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BoG Grants $75-million Loan To GCB Without Contract
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A $75-million loan granted by the Bank of Ghana (BoG) to the Ghana Commercial Bank (GCB) in 2009 without any valid contractual agreement became the topic for discussion at last Friday’s sitting of the Public Accounts Committee (PAC) of Parliament.

The BoG granted the cedi equivalent of $25 million and $50 million bridging facility to the GCB under a memorandum of understanding (MoU) on February 19, 2009. Although the agreement expired six weeks from February 1, 2009, an outstanding balance of the cedi equivalent of $50 million remained unsettled as of December 31, 2010.

According to the Auditor-General’s Report on public boards, corporations and other statutory institutions for the year ended December 31, 2010, there was no new agreement or addendum established with the GCB to extend the terms and conditions contained in the MoU, which expired on March 31, 2010.

“The absence of a valid loan agreement and contracts to govern the facilities could impede the efficient and effective management of the loan portfolio,” it stated. It added that as the tenure of some of the facilities had not been clearly agreed with the GCB, the recovery of the loans might not occur in a timely manner and might extend unduly, while the BoG was also losing interest on the facility.

Although the Chief Internal Auditor of the BoG, Mr Felix Adu, explained that the bank was in a discussion with the GCB to agree on terms for a new payback, that explanation did not go down well with members of the PAC.

Another issue that came up for discussion was the net debit on the special accounts maintained at the BoG by the Controller and Accountant-General’s Department (CAGD), contrary to the Loan and Fiscal Agency Agreement.

The CAGD maintains receiving accounts and HIPC funds and withdrawal accounts for development projects and as of December 31, 2010 the net position of the two accounts showed an overdrawn amount of GH˘83 million.

That, according to the Auditor-General’s report, indicated that the bank had advanced funds to the government under terms that appeared contradictory to the provisions of the Loan and Fiscal Agency Agreement.

The Auditor-General recommended that where it became necessary for a temporary advance to be granted to the government, the required procedure should be duly adhered to.


When officials of the Ghana Cocoa Board (COCOBOD) and its subsidiary, the Cocoa Marketing Company (CMC), appeared before the committee, the main issue that attracted the attention of the MPs was the GH˘17,750,256 expenses incurred on the CMC by COCOBOD.

According to the Auditor-General’s report, that amount entered in the books of the CMC could not be substantiated, while there was no confirmation from COCOBOD. “The correctness of the amount could be in doubt. We, therefore, recommend that the amount involved should be substantiated with the relevant documents,” it said.

Another issue was the pre-payment of GH˘3,307,716, which was not substantiated, in addition to the fact that not all title deeds and leasehold agreements entered into in respect of immovable properties were available.

“The absence of such documents will not give support to the CMC’s claim to ownership of such properties and might lead to loss in the event of any dispute,” the report stated.

Although the Director of Finance of COCOBOD, Mr William Mensah, and the Chief Executive Officer of the CMC, Nana Oduro Owusu, explained that measures were being taken to get the proper documentation to such properties, members of the committee were not happy that it had not been done over the years. Another issue that generated a lot of heat was the number of persons on the board of the CMC.

Although the regulations filed by the special resolution in April 2009 indicated that the members of the board should not be less than two or more than five, the report indicated that the current board had eight members. The Chairman of the PAC, Mr Kwaku Agyeman-Manu, directed the CMC to do the right thing by amending the company’s regulations to cater for the increase in the number of board members.

He added that the committee would decide whether officials of the CMC should be surcharged with the allowances paid to the extra three members on the company’s board, in contravention of its own regulations.

Securities and Exchange Commission

The Director-General of the Securities and Exchange Commission (SEC), Mr Adu Anane Antwi, and the Head of Finance and Capital of the commission, Mr Frederick Sappor, represented the commission during the hearing. The SEC recorded an operational surplus of GH˘213,213 in 2011, as against GH˘166,974 in 2010.

The committee, however, questioned the commission about outstanding loans amounting to GH˘382,746 granted to its staff. Mr Antwi said the SEC had taken stringent measures to ensure that members of staff did not slack in the repayment of their loans by demanding post-dated cheques for at least 12 months before loans were given out.

The Minister of Finance, Mr Seth Terkper, and one of his deputies, Mr Kweku Ricketts-Hagan, were present at the sitting to support institutions under the ministry.
Source: Graphic Business

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