Government tasks SEC to develop guidelines for ‘independent state-owned institutions’

By: Fred Yaw Sarpong- Daily Express

Government has tasked the State Enterprises Commission (SEC) to come out with guidelines on the running of ‘independent state-owned institutions,’ in the country.

According to the government, these guidelines will be subjected to Cabinet discussion and approval.

This contained in Government’s white paper on the Report of the Commission of Enquiry into Payments from Public funds arising from Judgment debts & Akin Matters (C.I. 79/2012).

The Commission recommended that State institutions must be given the independence to act and perform under the laws that establish them. “This is the only way they could be called upon to account for their stewardship and face the consequences if need be,” it added.

The Commission was of the view that Government should redefine its role in matters concerning institutions that have independent legal capacities but are wholly State-owned.

“It is not a good practice for the State to always absorb debts incurred by its agencies with legal capacities without the agencies being made to pay back or refund what was spent on them due to mismanagement,” the commission noted.

The commission gave these recommendations after it handled a case between New World Investments Limited verses Ghana National Procurement Agency (GNPA).  

The commission’s report stated that New World Investments Limited granted a 91-day credit facility of GHc1 million to GNPA in 2004.

“The GNPA paid back only part of it. New World Investments Limited then sued and obtained judgment against the State (GNPA). When the company threatened to auction the Headquarters of the Ghana National Procurement Company Limited (GNPCL) to defray the judgment debt, the Minister for Trade intervened and had the matter settled out of court,” according to the commission’s report.

The Commission established the following facts:

New World Investments Limited, later known as New World Renaissance Securities Limited and New World Securities Limited granted a 91-day credit facility of GhȻ1 million to the GNPA for the importation of sugar in 2004.

ii. The GNPA (converted into the Ghana National Procurement Company Limited (GNPCL) in 1993), instead, utilized the facility to finance its administrative expenses and was unable to repay.

iii. The GNPCL eventually paid GHc550,000.00 of the amount and two years later, in 2007, New World Renaissance Securities Limited sued the GNPCL for the entire principal amount of GHc1 million.

iv. New World Renaissance Securities Limited obtained judgment for the amount less the GHc550,000.00 that the GNPCL had paid. GNPCL still did not pay. When the Company threatened to auction the Headquarters of the GNPCL to defray the judgment debt, the Minister of Trade at the time, Hon. Hannah Tetteh, intervened and had the matter settled out of court leaving in its trail a judgment debt of GHc2.5 million which was paid by the Government.

The Commission made the following findings and observations:

The Minister of Trade’s intervention followed the attachment of the Headquarters building of GNPCL by New World Renaissance Securities Limited to defray the judgment debt which the Company pegged at GHc4.3 million instead of GHc1, 127,000.00.

ii. The amount of GHc4.3 million was arrived at by calculating the interest on monthly basis at a compound interest of 2.83%.

iii. Court (Award of Interest and Post Judgment Interest) Rules 2005 (C.I. 52) however stipulates that in the absence of agreement to the contrary, interest on such judgment debts is to be calculated at the bank rate prevailing at the time the judgment debt order is made and at simple interest.

iv. The GHc2.5 million that the Ministry of Trade settled with the Company was based on the GHc4,377,832.28 that the Company had arrived at using the wrong interest rate calculation.

v. This settlement caused the State to incur an extra debt of GHc876,080.16.

vi. There was misjudgment and wrong actions and/or inactions on the part of some few public officials.

vii. Though set up to function as a viable commercial entity, GNPCL could not perform as such due to interference by officialdom.

viii. According to the Acting Chief Executive of GNPCL, such interference had prevented the Company from making efforts to retrieve a total of GHc2,983,160.36 owed to it by 196 companies and individuals.