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31.03.2004 General News

CHRAJ Orders MPs To Pay Outstanding Loans

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The Commission on Human Rights and Administrative Justice (CHRAJ) has directed that MPs of the First Parliament of the Fourth Republic pay back into the Consolidated Fund the total outstanding car loans granted them in 1993/94 that were illegally paid off by Parliament/Government in 1995.

The Commission has described the conduct of Parliament /Government in paying off the outstanding loans as improper, unusual, and inexplicable.

''The payment of the outstanding amount by the Parliament/Government is illegal and also constituted an abuse of office and misapplication of public funds,'' CHRAJ said in its decision on a complaint lodged by Professor Stephen Kwaku Asare of the Fisher School of Accounting, University of Florida Gainsville.

The complaint was against the mode of acquiring loans by MPs.

In 1995, Parliament/Government paid ¢5,152,279,489.20 to the Ghana Commercial Bank (GCB) and SSB Bank on behalf of 183 members of parliament for the loans they contracted for the purchase of their cars.

The report said Parliament had failed to provide any explanation for this conduct and should repay the amount to the Consolidated Fund with interest at the prevailing bank rate from 1995 to date.

The MPs of the First Parliament who are in the present Parliament and who were also served with the complaint and the commission’s interim report are equally jointly liable to pay their outstanding loans together with interest.

''The MPs also cannot be absolved from liability because they knew or ought to have known that the payment was wrongful,'' the report, signed by the chairman of the CHRAJ, Mr. Francis Emile Short, said.

The Office of Parliament/Government on January 20 1995 and February 6,1995 paid the GCB ¢234,919,129.20 per Cheque Nos. 591387 and 591393 being car loan repayment on behalf of 111 Members of Parliament. The loans ranged between ¢5 million and ¢5.5 million and as at that time the MPs had paid between ¢2,000,000 and ¢3,000,000 to the banks.

It also emerged that in 1995, the Government requested for the aggregate indebtedness of the MPs as at May 1995, from the SSB and when this was provided, the Government on August 11,1995 again issued two cheques totaling ¢280,360,369 to pay off the total debt as at May 31,1995 on behalf of 72 other MPs who also accessed their car loans from the SSB.

CHRAJ said while the loans granted the MPs during the 1st and 2nd Parliaments were not wholly gifts disguised as loans, as alleged by Prof Asare, the complainant, as far as MPs did not pay fully for the cars, the transaction amounted to a partial gift and fraught with a number of irregularities.

The commission did not also take kindly to the conduct of the Ministry of Finance to pay on behalf of the MPs 27.5% of the prevailing 29% interest on the loans, which were granted by the banks, and not by the government, to the MPs.

The loans, according to CHRAJ, were personal loans of the MPs and added that public servants who obtained loans from the banks were required to pay the full prevailing interest.

Where a loan was taken directly from the bank by MPs, they should pay the prevailing interest rate like all other public servants.

''MPs, as public servants, must be subject to the same rules with regard to the granting of car loans by the banking institutions, as other public servants,'' stated CHRAJ.

In 1993/94, the MPs obtained loans from the GCB, SSB, Barclays and National Investment Banks to purchase cars.

While the prevailing interest rate at the time was 32%, the GCB placed an interest rate of 2% on the MPs’ loans.

Also the interest rate that the SSB charged on the loans was 29.5% but the agreement implemented between the SSB and the MPs indicated that the MPs were to pay only 2% of the 29.5% directly, whilst the Ministry of Finance was to pay 27.5% for the MPs.

The loans were to be repaid through monthly deductions from the salaries of the MPs and any unpaid balances to be offset from their ex-gratia entitlements.

The GCB made monthly deductions ranging from Ë131,578.94 to Ë239,130.43 up to December 1994.

The highest deduction made was not more than Ë2,500,000 but under mysterious circumstance in May 1995 while the MPs had one more year ahead for the deduction Parliament/Government paid the outstanding loans.