Government pays a Jospong Company GHC 95 million without any contract—Auditor-General

The Jospong Group of Companies has found itself on the grime pages of the Auditor-General’s report again.

This time, the Auditor-General is asking the company to cough up GHc 95 million, which one of its waste management subsidiaries, Sewerage Systems Ghana Limited, received from the District Assemblies Common Fund (DACF).

The state’s chief auditor has, therefore, ordered the Administrator of the DACF, Irene Naa Torshie Addo, to recover the fund which went into waste treatment plant construction by the Sewerage Systems Ghana Limited (SSGL).

SSGL has been receiving the funds since 2016 without any legal backing, the Auditor-General said. However, the payment of GHc 19 million last year, being an outstanding amount for the GHc 95 million, triggered an enquiry by the Auditor-General.
In its report on the 2020 Management and Utilization of the District Assemblies Common Fund and other Statutory Funds, the Auditor General said the payments were illegal and unconstitutional.

“We could not establish the basis for the payment of the GH₵ 95 million as support to a private entity with no government ownership. We were also of the view that Article 252 (3) of the 1992 Constitution does not permit the allocation of the Common Fund to private entities and would be a loss to the Assemblies if not recovered,” it explained.

The report said the only justification for the payments was a letter from the office of the President and dated June 15, 2016.

That letter did not authorize the payment of monies to the Jospong subsidiary. It rather stated “the intention of Cabinet to provide a credit guarantee for the completion of the Accra Waste Treatment Plant, Mudor Faecal and the old Lavender Hill.”

To unravel the basis of the payment of the GH₵ 95 million, the report said Auditor-General conducted a review of the transaction from the inception and noted how the Cabinet of John Mahama’s intention was ignored.

The report found three things:
i. The letter from the office of the President specified that the intention of the Cabinet was to provide a credit guarantee for the completion of the three facilities.
ii. The payments commenced in 2016 with an annual provision in the approved payment formula.
iii. The then Administrator, Kojo Fynn, did not obtain any contractual document to support funding to a private entity or enter into any legally binding arrangement to recover the support made to Sewerage Systems GH Limited.

Who owns Sewerage Systems Ghana Limited?  

The Fourth Estate’s checks at the Registrar General indicate that the SSGL was incorporated on July 17, 2012.

The company has two shareholders – Emmanuel Boate, a one-time Chief Operating Officer of Zoomlion, and the Chairman of the Jospong Group of Companies, Joseph Siaw-Agyepong.

The directors of the company are Joseph Siaw Agyepong and Emmanuel Boate; Florence Cobbold and Haidar Said, the General Manager and the Managing Director of the SGGL respectively.

Another director of the company is Gizella Tetteh-Agbotui, now the Member of Parliament for Awutu Senya West Constituency and a member of the Works and Housing and the Appointments committees of Parliament.

She also served as the Chairperson of the SSGL board from April 2016 to January 2021. At the time company was being registered in 2012, she was a member of the Ghana Civil Aviation Authority board.

Then there is also the current Technical Advisor to the Minister of Finance, Kwabena Adjei Mensah. He was was once the Executive Director of the Zoomlion Group of Companies.

SGGL’s mother company, Zoomlion, has for years, been at the centre of controversial waste management contracts that its critics say fleece the state for little or no work done.

Jospong Group’s related waste plant and the government’s role

This is not the first time a subsidiary of the Jospong Group is involved in a murky arrangement with the government of Ghana in the construction of a waste treatment plant.
The Accra Compost and Recycling Plant (ACARP), which is owned by the Jospong Group, was built under a similar arrangement, except that there was a written agreement in the previous one.

On December 5, 2011, the Secretary to Cabinet, Ben. C. Eghan, wrote a memo to the Minister for Finance and Economic Planning.

The memo said, “H.E the Vice President [Joh Mahama] has on behalf of H.E. the President [J.E.A Mills] given executive approval for government to grant security and guarantee for a loan facility of an amount of GHC 80 million to complete the construction of two compost plants in Accra, which will utilise social waste materials and human waste sludge from the Accra Metropolitan Area, Tema Metropolitan Area and parts of the Eastern and Central Regions.”

On December 14, 2011, the ministers for Finance, Local Government and Rural Development, and Food and Agriculture tabled a joint memorandum in parliament “for the credit agreement between the Accra Compost Plant Ghana Limited and Standard Chartered Bank.”

The memorandum to parliament said the government, through the Ministry of Local Government and Rural Development (MLGRD), was “to make the compost plant fully operational by providing raw materials through the solid/liquid waste generated by both household and industrial activities.”

The memo to parliament also said the “MLGRD will undertake to guarantee the payment of fees for accepting all the solid wastes and human waste sludge accepted by Accra Compost Plant.”

The memo went on, “With the provision of sovereign guarantee for the GHC80million loan facility, Government is set to have a leading ownership role and full oversight responsibility for the operations and management of the compost plant.”

In June 2012, before the Accra Compost Plant started operation, the government of Ghana signed a contract with the company and committed to paying a monthly fee of GH1.62 million to the company. That figure was increased to GHC3million a month in 2016 and paid to ACARP.

ACARP is, however, fully owned and managed by the Jospong Group of Companies.

The Ministry of Local Government and Rural Development, according to the contract, “may” inspect the operations of the company but it has to give the company a one-week notice before it could be allowed to inspect its operations.

The Ministry pays the company, but it does not independently verify the tonnage of waste materials the company claims to be receiving from some assemblies.

Zoomlion and Jospong Group have featured in almost all the Auditor-General’s report on the DACF, but only one of them have made it past just the report because the Auditor-General decided to act.

On October 29, 2018, the Auditor-General surcharged Zoomlion for GH¢184 million for a fumigation contract the Ministry of Health (MOH) for which it was paid by the National Health Insurance Authority (NHIA).

That was after an audit conducted by the Auditor-General on the accounts of the NHIA made findings that Zoomlion had between the years 2009 and 2017 had allegedly been paid a total amount of GH¢184.9 million devoid of due process.

The Auditor-General’s beef was that the company continued to receive payment from 2009 up to August 2018 even though its four-year (from 2009 to 2013) contract with the Ministry of Health had expired.

The waste management company appealed the decision at the Accra High Court on December 5, 2018, and urged the court to set the surcharge aside.

But the High Court, presided over by Justice Georgina Mensah-Datsa, did not find Zoomlion’s argument convincing. It upheld the Auditor-General’s constitutional power to disallow and surcharge the company. The court accordingly dismissed the appeal.

Zoomlion took another step up the judicial ladder and went to the Court of Appeal, which referred the matter to the Supreme Court as it said the case hinged on constitutional interpretation—which is a mandate of the apex court.

In a decision that got anti-corruption campaigners scratching their heads, the Supreme Court overturned the surcharge and disallowance.

The current revelation on the GHC95 million payment is just one of many infractions committed by government officials and state institutions and the Jospong Group in the contracts funded by the District Assemblies Common Fund.