... Amid charges of stealing, fraud & causing financial loss A sub-committee of the Serious Fraud Office (SFO) is carrying out further investigations into allegations of financial malfeasance against five top executives in connection with the divestiture of the State Transport Company (STC).
This was confirmed to The Chronicle by the Executive Secretary of the Divestiture Implementation Committee (DIC), Mr. E.A. Wiredu, in reaction to an SFO report on the allegations, which had come out with charges of stealing, conspiracy to defraud and causing financial loss of about ¢ 90 billion, against the five officials.
They are the Chief Executive of Vanef Consortium Limited (VCL), Mr. James Owusu Bonsu; the former Director General of the Social Security and National Insurance Trust (SSNIT), Mr. Charles Asare; the Chief Executive of Messrs Kwame Asante and Associates, Mr. Kwame Asante; the Chief Executive of David Dorte Ltd (DDL), Mr. David Dorte and the Former Executive Secretary of the Divestiture Implementation Committee, Mr. Emmanuel Agbodo.
The report had recommended that a legal practitioner of Awoonor and Associates, Mr. Maxwell Logan be reported to the General Legal Council for alleged collusion and conflict of interest, meant to force the hands of VCL to pay $76,000 to a consultancy firm, Mitan Capital Corporation in USA.
Mr. Logan was reported to have gone to the VCL board, claiming man-hours for work done to the tune of $182,000.
The report advised that since the divestiture of STC was not successful, Mr. Asante could not demand and if he did, should not be paid the $600,000 as success fee.
The Chronicle gathered that the report that covered the period between 1996 and 2003, looked into the following companies : DIC, SSNIT, Societe Generale Social Security Bank (GS-SSB), VCL, Vanef Limited, Vanef STC Limited, DDL and STC.
The rest were MAA, Magna Consulting, Awoonor Law Consulting, Data Bank LTD, Intercity STC Coaches LTD, Mitan Capital Corporation, and Greyhound Lines INC in USA.
It emerged that SSNIT/ Ministry of Finance (MOF) used “debt swap” method to pay STC a total of about ¢54 billion.
The idea, which was for SSNIT to use outstanding contributions by state-owned enterprises under divestiture to be converted into equity, seemed at first sight to be sound and regular, but SSNIT/MOF, doing such an arrangement without involving the Controller and Accountant General and the Auditor General, was open to abuse, the report opined. CASE OF MISAPPLICATION The report disclosed that SSNIT guaranteed a loan of about ¢19 billion from GS-SSB in 2000, and the first amount released to VCL, was for down payment to DIC for the purchase of STC through the consortium in which SSNIT was 97% shareholder.
It noted that, instead of using the said amount as down payment as agreed between him and SSNIT, Mr. Bonsu allegedly paid only ¢11.2 billion on March 7, 2000, and on the 1st June 2000, made another payment of ¢4.5 billion.
The report said from the records, between November 2000 and March 2002, the management, under Mr. Bonsu, had paid about ¢20 billion of the loan and between April 2002 and August 2003, the new management of Mr. G. K. Owusu had also paid ¢7.3billion, mostly of interest. The outstanding loan as at 31st August 2003, stood at about ¢14billion, all from the income generated from the service of Vanef/STC.
The report said the government, as shareholder on one part, and VCL on the other, were servicing the loan, including the part allegedly diverted for private purposes by Mr. Bonsu and Mr. Dorte.
It said but for the possible fraud and connivance, what SSNIT, under Mr. Asare, should have done, if it was diligently protecting its investment and pension funds, was to have asked SG-SSB to transfer the monies directly to DIC. FIRST COUNT OF STEALING The report said despite the long list, accounting for what Mr. Bonsu said he used those monies for, he was unable to account for ¢413million which he said was used in paying bribes.
It would be the case for the prosecution, the report indicated, that those amounts were stolen unless he was able to identify those he said he paid the bribe to.
SECOND COUNT OF STEALING
The report revealed that without approval of the board, Mr. Bonsu allegedly sold 17 trucks of the Bulk Haulage Division of STC estimated at about ¢8.5 billion.
It noted that when the sale came to the notice of the board, he was apprehended and asked to account for the use of the monies obtained from the sales but he could not.
MAKING FALSE REPRESENTATIONS In a correspondence to DIC and outsourcing consultants on July 29, 1999 on the shareholding structure of VCL, Mr. Bonsu stated that the current shareholding of VCL was as follows: Vanef Ltd 40%, SSNIT 40%, Greyhound 10% and David Dorte 10%.
When questioned, Mr. Bonsu was quoted by the report as saying in his statement that it was a mere proposal.
The report noted that at the time he wrote that letter, neither SSNIT nor Greyhound had any such shares in the company, adding that the false representations were made to mislead officials evaluating the bid and create the impression that reputable companies like SSNIT and Greyhound were involved.
According to the report, Mr. Dorte in his statement said the category of payments was all made solely for the purpose of the acquisition and not for other purposes.
Secondly, the payments were made after the full sum due DIC had been settled or set aside and they were made purely from the exchange rate savings.
However, the report uncovered that his statement was untrue since the full sum due to DIC was never paid, not even the initial deposit of $2.4 million, which should have been paid on 16th December, 1999.
CONSPIRACY TO DEFRAUD AND / OR CAUSING FINANCIAL LOSS
The report said an outsourcing contract dated December 5, was signed between KAA and Magna Consulting on one part and DIC on the other.
The consultants were to perform the services with all due diligence, efficiency and economy in accordance with generally accepted professional techniques and practices.
Contrary to what was expected of them, Mr. Kwame Asante's leading role in turning the passenger service division of the STC to Vanef STC Ltd, using the Vanef prefix, as VCL was announced as the bid winner, was quite revealing.
According to the report, Mr. Asante, knowing from the track record of VCL that it could not pay for STC when they won the first bid in 1998, “was reckless, to say the least, if not conspiratorial.”
The report said even though the divestiture of STC had been given as outsourcing contract to KAA, Magna, Mr. Agbodo could have forestalled the malfeasance surrounding the STC divestiture if he had not been part of that conspiracy.
Mr. Agbodo and Mr. Asante shared responsibility for the formation of Vanef/STC, to which Vanef was prefixed and for not advertising the second round bidding.
The report disclosed that the whole plan was to hand over the company to VCL without the investor putting in even a pesewa.
“It was just manipulation of paperwork which SSNIT guaranteed and so, called for debt swaps which, on paper, was made to appear that an investor had purchased STC when in fact, that was not the case and the state got nothing out of the transaction,” the report said.
It said, having got the purchase through, Mr. Asare then moved in as the Chairman of VCL board, and with the board loaded with SSNIT employees nominated by him, set out with Mr. Bonsu to approve all kinds of expenditures, calling them pre-incorporation expenses, which stood at almost $3million.
The report said Mr. Asare, Mr. Agbodo, Mr. Asante, Mr. Dorte and Mr. Bonsu had all argued in their various statements that the debts owed by some state-owned enterprises on divestiture to SSNIT had been written in SSNIT books as bad debts and, therefore, debts being swapped for equity were means of recovering the bad debts.
The report maintained that the argument that bad debts were being swapped were untenable, saying if STC had been properly valued and sold to an investor even at the $14million, government would have been in funds to pay SSNIT their outstanding contributions on STC.
Secondly, it would have taken further pension obligations away from government agencies such as SSNIT/VCL and thirdly, not all debts swapped were unpaid workers contributions.
The report noted that some were payments done by SSNIT for government agencies and other services that had nothing to do with workers' contributions.
The report said since the fact not to advertise was a ploy to minimize the competitiveness of the second bidding and pave way again for VCL, Mr. Kwame would have to explain who took the decision not to re-advertise the second round and that his failure to disclose put the onus on him as the consultant.