Transaction Not Failure - SSNIT

The Social Security and National Insurance Trust (SSNIT) has denied that its transaction with the AU Development Consortium Limited (AUDCL) has been a failure, despite the consortium’s indebtedness of more than GH˘12 million and an additional $11.294 million as the value of the land used for the Ridge AU housing project. The Trust lent itself to further grilling when it failed to adequately explain to the Presidential Commission investigating the [email protected] Secretariat why it took the Land Valuation Board (LVB) more than two years to prepare a valuation report on the Ridge land, thereby stalling an earlier agreement by the government to purchase the land. The SSNIT, in April 2007, approved a GH˘10 million loan for the AUDCL to construct the houses to accommodate Heads of State who were to attend the AU Summit in that year. The General Manager of Investment at SSNIT, Mr Michael Addotey Addo, told the commission that the consortium had paid GH˘2 million of the loan to SSNIT, leaving its outstanding indebtedness, inclusive of interest, at GH˘12,029,695.44. Testifying before the commission on SSNIT’s transaction with both the AUDCL and the secretariat, the witness, when asked by the commission’s chairman whether the project had not been a failure, replied that the loan was a guarantee which SSNIT wished to recover, in addition to the land. Giving the background to the loan transaction, Mr Addo said the AUDCL, on April 16, 2007, applied to SSNIT for a GH˘10 million facility to enable it to construct the houses and on April 30, 2007 the loan was approved, after the trust had signed an agreement with the shareholders of the AUDCL, namely, the Agricultural Development Bank, with 39 per cent shares, the National Investment Bank, 39 per cent, and the Prudential Bank, 22 per cent. The deed of agreement, he indicated, was executed between SSNIT and the consortium to make way for the Ridge project, while proceeds from the sale of the houses, plus money from any other source, would be used to repay SSNIT. Mr Addo said a joint task force, made up of two representatives from the consortium and one from SSNIT, was constituted to sell the houses but the task force had not been able to sell them. He attributed the inability of the team to sell the houses to the delay on the part of the LVB to prepare a valuation report on the land, although SSNIT initially valued the land at GH˘4.5 million. It was on July 27, 2009 that the LVB submitted the valuation report, more than two years after it had been tasked with that duty in 2006, he said. His explanation and subsequent denial that the project had failed compelled Mr Justice Isaac Duose, the commission's chairman, to request SSNIT to furnish the commission with the name of the schedule officer at the LVB who worked on the report in order for him or her to appear before it to explain the delay. Asked whether SSNIT had been involved in the housing business, the witness replied in the affirmative and cited some housing projects in Accra and other parts of the country. He also denied that it would have been profitable for SSNIT to have constructed the project itself, since it had been approached with a request for a loan. Mr Addo said SSNIT granted loans to private limited liability companies based on evaluation and assessment of projects involved and other conditions, denying that the request came from the government. "The request came from the AUDCL. However, there were attachments (correspondence) from the Office of the President," he said, and further denied that had it not been for the government's intervention, SSNIT would not have granted the loan. He said the initial interest on the loan was 12.3 per cent. When Mr Akoto Ampaw, counsel for Dr Charles Wereko-Brobbey and Mr Kwadwo Mpiani, suggested to the witness that the two-year delay by the LVB in preparing a report on a plot of land in Accra was unduly long, he replied that that depended on several factors. He said he was not aware of any obstacle on the part of SSNIT to LVB, neither was he aware of any obstacle on the part of the consortium. The witness agreed with the counsel that the delay in preparing a valuation report on the land could be responsible for the appreciation in price. Mr Addo said the delay of the valuation report resulted in SSNIT’s inability to sell the houses, noting, however, that after the sale if there was any residue, that would be for the consortium, since he was unaware that the government was to be paid anything. He said he was also unaware that SSNIT granted the loan to AUDCL which also lent it out to the [email protected] Secretariat. The witness said in May 2006 the Office of the President appealed to SSNIT to purchase the Ridge land and directed the secretariat to liaise with SSNIT for the formal release of the land for the housing complex for the AU Summit. He said it was during that time that SSNIT requested the LVB to undertake a valuation of the land but when the report was not forthcoming, the secretariat came to seek the right of entry onto the land, which SSNIT granted on July 20, 2006 to enable the AUDCL to construct the houses. He said he was aware that the loan was to be given to the government but he did not know whether it was subsequently to be given out to private developers. Mr Addo admitted that the delay in getting the valuation report on the land was a shortcoming in the consummation of the original contract which was not effected.