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20-year review of judgement debt payments in Ghana — Impact, causes, remedies (VIII)

BY: Centre for Social Justice

Rockshell International supplied stones for construction works on the Keta Sea Defence Project under a 1983 contract with the Government of Ghana and issued a certificate to be paid Five hundred and fifty-three million and fifty-six thousand old cedis (now GH¢53,305.60) in 1986.

The government failed to pay as per the terms of the contract and after numerous follow-ups and demands to be paid for work done, the company went to court in 2005 for recovery of the said amount with interest and obtained a judgement of US$70 million in November 2006.

Ignoring how a Ghana Cedi claim led to a United States Dollar judgement debt, the transformation of fifty-five thousand Ghana Cedis to a whopping US$70 million in precisely two decades is mind-boggling.

The government of the day neither appealed the court ruling nor took any action to settle its indebtedness to Rockshell until it left power in January 2009.

The new government that took office in 2009 renegotiated this judgement debt, amongst others, and successfully reduced the amount by fifty per cent to US$35 million, which was paid by the government between July 2009 and August 2010.

And so, because of delays in the payment of the amount of GH¢55,305.60 owed Rockshell International in 1986, Ghana became poorer by US$35 million, which could have been as high as US$70 million.

No sanctions

But for this judgement debt, US$35 million could have built a couple of district hospitals in deprived rural communities or purchased hospital beds to reduce the ever-present "no bed syndrome" in health delivery in Ghana.

If invested in education, it could have eliminated schools under trees in their hundreds or provided computers for pupils whose only means of acquiring computing knowledge is by drawings on blackboards.

While similar cases are all over the place, there are hardly any sanctions for public officers whose acts due to omissions or commissions gave rise to this avoidable wastage of our scarce financial resources.

Consequently, such behaviours abound in our public institutions. The starting point to fix this serious dereliction of duty is to ensure public officers who cause the state avoidable judgement debts are severely punished.

GH¢20 turned US$2,640,000 with time

As the adage goes, "a cedi today is worth more than a cedi tomorrow." So does a stitch in time saves nine? For countless times, the government could have saved millions of Ghana cedis regarding judgement debt payment but for its failure to settle promptly.

The government must be mindful of the fact that as much as the constitution permits or allows the State to acquire lands in the public interest and for public purposes, the same constitution enjoins the State to pay prompt, fair and adequate compensation to landowners whose lands are compulsorily acquired, to contractors who services are employed or organisations from which the State procures.

Therefore, it is incumbent on every government to ensure that funds are readily available before any compulsory acquisition is embarked on for any public project or any goods and services are employed.

This will prevent the State from being dragged to court years later to pay unwarranted judgement debts that would defeat the purpose of the acquisition, as has happened countless times.

Claim by Carmichael family

For instance, in the case of the Compensation Claim by the Carmichael family, when the land was acquired in 1976, the assessed value of compensation for the portion measuring about 1,800 acres, which the company accepted was 200,040 old Ghana cedis (now GH¢20.00) this amount was, however, not paid.

About 30 years down the line, the State was made to cough out US$2,640,000 for the piece of land.

The State and its institutions should understand that bureaucracy does not mean time-wasting.

Bureaucracy is to streamline procedures and allow for transparency. Procedures for payment of compensations and debts should not take decades to complete.

This bureaucratic tendency has caused the State to pay US$2,640,000.00 as compensation to the Carmichaels instead of GH¢20.00 if paid 30 years earlier.

We also note how the failure to settle GH¢5,053 outstanding debt for eight years also cost taxpayers a whopping GH¢177,664.09.

Not to mention the recent judgement debt awarded to GPGC Ltd against the GoG and many others like these examples that continue to accrue interest until they are paid.

In the GPGC Ltd vs GoG case, the interest accrual on the total judgement debt began on November 12, 2018, and it will continue until the date of payment, accruing daily and compounded monthly, at the LIBOR rate for six-month US dollar deposits plus six per cent.