Another 'gargantuan' debt stares Ghana in the face

The Government of Ghana (GoG) stands the risk of losing additional billions of Cedis as a result of negligence in omitting  its judgment debt due Construction Pioneers Baugesellschaft Anstalt (CP) from its accounts.

The GoG, from now till June, 2012, has an obligation to pay GH¢160 million (80 million Euros) in addition to GH¢24.4 million (12.2m Euros) as interest to CP for liabilities incurred.

However, the said debt, according to the Auditor-General, does not reflect on the accounts of the GoG when his office audited the Public Accounts of the country for the year ending December 31, 2009.

This came to light at the sitting of the Public Accounts Committee (PAC) on Friday in Accra, to consider reports of the Auditor-General (A-G) which have been laid before the House.

The PAC, chaired by the Member of Parliament for Afigya-Sekyere West, Albert Kan-Dapaah, is expected to consider seventeen reports of public institutions and agencies from 2004 to 2010. The reports have been categorized into two, namely Performance Audit and Financial Audit.

Among the Performance Audit Reports include Management of irrigation projects in Ghana, Generation and management of internally generated funds in public funds, Management of building permits by Ga East Municipal Assembly, Collection of property rates by Ga West Municipal Assembly, Road Safety in Ghana, Maintenance of feeder roads in Ghana and Management of solid waste by Accra Metropolitan Assembly.

The Financial Audit Reports comprise the Statement of foreign exchange receipts and payments of Bank of Ghana for 2009 and 2010 as well as Consolidated fund for the 2009 and 2010 financial years.

The GoG had agreed to pay to CP all its claims of 94 million Euros, following arbitration proceedings the latter commenced against it at the Commercial Arbitration Court in London.

In 2009, the GoG paid an amount of 14 million Euros of the debt and reached an agreement with CP to spread the remaining 80 million Euros over a two and half year period starting from March 31, 2010 and ending on June 30, 2012 with interest at 7% (5.6m Euros) per annum in full and final settlement of GoG indebtedness.

But the A-G fears that the non disclosure of GoG liability of 80 million Euros could result in delays in honouring such payments which comes with additional interest charge at 7% per annum.

'I noted during my review that this debt was omitted from the accounts. My review of records obtained from the Aids and Management Unit (ADMU) of MoFEP also did not disclose the liability of 80, 000, 000 Euros.

'The risk of improper records keeping on this liability could result in delays in honouring GoG's obligation on the debt when they fall due. Any delay in payment per the agreement shall result in additional interest at the rate of 7% per annum,' the A-G intoned in his report to the PAC.

To mitigate this risk, the A-G recommended in his report that the Controller and Accountant General (CAG) and ADMU of MoFEP should update their records to take account of all GoG liabilities.

Responding to the report of the A-G, the PAC expressed its disappointment in the CAG for failing to take records of such liability hovering around the neck of the GoG.

The PAC, therefore, ordered the CAG to furnish it with all documents surrounding the award of the said contract between the GoG and CP together with copies of the Commercial Arbitration for study and advice latest by Tuesday, February 7, 2012.

'Let us have access to the records and documents which you used to satisfy yourself that an amount of 94 million euros was a valid liability which had to be deepened in the accounts of Ghana,' Mr. Kan-Dapaah demanded.

Already, there is a huge public outcry over judgment debts awarded against the country, following the controversial payment of GH¢51million to the financier of the ruling National Democratic Congress (NDC), Alfred Agbesi Woyome, for apparently no work done.

It is, therefore, not clear, how the public would receive this gargantuan debt awarded against the country for failing to honour its obligation in a deal with CP.