Kumasi Technical University loses GH¢2.8m for lack of due diligence
Lack of due diligence by the management of the Kumasi Technical University (KTU) before entering into a joint venture with Song Tech Limited, a Chinese company, has left the institution bleeding from financial loss of GH¢2.8 million.
The KTU and Song Tech jointly established the Kumasi Polytechnic-Song Tech (KPST) Electronic Company Limited in 2011 to assemble and sell electronic products, a business that turned out to be a white elephant.
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As part of the memorandum of understanding (MoU) that was signed between the two parties, the KTU had a 40 per cent share, while Song Tech was expected to own the remaining 60 per cent.
Consequently, the institution used its GH¢1.4 million fixed deposit account at ECOBANK Ghana Limited as collateral for the letter of credit.
The letter of credit, established in November, 2014, compelled the bank to use the KTU’s fixed deposit to defray part of the accrued debt which consisted of the principal, interest and penalty charges, totaling over GH¢1.5 million.
The Auditor-General’s Report for 2015 revealed that the KTU also committed more than GH¢1 million into the joint partnership for the importation of building materials for a factory and raw computer parts to be assembled locally.
Interesting development
However, it was an interesting spectacle when the management of the university appeared before the Public Accounts Committee (PAC) of Parliament on Tuesday to answer questions on the collapsed entity, as they struggled to put pieces together to defend what was seen as a bad deal.
A former Vice-Chancellor of the university, Prof. Nicholas N.N. Nsowah Nuamah; the current Vice-Chancellor, Prof. Asiamah Yeboah; the Finance Director of the university, Nana Awuah Dapaah; the then Project Manager of the KPST, Mr David Addo-Yobo, and other management members who appeared before the PAC could not produce documents on due diligence, financial analysis, value for money and other processes followed in the joint venture.
It took about three hours of grilling by and probing from members of the PAC to establish the facts of the deal as contained in the Auditor-General's Report.
It was established that the KTU had lost GH¢1.4 million in fixed deposit that was used as collateral and over GH¢1 million as its 40 per cent commitment in the acquisition of building materials and computer parts.
Losses
Even though the KTU has abrogated the contract with Song Tech, it is unclear whether the assets of the joint venture could offset the losses made.
Facts from the A-G’s Report showed that Song Tech Ghana Limited had depleted the stock of the joint venture, leaving it a pale shadow of itself.
For instance, out of the 200 computers in stock, 22 could not be accounted for, while 109 laptops out of 116 had also been taken away.
In addition, of the 1,000 tablets that were stocked, 998 had been taken away without the university knowing their whereabouts, a development that led to the abrogation of the contract.
Directives
Convinced beyond reasonable doubt about the mismanagement and lack of diligence on the part of the university, the Chairman of the PAC, Dr James Klutse Avedzi, directed that the assets of the joint venture be valued to know its current worth to enable the committee to take an informed decision on the way forward.
He gave the KTU a one-week ultimatum to hire the services of a professional consultant to carry out the exercise.
Mr Addo-Yobo, who is alleged to have failed to appropriately account for GH¢265,000 collected from 172 students who patronised the services of the company, was also given two weeks to correct all anomalies or be prepared to face the law.
“If you cannot provide evidence of disbursement of the money, we will be left with no option but to make you refund the amount involved,” Dr Avedzi cautioned.
Mr Addo-Yobo, however, told the Daily Graphic after the sitting that he had not misapplied the said amount and would provide all documentations to the A-G within the two weeks.
Accra Technical University
Meanwhile, the management members of the Accra Technical University (ATU) who had appeared before the committee earlier in the day had their fair share of bastardisation from the committee for illegally paying money to some members of the council of the university.
The A-G’s Report showed that GH¢219,510 had been paid as quarterly remuneration to five co-opted members of the university’s council who also took sitting allowances.
The development was said to be in violation of Section 12 and other provisions of the Polytechnic Act.
Among other things, the ATU management, led by its acting Vice-Chancellor, Prof. Edmund Ameko, were chastised by members of the PAC for its failure to review the rent paid by members of staff, which stood at GH¢65 for three-bedroom facilities, since 2012.
The management was directed to take steps to recover outstanding loans that had been advanced to workers for more than three years.