Accra, April 6, Palaver -- The Social Security and National Insurance Trust (SSNIT) has confirmed Ghana Palaver's worst fears that the Government of Ghana (GOG) is gradually “capitalising” the GIA-USA PLB, the so-called American partners in the Ghana International Airlines (GIA) out of what is turning out to be a very risky venture and assuming all the risks of an Airline that seems bound to fail.
It seems only a matter of time that GIA will become 100% GOG-owned, “back-to-bataan”, a la Ghana Airways.
In a response to written questionnaire administered to it by Ghana Palaver and signed by its Head of Public Affairs, Mr. K. Osei Bimpong, SSNIT has confirmed that in December 2004, the Trust approved on commercial terms a loan amount of the cedi equivalent of US$5 million in favour of the GOG to enable the Government pay for its equity share in GIA. At that time, the share structure of GIA was 70% (GOG) : 30% (GIA-USA PLB).
In September 2005, the SSNIT Board approved a further loan of the cedi equivalent of US$15 million for the GOG. According to SSNIT, US$4 million of that amount has been disbursed, and it was for the acquisition of additional equity (shares) in GIA
This means that the Minister of Presidential Affairs and Chief of Staff lied to Parliament when he told the Finance Committee in March 2006 that only $5 million had been secured and certified from SSNIT loan.
Therefore, unless GIA-USA PLB matched this additional share acquisition by the GOG, and the Parliamentary Committee Report does not say the American partners have, then the shareholding of GIA-USA PLB in GIA has been diluted by that amount.
Mathematically, it works out like this:
Original Shareholding Structure:
GOG: US$4,900,000.00 or 70%
GIA-USA PLB: US$2,100,000.00 or 30%
Add GOG Additional Acquisition:
GOG: US$4,900,000.00 + US$4,000,000.00 = US$8,900,000.00 or 80.9%
GIA-USA PLB: US$2,100,000.00 or 19.1%
What we expect to see therefore is that in the records of the Registrar General, the shareholding structure of GIA has been amended to reflect this new reality. Did the Parliamentary Committee satisfy itself that this has been done?
The SSNIT letter does not state what the approved but undisbursed US$11,000,000.00 (US$15,000,000.00 – US$4,000,000.00) represents – whether it is also for additional equity acquisition or it is a loan.
On the assumption that it is additional equity (as the SSNIT letter actually implies), and GIA-USA PLB has not matched it with further share acquisitions, then the shareholding structure changes even further as follows:
Add GOG US$11 million Share Acquisition
GOG: US$8,900,000.00 + US$11,000,000.00 = US$19,900,000.00 or 90.4%
GIA-USA PLB: US$2,100,000.00 = US$2,100,000.00 or 9.55% Is it a Loan? On the other hand, if the undisbursed US$11,000,000.00 is a loan from the GOG to GIA, then the GOG becomes a debenture holder in GIA. In that case, GOG must be holding a debenture certificate issued by GIA spelling out the terms and conditions of the loan. It also raises the question whether the GOG is a secured or an unsecured debenture holder.
If the GOG is a secured debenture holder, then the further question is: With what assets of the GIA is the loan secured since GIA does not appear to have any assets, according to the Parliamentary Committee Report – no aircraft, no buildings, no routes, possibly even no vehicles.
For our readers, and especially for the Ghanaian taxpayer, the important point about all these inquiries is that if the GIA does not become sustainable, and it collapses, GOG will have to pay SSNIT the US$20 million loan plus interest. But since the GIA does not have any assets, there will not be any properties of the GIA for the GOG to sell to recover the US$20 million from the GIA.
The US$20 million will become a total financial loss to the Ghanaian taxpayer. Who then would have caused this monumental financial loss to the State? That is why the SSNIT has been quick to distance itself from any possible liabilities of the GIA. In its letter to the Ghana Palaver, the SSNIT states as follows:
“As you can see, SSNIT dealt directly with the Government of Ghana and therefore the Trust is not in a position to address issues directly related to GIA”.
In other words, if anything happens, as for us, we will get our money from the Government of Ghana. What happens between the Government of Ghana and the GIA is not our business.
So our question is: What convinced the Parliamentary Committee to approve by consensus the loan? Answers to the following questions will help:
· Did the Committee see the so-called Business Plan of the GIA to convince themselves that indeed the enterprise is viable?
· Did the Committee see or ask for any on-lending agreement between the GOG and the GIA to satisfy itself as to the terms and conditions under which the GOG was lending the money to the GIA?
· Did the Committee see any debenture certificate issued by GIA in favour of the GOG acknowledging the debt of US$11,000,000.00?
· If the additional US$11,000,000.00 is not a loan but is for the acquisition of additional equity shares, did the Committee assure itself that GIA-USA PLB will be matching this injection of capital on a pro rata basis?
· If the answer to the immediately preceding question is in the negative, then is the Committee satisfied that all that GIA-USA PLB is bringing into the company is US2,100,000.00 or 9.55% and is that why we went to all this trouble of liquidating a fine national asset like Ghana Airways?