A five-member committee set up by the West Akyem Municipal Assembly to investigate two overdraft facilities obtained from the National Investment Bank (NIB), Koforidua and Accra totaling GHC 319,000 without approval of the general house has presented its report.
The first overdraft facility of GHC 160,000 obtained from NIB, Koforidua was meant to pay off the assembly's indebtedness of GHC 70,000 to the NIB, Koforidua and utilize the remaining GHC 90,000 to meet other pressing commitments of the assembly.
The other GHC 150,000 from the NIB, Accra, was for Abex Impex Limited, a private company, to engage in vegetable oil production.
In its report, the committee said the arrangement for the overdraft facility contravened a section of the Local Government Act, 1993.
The report said in an attempt to establish circumstances leading to the need to apply for the overdraft facility from NIB, Koforidua, all members of the management team including the former Municipal Chief Executive, Mr. Kwabena Sintim Aboagye, cited low remittance from the assembly's share of the Common Fund.
According to them, their creditors were threatening to send them to court.
However, the committee also gathered that lack of budgetary control and failure by management of the assembly to strictly adhere to development plans contributed to the need to seek the overdraft facility.
Furthermore, the committee observed that the assembly did not take cognizance of the rules and regulations that would ensure prudence in the financial management of the assembly resources.
For example, a report of the Finance and Administration sub-committee held on August 22 last year, revealed that the assembly owed GHC 847,407 as at that date but management of the assembly considered it urgent and necessary to award a contract for the renovation of the Municipal Chief Executive and Municipal Finance Officer's Offices, supply of furniture, installation of air conditioners and rehabilitation of the assembly hall, amounting to GHC 171,143.69 on September 16, 2008.
As a result of those lapses by management, the assembly had paid a total amount of GHC 61, 106, 87 being overdraft interest from July, 2007 to August 2008 thereby deepening the financial woes of the assembly.
On the loan facility for Abex Impex, Ghana Limited, the committee noted that the assembly entered into an enterprise promotion agreement with the shareholders of the company to capitalize the operation of the company in vegetable production at Asamankese.
The assembly therefore obtained a loan facility of GHC 150,000 to fund the working capital and other operational requirements of the company.
The loan was approved by the executive committee of the assembly despite its limitations under section 88 of the Local Government Law 1993 of Act 462.
The committee observed that though the initiative of the assembly was laudable, the entire arrangement with a private limited liability company contravened the Companies code of 1963 Act 179.
Further investigations into the transaction revealed that though the loan facility was approved by NIB, Accra, the assembly never withdrew any money from the account.
However, one Mr. Emmanuel Addison, who is a consultant and a Board Member of Abex Impex, managed to access the loan and withdrew an amount of GHC 12,000 from the account on January 4, 2008 without the consent of the assembly.
The loan has accumulated an interest of GHC 4,902.77 as at June 30, 2008 thereby bringing the assembly's total indebtedness to GHC 16,902.77.
The committee also noted that the assembly awarded a contract to M/S Roger Construction and furniture Works, Asamankese, to rehabilitate the Rattan Factory, which was to be used for the production of vegetable oil and construct a fence wall which belonged to Abex Impex at a contract sum of GHC 9,981,50.
Contract works executed and interim certificates presented for payment amounted to GHC 5,987.80 out of which GHC 2,000 was paid leaving an outstanding balance of GHC 3, 987, 80 owed to M/S Roger Construction and Furniture Works.
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