21 Companies fail to pay loans from Austria (Saturday, February 9, 2012, pg 3)

Sixteen years after receiving loans from Austria which were guaranteed by the Ghana Government, 21 local companies have failed to make full payment of about GH¢4 million they received to support their business, the 2011 Auditor-General’s Report has revealed.

The funds were to be recovered on behalf of the government by the Export Finance Company Limited (EFCL), but as of December 21, 2010, only GH¢616,717 had been recovered leaving an outstanding balance of GH¢2,763,336.

The core functions of the EFCL include granting of loans and providing other forms of credit to exporters. Again, the company carries out business as a finance house and raises loans for the purpose of financing exports.

The amounts recovered, according to the report, were paid into the Exhibit Account of Economic and Organised Crime Organisation (EOCO), following their investigation into the loan facility at the Export Finance Company.

A breakdown of the figures indicated that while Alfralex Company Ltd received GH¢161,970; Alluvial Recovery System was given GH¢21,799 with Asamoah Raffan Works receiving GH¢212,458.

Others are Asihene Brothers, GH¢394,482; Cofie Zane Jewellery Ltd, GH¢23,652; Direct Arts Industries Ltd, GH¢147,626; Esterimo Packaging Ltd GH¢128,020; Gellina Packaging Co Ltd, GH¢29,348; Gidama Wood Processing, GH¢404,529; Hicent Enterprise, GH¢45,020; J K Enterprise, GH¢26,760; Ken Sworth Mining & Cont. Limited, GH¢4,889, and  Lorando Mining Co. Limited, GH¢389,330.

The rest are Louis Jewellery Factory Limited, GH¢6,496; Nana Boakye Austrian Casting Limited, GH¢374,134; Osei Research Centre, GH¢445,681; Osumanu Salt Industry Limited, GH¢117,800;  Plastic Packaging Products Limited, GH¢47,852; Tropical Crop Export Limited, GH¢15,863; Tropical Golden Fruits Limited, GH¢373,571, and West Africa Salt Limited, GH¢8,773.

Giving reasons for the failure of the EFCL to recover the funds, the Auditor General, Mr Richard Quartey, said the failure of the Government of Ghana “to collateralise the loan facility, in my view, accounted for the poor recovery”.

“Also, the absence of strong oversight of the Export Finance Company by the Ministry of Finance and Economic Planning to ensure that recoveries were promptly made and paid into the Consolidated Fund contributed to this poor state of affairs,” he added.

To forestall a recurrence, the Auditor General recommended the collateralisation of all such loans to minimise the risk of default.

“I recommended further that MoFEP should keep Controller and Accountant General Department (CAGD) informed of all loans granted to enable CAGD to maintain proper books of accounts for each beneficiary.”

Furthermore, the Auditor General recommended that CAGD should update its records on loans and ensure that all monies were deposited in the Exhibit Accounts of EOCO by EFCL in relation to the loans to ensure that such facilities were transferred immediately into the Consolidated Fund.

The Controller and Accountant General in reply to the concerns stated that he had directed EOCO to transfer GH¢616,717.00 recovered from the on-lent loans into the Debt Recovery Account of the Bank of Ghana.

The  CAGD has also requested for a debt repayment schedule from Export Finance Company to update its records. 

“CAGD is liaising with MoFEP to ensure that future loans are collateralised and Export Finance Company provides information for update of the accounts,” the report said.