STX: give us proof of $6.8bn indebtedness

By Bismark Bebli
STX, the Korean Company tasked by the government of Ghana to provide 200,000 houses for the security agencies and the public at the cost of US$10billion, has challenged its critics, especially the main opposition New Patriotic Party (NPP), to provide proof of their claim that STX Korean Group is indebted to the tune of US$6.8billion.

According to STX, though the company is not worried about the latest developments about the deal, because it helps to entrench democracy, the attempt to impugn indebtedness to them smacks of mischief.

The STX stated that the company has been in existence for the past 30years and has the potential to provide affordable houses not only to Ghanaians, but to other countries as well. 'It is never true that the company is broke. We are listed on the Korean and Singapore Stock Exchanges. For a company to be listed on the stock exchange of Korea and Singapore, it means that the financial status of the company is sound. Currently, our turn over is in excess of US$25billion.'

Speaking exclusively to this paper in Accra on Wednesday, Mr. B. K Asamoah, Chief Executive Officer and Partner of STX Engineering &Construction Ghana Limited, said the allegations about the company has made them suspect that 'there a hidden agenda being pursued by some people.'

'There is nothing dubious about this housing project. The allegations that we are hearing make us suspicious of a hidden agenda against the company,' he said, daring the critics to provide evidence to support their claim. 'Those who are claiming that we are in debt should prove their claim,' he said.

The NPP at a news conference on Tuesday alleged that STX Korea was not known and that they are financially challenged, thus the deal with the government of Ghana is a sort of stimulus package for them.

'The Government of Ghana by this deal will be providing a stimulus package for a Korean company that is in a US$6.8 billion debt. Meanwhile, thousands of Ghanaian companies that would require only a fraction of that amount to stimulate them back into business are being treated with reckless abandon. STX Group of Korea has cash-equivalent assets of US$2.92 billion and a debt of US$6.8 billion of which US$1.8 billion are short-term debts with less than 2 years maturity. This is a company in distress and in need of a stimulus package for solvency. Why should an NDC Government that claims to be tight on funds enter into a credit facility to rescue a Korean firm rather than our Ghanaian companies? Contrary to Government claims, this project will not ensure any technology transfer. All what STX Korea will be doing is coming to Ghana, getting money from our Government, using our technology to build houses for Ghanaians, killing our local construction industry and repatriating their profits to build a better Korea.

In a sharp rebuttal, the Korean STX said on their balance sheet, the total assets for 2008 were US$25.164 billion, whilst that of 2009 stood at US$28.046b.  Currently the total assets of the company stand at US$29.500 billion.

According to Mr. Asamoah, who is a Ghanaian, the STX was not in the country to 'kill local industries. It is not that we are here to rip off Ghanaians. We are here to help contribute our quota towards the development of this nation.'

On the issues of due diligence, he stated that it was worrisome that bilateral agreements entered by the two countries could be described as bogus and unacceptable. 'What is more diligent than the Vice President of Ghana and the President of Korea to have a discussion on this matter in the presence of the Minority in Parliament? The Korean government is solidly behind the project and there is nothing untoward about the agreement since the two countries have their credibility at stake.'

According to him, the Korean President would arrive in Ghana next month to cut the sod for the commencement of the project.

Speaking on the concerns raised by the local real Estate Developers, he said 'There is no fear at all. We are going to sublet some contracts to the local developers because the STX alone cannot execute the projects. It is going to be a partnership work. We have already picked a form from the GREDA, so that together we can work as a team. There is no way that we can leave the local developers.'

He stressed that the agreement was a joint venture between the STX Ghana and is also represented by the HFC bank as government entity.

Further, he underscored that a monitoring committee was set up under the auspices of the Minister of Water Resources, Works and Housing, Hon. Kingsford Alban Bagbin to have an oversight responsibility of whatever is being done.

'Ghana is not going to provide a loan for the STX.  What is currently in Parliament is the Suppliers Credit of US1.5billion.  We are entering an agreement with the government for the Suppliers Credit of 1.5billion to provide 30,000 units of houses out of the government's 90,000 units. It is therefore erroneous for people to say that the government is providing a stimulus package.'

To Mr. Asamoah, the STX Korean was to pre-finance the building of the houses, after which government has a long span of time to pay back the money in installments.

Hinting about establishing an industrial complex where the STX would process their raw material, he said 'The aim of the setting up of the facility where our materials would be produced locally in Ghana was to reduce cost. We have a lot of offers from the West African countries like Senegal, Cameron and Nigeria, but we chosen to come to Ghana first.'

Accordingly, he said STX Korea has come to stay in Ghana and to provide jobs for the citizenry. 'We are here to stay and be part of development of Ghana' The Ghana representative of STX Korean Group said the hue and cry over money was untenable, since the Korean government, which is strongly in support of the agreement had set up an industrial fund called Global Infrastructure, to the tune of US$16billion, to support companies.

On the cost of the affordable houses, he said it would vary from region to region, saying that the average cost for a two bed room apartment for regions outside Greater Accra would be between US$10,000 to US$15,000 – while the same two bed room apartment in Accra would cost at an average of US$25,000.