ModernGhanalogo

FEATURED: How Human Procreation By Sexual Means Came As Punishment For Sin (part...

body-container-line-1
08.05.2020 Football News

Top Officials Challenge GFA’s Insolvency Slaim

By Graphic.com.gh
Top Officials Challenge GFA’s Insolvency Slaim
LISTEN MAY 8, 2020

Some top football officials have described the recent insolvency claim made by the current Ghana Football Association (GFA) Executive Council (ExCo) as a one-sided financial monologue that is contrary to the financial statement presented to congress last December.

At a consultative Zoom Cloud meeting with clubs last week, the GFA Executive Council (ExCo) stated that it was saddled with a huge burden of legacy debts, for which reason it could not disburse the $500,000 FIFA Forward money to them as expected.

  • One-sided claim

However, the visibly disappointed officials who pleaded anonymity, challenged the GFA’s assertion, stating that the financial records available depict quite a different picture and exposes the diabolic intentions behind the Executive Council’s position.

“Apart from the dark cloud of doubt hanging over the credibility of most of the so-called ‘legacy debts’ of the GFA, the audited financial statements of the GFA over the years (at least from 2006-2019) do not lend the much needed helping hand to the claims of the GFA.

“The claim by the GFA is merely a one-sided financial monologue. Assuming without admitting that the association is swimming in a pool of debt, it’s true that the GFA failed or refused to add that upon assumption of office, it inherited a windfall of revenues, including but not limited to a whopping US$1m paid by Glo,” they emphasised.

“These revenues were applied to the payment of non-essential expenditures such as the needless renovation of the GFA office premises, the payment of high salaries to new recruits, allowances of Executives, all without the requisite approval of a budget by congress, among others.

  • Poor financial management

“A prudent disbursement of the monies received by the current administration would have left the GFA in a better financial state of health.”

According to the sources, a thorough review of the GFA financial statements submitted to congress in December 2019 is in contradiction to the claim that the GFA is illiquid.

“Current assets of the GFA, that are funds set aside to meet short-term external obligations, was projected at GHc15.8 million. The current liabilities of the GFA was estimated at GHc4.1 million, which by implication gives a net current assets of GHc11.77 million.

“This indicates a strong liquidity position of the current assets covering up an external indebtedness by 3.8 times. The claim that the post-balance sheet events of the GFA occurred immediately after June 2019 is not true as most of the indebtedness being made on the GFA were in existence as far back 2001/2002,’ they added.

Below is the full statement

  • SETTING THE FINANCIAL RECORDS STRAIGHT ON GFA’S ALLEGED “LEGACY DEBTS”

Good corporate governance practices demand that the GFA demonstrates transparency, credibility, accountability and responsibility in dealings with its members.

The recent Boardroom and media wranglings over the purpose and usage of the US$500,000 FIFA Covid-19 relief grant to the GFA was self-created because the GFA misrepresented to its Members that it was “broke”, a picture that stands in contradiction to the financial statements approved by Congress in December 2019.

The GFA that was financially sound as per the statement of accounts of 2019 is now illiquid and inundated with unsurmountable debts that are unprecedented in the annals of GFA history. Anecdotal evidence clearly points to the contrary. We must be guided by the wise counsel of the FIFA President Gianni Infantino on transparency when he said: “You will never be alone… (and) the world will know where the money

goes and, equally important, why the money goes there.”

FIFA adopted a three-prong approach to providing financial relief to its 211 Member Associations (MA). First, FIFA voted US$500,000 as COVID-19 relief for each MA. This was in addition to the FIFA FOREWARD for 2019 and 2020 of US$1,000,000 per annum irrespective that the MA was unable to fulfil the stringent conditions for accessing FIFA Foreward for 2019.

The FIFA Foreward is meant for “Operating Costs” that is basically any recurrent expenditure with a lifespan of a year and solely meant for the core business activities of an MA. With the GFA offices closed down, how could they be incurring operating cost in this regard. Staff Cost that relates to operating cost are those in positions that are football-related.

Seminars, workshops and capacity building costs for coaches, referees, football management qualify for operating costs. Once again, FIFA President Giani Infantino said “But our reserves are not Fifa’s money. It is football’s money. So when football is in need, we must think what we can do to help… It is our responsibility and our duty.” A word to the wise is enough.

  • IS THE GFA TRULY “BROKE”?

There appears to be underhand dealings to conceal and suppress information through Executive distortions contrary to what Gianni Infantino said; “If football manages to have a discussion where everyone contributes positively and keeps in mind the global interest over the individual one, I am convinced our future can be better than our past, and we will be better prepared for the times ahead,”. The financial records depict quite a different picture and expose the diabolic intentions behind the executive council position.

Apart from the dark cloud of doubt hanging over the credibility of most of the so-called ‘legacy debts’ of the GFA, the audited financial statements of the GFA over the years ( at least from 2006-2019) do not lend the much needed helping hand to the claims of the GFA.

The claim by the GFA is merely a one-sided financial monologue. Assuming without admitting that the Association is swimming in a pool of debt, it’s true that the GFA failed or refused to add that, upon assumption of office, it inherited a windfall of revenues including but not limited to a whopping one million US dollars (US$1m) paid by Glo.

These revenues were applied to the payment of non-essential expenditures such as the needless renovation of the GFA office premises, the payment of high salaries to new recruits, allowances of Executives, all without the requisite approval of a budget by congress, among others.

A prudent disbursement of the monies received by the current administration would have left the GFA in a better financial state of health.

Some of the ‘legacy debts’ are of doubtful accounting basis as they have not been recorded as liabilities or contingent liabilities on the balance sheet of the Association. Is it not strange that the balance sheet of the GFA shows that it’s financially sound yet the situation painted by Management is a different story?

  • Financial Figures Do Not Support the claims of the GFA

A thorough review of the GFA financial statements submitted to Congress in December 2019 runs in contradiction to the claim that the GFA is illiquid or “broke”. Current assets of the GFA that are funds set aside to meet short term external obligations was projected at GHS15.8 million.

The current liabilities of the GFA was estimated at GHS4.1 million which by implications gives net current assets of GHS11.77 million. This indicates a strong liquidity position of the current assets covering up an external indebtedness by 3.8 times.

Its instructive that there was no liability other than accounts payable of GHS 4.1 million in the accounting records of the GFA either as a balance sheet item or off-balance sheet item in the footnotes as contingent liabilities making it managerially irresponsible for anyone to bring in peripheral debts when the accounting records have not captured that.

The claim that the post-balance sheet events of the GFA occurred immediately after June 2019 is not true as most of the indebtedness being made on the GFA were in existence as far back 2001/2002.

If the GFA is truly “broke” as being claimed by the Executives, then the liquidation processes must be filed at the Registrar General’s Department as per the Companies/Official Liquidation Acts of Ghana for the needful to be done.

  • What could have motivated the claims of insolvency?

The debt claims has been linked to recent demands by members of congress for the covid-19 relief package from FIFA to be applied judiciously for the Members of Congress to be made “happy” as envisaged by FIFA which delved deep into its reserves for such funds to be disbursed with the utmost intentions of making the “Football Community HAPPY”.

The GFA Executives for political expediency are thwarting the efforts of FIFA to achieve this global objective. It is preposterous for the GFA Executives to insinuate that FIFA forward 1 and 2, as well as covid-19 relief package, are to finance operational costs that spans through a year.

The issue here is that FIFA has institutionalized the cover-19 Fund to run concurrently with FIFA forward to address the myriad of expenditures that the FIFA foreward cannot cover to make the “football Community in Ghana HAPPY” It therefore behoves the current Executives to uphold this in high esteem.

The absurdity here is that GFA executives, by FIFA guidelines, are barred from utilizing both FIFA Foreward and the covid-19 relief to settle debts owed by the GFA as such expired expenditures are regarded as “sunk cost” and do not qualify to be classified as operating costs. The bulk of these debt claims emanate from capital acquisitions that date back to the year 2001.

These are capital expenditures and can never be classified as operating costs by Generally Accepted Accounting Practices (GAAP). An executive fiat to use these funds for settling existing debts would be tantamount to a “Misapplication and Misappropriation of funds” with dire consequences.

The GFA Congress should resist any attempt to use covid-19 funds for an illegitimate purpose. Members of Congress as owners of “Corporate GFA” deserve a better package from the GFA Executives than allow their rights to be curtailed with a denial of access to funds earmarked to cushion members at this critical moment of covid-19.

There is a school of thought that holds the view that the current executives are making excuses to cover up the “incompetence” being exhibited on the face of certain manifesto promises made during the electioneering campaign.

They must brave themselves up to resolve issues confronting the GFA through the use of pragmatic policies rather than resorting to the lazyman’s approach of shifting the blame unto pedestrians or predecessors who are no longer active in the scheme of things at the GFA. They have been voted to continue to develop the GFA from where the old executives left off as it is with all corporate bodies with perpetual succession.

Finally, you cannot rule out the motive of tainting potential and future Executive Committee Membership hopefuls with such debt claims for the current executives to have a political advantage over their potential rivals.

The current executives must know that managerial competencies can never be subordinated and sacrificed under the alter of political expediency.

  • DOES THE GFA TRULY HAVE “LEGACY DEBTS”?

It is noteworthy that “legacy debts” in the social security system connotes "the difference between what the current and past cohorts of beneficiaries paid into the system and the benefits they were paid”.

This is a confirmation that some members of the current GFA administration are self-centred individuals who do not have football at heart and would coin terminologies to support their jaundiced stance on issues.

There is nothing like ‘legacy debts’ in financial accounting reporting. We would enumerate each segment of the so-called “legacy debt” and deal with them diligently.

1. Westhead vrs GFA. This is a case before the High Court Accra. Westhead is claiming the payment of agency commission from the GFA for allegedly sourcing sponsorship from the GNPC.

The case was last adjourned by the High Court to 16th June 2020 for the continuation of hearing. It means the court is yet to complete a hearing of the case and fix a date for judgement. Why would the GFA determine its liability ahead of the High Court and purport to make provision for the court judgement against the money paid by FIFA.?

This is an unjustified provision that offends the law and sporting integrity of the sport of football. Is FIFA aware that the GFA proposes to apply a part of its funds to defray a contingent liability which is yet to crystallize?.

Since a decision one way or the other is yet to be delivered by the High court, our view is that there’s no debt arising or emanating from this case as at now.

  • 2. Startimes/MTN indebtedness to GFA

The GFA's contracts with Startimes and MTN were frustrated by force majeure when the Anas Expose occurred. Following that, the then Normalisation Committee contracted GBC to cover matches under its “special competition”.

In the circumstances, Startimes and MTN couldn’t be faulted for a non-payment of the sponsorship fees. Why would the GFA make provision for payments under the frustrated contracts as debts against the fifa grant.?

We thought as lawyer, the General Secretary would have explained the ramification of a frustrated contracted to the Executive Council. This appears to be a scheme to rob the clubs of monies legally due them by hook or crook means.

  • 3. GLO Money

The GFA through lawyer Sory sued Glo for the recovery of debts owed under its sponsorship contract. During the pendency of the case, the parties submitted the dispute to arbitration.

The same lawyer Sory was in charge. A settlement of US$1.5m was reached. Glo paid US$500,000 in 2018. The balance of US$1m was paid in November 2019.

The arbitrators fee of US$70,000 and the legal fees of Lawyer Sory are expected to be paid from the proceeds of arbitration. Why would the GFA make provision from the Fifa grant for cost of services which were self financing? It’s also puzzling that Lawyer Frank Davies’ name popped up as having ‘rendered services’ in connection with the same debt recovery case at the time lawyer Sory had not been disengaged as lawyer.

The alleged appointment of lawyer Davies raises serious compliance, auditing and professional legal issues. Can two different lawyers do the same work on the same case without the first lawyer knowing of the second lawyer?. The argument that lawyer Sory handled the arbitration with Lawyer Davies handling the main litigation is mute.

Lawyer Sory handled both the arbitration and main litigation. He filed the writ of summons and subsequent court processes leading to the arbitration and payment by Glo. Lawyer Davies could have been paid for no work done or just duplicating the same work that lawyer Sory did.

Was lawyer Davies appointed by the NC at a meeting duly constituted for that or he was just handed a letter of appointment by virtue of his friendship with Dr Amoah? Any claim that Lawyer Davies offered legal services at the time the Arbitration had been concluded, and at the time lawyer Sory had not been disengaged as lawyer is untenable.

All that was left was for the GFA acting through its General Secretary or Lawyer Sory to remind Glo to honor the Arbitration award or enforce it through the court processes.

This might have only been an arrangement to “create loot and share”. To many, this appears to be a daylight robbery of monies meant for the clubs. How can the GFA dissipate scarce resources on a duplicitous job and then turn and wail uncontrollably as being “broke”?

  • 4. Cost of two Toyota land cruiser vehicles

In 2017 the GFA ordered two Toyota Land Cruiser vehicles for the president and head coach of the Black stars. The total cost of the two vehicles was US$150,000. The GFA was expected to pay the duty and clearing charges connected with the vehicles.

US$100,000 was paid as deposit for the two vehicles out of the US$500,000 received from Glo. It was expected that the balance of the cost for the two vehicles would be paid from the Glo money. Why would the GFA clear the two Toyota Land Cruiser vehicles and make a provision from the Fifa grant for them.

Contrary to claims of the GFA no demurrage charges were paid for the two vehicles. The two vehicles are currently being used by the president and General Secretary. How did the cost of the two Toyota Land Cruiser vehicles metamorphose into a debt?. Is it a clever ploy to conceal GFA’s revenue made from the Glo windfall?

  • 5. Salary of coach of the Black Stars

Another provision that was made against the fifa grant was the alleged salary arrears of coach Kwasi Appiah. The salary of the coach of the Black stars has NEVER been paid by the GFA.

It’s either paid by the MOYS or a Sponsor. Currently, the MOYS has reached terms of settlement for the payment of the salary arrears of the former coach. How did the salary of the coach become a debt for the GFA? If this provision is made, it would only confirm that greed and avarice are still players in the financial management of the game.

  • 6. Divestiture Implementations Committee (DIC)

The GFA head office land & building was acquired from the DIC during the era of late Mr Ben Kuofie for the sum of two hundred million cedis (now GHS20,000). We are unaware that the total and full cost wasn’t paid.

This subject has never come up in the financial statements of the GFA from 2006 to date. Mr. George Amoako was chairman of the GFA Finance Committee from 2006-2011. Mr Randy Abbey was a Member of the Emergency Committee during the same period. President Okraku was a member of the Executive Committee from 2015-2018.

They should be asked whether they ever heard of this debt. Be that as it may, the DIC is now defunct. It’s assets and liabilities have been taken over by the State Interests and Governance Authority (SIGA).

We learnt upon the demand notice of SIGA, the GFA has requested a meeting to discuss the settlement of the debt. In the absence of that discussion which could lead to a reduction of the debt-based mainly on accrued interests, it’s premature for the GFA to make a provision of GHS450,000 for the head office premises.

The GFA must hasten slowly in making provisions before a full determination of its indebtedness to the SIGA.

  • 7. Referees & Match Commissioners Fees

The GFA accumulated debts for referees and match commissioners (match officials) during the years that Glo failed to pay its sponsorship fees together with the years when the GFA had no sponsors for its main leagues. The debts were defrayed from payments made by Glo.

In 2018, payments to match officials were made from the Glo payment. In 2019, why did the GFA not apply a part of the US$1m paid by Glo towards a redemption of the debt?. The GFA must come clear with what it used the Glo money for.

  • 8. Debt to TT USTAY

This debt was created in 2002 during the construction of the first goal project in Prampram. The GFA contested the debt and lost in court. The principal amount of GHS600,000 was paid by the last administration pending further negotiations on interest and penal charges. This was done without any publicity or fanfare. The current debt is accumulated interest on the principal sum.

The judgement debt crystallized in US dollars. International financial best practices required that interest payable would be based on libor plus 2-3 percentage premium. This was worked at a debt plus interest of US$415,785. With the principal debt of about US$200,000 already settled, the balance of US$215,785 should come to about GHS1,251,556.69.

The wide discrepancy in figures was caused by the wrongful application of the cedi interest rate of 27.5% to the dollar-denominated debt. The gargantuan rate of 27.5% to the US dollar is inapplicable anywhere in the world. As at June 2018, the GFA through lawyer Sory, Messrs Eyison and Addo was engaged in discussions with the judgement creditor and its lawyers to negotiate the settlement of the accumulated interest.

The current administration must continue to engage the company to reduce the debt as it’s excessive. Until the window for negotiations is shut the debt can be reviewed before the GFA runs to the media with its claims.

  • 9. Kenpong

Travel matters sponsored tickets for GFA officials. Kenpong was brought on board to handle tickets for national teams’assignments. The debt of GHS26,000 should be verified and paid if it’s accurate.

  • 10. Clearing charges

These are normal charges incurred for kits supplied by caf, Fifa & puma.

  • 11. Debt to Travel Matters for match Iceland v Ghana/Japan v Ghana

As per the practice at the GFA, financial proceeds from friendly matches financed the matches in question. The friendly matches against Iceland and Japan were no exceptions. The match fees was paid during the era of the Normalisation Committee. Why was Travel Matters not paid from proceeds of the match? This could be one of the many cases of misapplication of funds by the NC if the match fees were indeed received but utilised for expenses unrelated to the matches.

  • 12. Other debts including a TV set for GHS6000

The GFA Executives must acknowledge that debts are a part and parcel of the lives of organisations. Their predecessors inherited debts and paid. They would also leave debts after their tenure. The bad faith in raising issues of debt is demonstrated by the timing which coincided with the advent of the Fifa stimulus support for football. The clubs may only remember the current Executives for greed and selfishness.

  • 13. Title to land at Prampram

While discussing assets and liabilities of the GFA, it's imperative to set the records straight on a pedestrian claim that the former administration of the GFA was less diligent in perfecting title to the land in Prampram. The land was acquired in 2001 on a 99-year lease through the instrumentality of the former MP & former Minister for Youth &Sports Mr ET Mensah.

An internal dispute among different claimants of the same family led to the Court declaring the Moitso clan as the right owners of the land. The GFA which had obtained title from a different clan was requested to surrender its title to the land for a new lease. The process was slow and laborious.

At one time the former claimants sued the GFA at the High Court Tema for a declaration of title to the land. Officers of the GFA at the time namely Messrs Nyantakyi, Pappoe, Crentsil, Abbey, & Gyimah were cited for contempt for not complying with directives of the Court.

The GFA continued to engage the chiefs and new claimants of the Prampram land for title with its attendant cost to the Association.

From the above, it is clear most of the debt levels are unjustified projections and at worse a sinister plan to deny the clubs from gaining a chunk of the money from FIFA meant to help stimulate clubs as they are the most affected by the outbreak of the cover-19 pandemic.

Powered By Modern Ghana
body-container-line