,362.68; the Ghana Road Fund - GH¢261,698,706.24; shareholders advance (Bridal Trust) - GH¢193,129.40; shareholder advance (Intercity STC Coaches) -GH¢ 20,292,258.13; Intercity STC Coaches Limited - GH¢10,712,512.20, and Golden Beach Hotels - GH¢ 176,075,168.

The report noted that the SSNIT management’s inability to value and perfect the collaterals provided by the organisations might cause the trust to lose funds, which might eventually affect its ability to pay pensions in the future and in a timely manner.

Recommendations

The report recommended that the management of SSNIT should take the necessary steps to recover the loans, as well as strengthen its recovery efforts.

“They should also value and perfect collaterals covering these loans, so that recovery can be made from the sale of the collaterals,” it recommended.

Response

According to the report, the management of SSNIT responded that “they have obtained judgement in court to recover the amount involved with FOS Aluminium Limited and Bridal Trust and, therefore, ordered for judicial sale of the mortgaged properties (land and building)”.

“Management has also obtained judgement against the Ghana Leasing Company Limited and ordered for the sale of the leased assets which were acquired with the loan.

“With Golden Beach Hotels, the loan amount has been converted into shares.

 “For the Ghana Road Fund, a final demand notice has been sent to the Ministry of Finance and the Ghana Road Fund Board to pay the outstanding amount,” the report pointed out.

Fixed deposits with GIB

The report also noted that SSNIT’s fixed deposits with the Ghana International Bank (GIB), totalling £620,000 (GH¢2,788,992.00), were not supported by a security assignment, contrary to SSNIT’s own practice of fixed deposits being backed by securities.

“This anomaly occurred as a result of management’s decision to convert dividend paid by the bank into fixed deposits in order to earn interest. In the event of a default, SSNIT stands to lose its investment, since there was no security to rely on,” it noted.

The Auditor-General, therefore, recommended that SSNIT should request the GIB to back the fixed deposits with securities, so that in times of default, SSNIT could fall on the security to redeem the amount.

“Management said they had written to the bank to seek clarification on assignment of security for fixed deposits for their next line of action and in conformity with their domestic fixed deposit placements,” the report said.

The report

The report, which has been presented to the Speaker of Parliament, in accordance with Article 187(2) of the 1992 Constitution, highlights the audit of the accounts of public boards, corporations and other statutory institutions for the period ended December 31, 2015.

It highlights the significant findings arising from the audit of the financial operations of public boards, and corporations and other statutory institutions, in accordance with Section 13 of the Audit Service Act of 2000 (Act 584).

It includes details of financial errors and irregularities arising out of the breakdown of internal controls and provides recommendations, where possible, to rectify the weaknesses identified in the financial control systems.