SSNIT loses $11m from liquidation of 3 investments – A-G report

The Social Security and National Insurance Trust (SSNIT) according to the Auditor-General’s report on the public accounts of Ghana, public boards, corporations and other statutory institutions for the period ended 31 December 2021 made a total loss of US$11,794,109 from the liquidations of three of its investments with a total cash outlay of US$14,768,153.00.

The A-G has urged the management of SSNIT to investigate the nonperformance of the investments for all with the aim of ensuring value for money and ensure that officers whose action led to the loss are appropriately sanctioned for the loss.

Also, management of the Trust could not retrieve an outstanding loan balance of GHS146,964,641.07 from the Ghana Road Fund as at 31 December 2019.

This according to the audit report was partly due to the Trust’s inability to put in place strict measures to ensure that Ghana Road Fund issue a Letter of Authority to the Ghana Commercial Bank and Bank of Ghana, to pledge and place a lien on the Road Fund Accounts, to recover the monthly instalment in line with paragraph 11.0 of the loan agreement.

Furthermore, management of the Trust could not provide the supporting documents for GHS140,198,668.12 debt disclosed in the 2019 Trial balance as the Government of Ghana portion of student loan.

Additionally, the Management of the Trust could not collect from the Ministry of Finance, the divestiture proceeds of US$626,522.47 from the Divestiture Implementation Committee (DIC) since 2012. This was the proceeds due the Trust, after the sales of its 13.60% equity stake in Subri Industrial Plantation Limited (SIPL) to Plantation Socfinaf of Belgium.

Despite the requirement of Section 90 of the Public Financial Management Act 2016, the Trust has not received any returns in the form of value appreciation or dividend in its investments in nine listed and six unlisted equities (Companies) with a total paid-up consideration of GHS63,174,927.73 and US$65,892,842.09 respectively.

The A-G has, thus, urged the management to take an effective decision on the companies to avoid further loss and investigate the nonperforming investments of the 15 Companies and ensure value for money is achieved.

Contrary to Section 1 of the Value Added Tax Act, 2013 (Act 870), the audit report disclosed that CCL Property Management Limited, which is 100% owned by SSNIT could not pay the outstanding tax liability of GHS5,371,230.00, due to its failure to charge respective VAT on its services. “We recommended to Management to ensure that CCL Management levy the required VAT and transfer the same to GRA. Management should carefully review, tax implication in engaging in similar businesses,” the report advised.

Further revelation said the management of the Trust made payments totalling GHS38,671,409.09 to three investee Companies without agreeing with the other stakeholders of the Companies, the nature of expected returns from the payments. This resulted in payments not being classified as loan nor added to the equity portion of the Trust in the Companies involved. To derive the maximum benefit from the investments, the A-G urged management to reach an agreement with the relevant stakeholders of the Companies to properly classify the payments.

The management of SSNIT also proposed to the Board to write off losses of GHS26,838,588.87 due to the official liquidation of Bridal Trust, which could only pay GHS5,490,000.00 out of its accumulated loan of GHS32,328,588.87. The Trust also made losses totalling US$11,794,109.00 from the liquidation and sale of equities holding in the three companies.

For proper accountability of public funds, the A-G recommended to the Board to liaise with the Minister of Finance to seek parliament approvals to ensure that the losses are duly written off.

The report also noted that the Board could not ensure effective returns from the Trust’s investment in Intercity State Transport Company (ISTC). This company among others has not presented its audited financial statements over the years, nor pay any dividend, SSNIT however, guaranteed for the company to take a loan of US$17,500,000.00 from ADB BANK to procure 100 buses. The Trust did not again recover the various loans and Shareholders advances to the company totalling GHS49,453,473.45.

The A-G recommended that the Board should take appropriate measures to ensure that the pensioners’ fund invested in ISTC yield returns and monitor the performance of the US$17,500,000.00 loan guaranteed ISTC to procure 100 buses to augment their fleet to avoid possible repayment by SSNIT.

Other anomalies captured in the report include:

  1. Contrary to Paragraph 4.7 of the Policy on Official Accommodation, in 2014 the Executive of the Trust did not review the rental rates of the Trust’s accommodation for over six years. We urged Management to appropriately review the rental rates of the properties.
  2. Twelve parcels of lands in eight regions that belong to the Trust were found to be in various levels of encroachment or attempted encroachment by persons. This was due to delay in the development of the lands, coupled with insufficient due care by Management in the protection of the lands from encroachment. We recommended to Management to consider developing some of the lands into service plots.
  3. Funding policy is an effective means for sustainable management of pension schemes, the Board, however, could not ensure the preparation of a funding policy, to enable them to manage effectively and sustain the pension scheme. We urged Management to immediately commence the process leading to the establishment of a Funding policy.
  4. The Actuarial valuation report of the basic Social Security Scheme as of 31st December 2014 by the International Labour Office recommended a sustainable Contribution rate of 19.2% for the Scheme. The proportion of contribution used to pay benefits in 2017 and 2018 was in excess of 90%, which implies that investment income will be used in the very near future to pay benefits. The ability of the Trust to generate income to sustain its operations thus, to pay benefits and operational cost declined from 17% in 2017 to 16% in 2018. We recommended to Management to institute pragmatic strategies to increase investment income and control costs. We also urged Management to effectively collaborate with all stakeholders to achieve sustainable salaries contribution rate for the Trust.


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