MPs can't pay back $20,000 car loan -Part II

The Commission on Human Rights and Administrative Justice (CHRAJ) says by December 2004, when parliament would be dissolved MPs who accessed the $20,000 car loans would have an outstanding balance of ¢92 million to pay to government.

The government, through the Ministry of Finance, on 4 September 2001 approved an all inclusive credit facility amounting to $20,000 (about ¢140m at the exchange rate of ¢7,000 to $1) to each MP to purchase a car for official duties. CHRAJ findings, which were based on a petition by Prof Stephen Kwaku Asare of Fisher School of Accounting, University of Florida, Gainesville, stated that almost all MPs of the Third Parliament availed themselves of the loan facility.

Prof Asare had challenged the mode of granting car loans to the MPs by the state from 1993 to 2001. In his complaint to CHRAJ on October 2001, the petitioner described the loans as bi-partisan raid of the consolidated fund and gifts in disguise.

An amount of ¢1.2m per month was being deducted with effect from September 2001 from the salary of each MP towards the repayment of the loan. CHRAJ noted that MPs have 40 months, from September 2001 to December 2004, to pay for the loans from the monthly deductions and from end of term entitlements.

Total expected deductions from the salary of each MP for the 40 months would amount to ¢48m and the expected end of term entitlements are expected to amount to ¢38,002,345.28 based on the Greenstreet Report and provided the salaries of the MPs are not increased substantially before the end of December 2004, when that Parliament would stand dissolved.

Currently MPs are on a monthly salary of ¢5.2m. On the question of how the balance of the loan would be paid, Parliament told CHRAJ that, “unpaid balance is to be settled from other entitlements of MPs at the end of parliamentary term of four years”.

But should the salaries remain the same by 2004, when parliament would be dissolved each MP would be entitled to an ex- gratia award of ¢62,594,373.80 going by the Greenstreet Report of (4 years x 3x ¢5,216,278.15). Clearly this amount would not be able to fully repay the outstanding balance of ¢92,000,000.

“There will still be a balance of ¢29,406,627.80 to be paid by each MP. Indeed, it will require raising the salary of the MPs significantly to be able to recoup the loan fully from their end of term entitlements as envisaged,” declared CHRAJ.

“Based on these figures, they (MPs) would not be able to pay off the loans by the end of the present Parliament,” CHRAJ's findings indicated. CHRAJ has therefore stated that the present policy of granting loans to Members of Parliament to buy cars every time a new Parliament was inaugurated was not in the national interest.

“It constitutes an injudicious use of state resources; it is not sustainable, given the state of the economy”, said the report signed by M. Francis Emile Short, CHRAJ chairman. CHRAJ observed that the granting of loans to MPs for the purchase of cars should be based on need at the time the loan was granted and not on the mere fact of the inauguration of a new Parliament.

In its findings dated 19 March 2004, CHRAJ held that due to the policy of granting MPs car loans at the end of every four years, an MP who manages to hold on to his or her seat will receive a loan to buy a car each time a new Parliament convened whether he or she had finished paying for previous loans or not.

“Based on these figures, they (MPs) would not be able to pay off the loans by the end of the present Parliament,” stated CHRAJ.

CHRAJ observed that there was no doubt that MPs needed cars for their official duties but it was not part of the conditions of service of MPs that government should provide cars for them, as was the case with top state functionaries, such as Ministers, heads of constitutional bodies etc., who were provided with cars as part of their conditions of service.

“If the present salary levels of MPs make it difficult for them to buy cars for their official duties by taking loans, even at the current government interest rate of 2%, a more transparent and equitable loan policy should be developed,” CHRAJ advocated. CHRAJ said going by the new figures submitted by Parliament (Respondent), the MPs had fully paid for the loans.

“However, the allegation by the Respondent that the loan amount was ¢29,000,000 is not consistent with the amount of ¢29,020,00 that appears from the document entitled “Computation of Difference in the Payment of ex-gratia for members of the 2nd Parliament”.

CHRAJ also revealed that the MPs were not required to pay any interest on the loans granted to them to purchase cars in 1996. The Commission therefore directed that parliament should pay back to the consolidated fund the total outstanding loans granted the MPs of the first parliament in 1993/94, which was illegally paid off to the various banks in 1995.

The amount should attract interest at the prevailing bank rate from 1995 to date. Also MPs of the First Parliament who are in the present Parliament and were served with the complaint and the Commission's interim report are equally jointly liable to pay their outstanding loans, which were paid off by Parliament together with interest.

In arriving at its conclusion CHRAJ requested those persons and institutions served with the interim report to submit their comments on the report to enable it complete its investigations into the complaint. According to CHRAJ apart from Agyare Koi Larbi, who informed the commission that he did not benefit from the car loans in 1997-2000 (which comments were taken into consideration), no comments were received from any other MP or institution.