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The Auditor General has established that the Management of SSNIT is not able to recover repayment of loan facilities totalling GH¢858,380,662.10 from seven (7) Companies.
The report recommended that Management should take possession of the underlying assets of the defaulting companies to defray parts of the loans.
It was further recommended that Management should seek redress at the law court where appropriate to recover the loans.
Management explained that though these loans were all legacy facilities they have currently taken various measures in pursuing their recoveries that including the following:
RSS Developers Ltd. (Loans1, 2, 3).
Loan 1– Ghana cedi equivalent to US$50.0 million was disbursed in tranches to the company in 2011 (April, June and December).
Loan 2 – Ghana cedi equivalent of US$115.0 million was disbursed to the company in tranches as follows:
2013 (January, February, April, September and October).
2014 (March and April).
2015 (August and September).
Loan 3 (Bridge) – Amount Approved US$17.0 million. The Trust disbursed Ghana cedi equivalent of US$12.75 million in two tranches to the company in November 2014 and February 2015. The company was to repay the loan with proceeds from the sale of its property developments.
The development has however faced a myriad of challenges including a slowdown in the real estate market, overpriced units of its development, and the inability of the contractor, being a partner in the company, to complete the development, which in our estimation, arises from the contractor’s own financial challenges.
SSNIT has swapped part of its debt with the completed housing units of the company to lower its financial exposure. SSNIT Management has put in place a new Investment Policy and Guidelines document to guide the Trust on such transactions in future that includes that, SSNIT shall not enter into any joint venture agreement where a partner in the JV will be the contractor for the project the JV is to undertake. SSNIT is preparing to aggressively market the sale of the units that have been taken over.
Aluworks Limited
Aluworks defaulted on its contractual obligations to the Trust due to financial and operational challenges arising from what they termed as unfair competition from abroad.
Aluworks Ltd., being a public listed company, is preparing to hold an Annual General Meeting (AGM) tentatively set for October 2021 where it will table the SSNIT proposal for a strategic investor for shareholders’ discussion and direction. A draft resolution to be considered at the AGM has been received from the company’s Management. Injections by a strategic investor will be used to retire a significant portion of the SSNIT debt.
Switchback Developers Limited
The construction of Phase I of the project experienced delays due to a lack of adequate construction finance. Sale proceeds received, which were to be used to pay for the loan, have been used for the construction. Thus, the company’s inability to pay back the loan when it fell due.
Phase I of the project is about 95% complete. The Trust has injected funding by acquiring 6.18 acres of the land and responded to a rights issue to purchase flats at a significant discount. Sales are ongoing and is expected that the loans will be repaid from the proceeds. In addition, Shareholders are also considering selling additional parcels of land. It is expected that the sales of the land and apartments will exceed the value of the loans.
Management again indicated that all four Joint Ventures were legacy investments, some dating back to 2008. However, in the case of West Hills Ridge Company Ltd, the current SSNIT Management/Board conducted a value-for-money audit on the company. The audit led to the company saving US$30 million on construction costs.
SSNIT further stopped the continuation of Phase 2 except for six blocks where construction was advanced and the Sports Centre, which is a very necessary complimentary facility. The project is steadily going on with sales ongoing for the completed units.
Management recorded a surplus of GH¢1.1billion in the 2020 financial year as compared with a deficit of GH¢472million posted in 2019. This represents a 314.4% increase in the Trust’s financial performance over the period.
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