Thursday, July 17, 2014

AG's REFUSAL BROUGHT JUDGEMENT DEBT

Posted on: www.dailyguideghana.com
By William Yaw Owusu
Thursday, July 17, 2014

The Attorney General’s (AG) refusal to coorporate with an independent referee appointed by a High Court to look into claims filed by Africa Automobile Limited (AAL) led to an award of GH¢8.3million paid by the government to the vehicle dealing firm.

According to Ben Korley, a Chartered Accountant with Messrs Intellisys the AG did not show any interest when they wrote to government’s lawyer as independent referee, requesting them to provide information on the Ministries Departments and Agencies whom AAL claimed were owing them.

He told the Commission of Enquiry investigating the payment of judgement debts that since the AG did not get back to them, Messrs Intellisys went ahead to do the assessment based on what AAL had submitted before the court.

AAL Services
AAL reportedly provided services as well as supplied spare parts to 17 MDAs from 1994/95 to 2010 but the government failed to pay for them and that compelled them to go to court, suing the AG.

Unfortunately, when AAL filed the suit against the government, the Attorney General did not contest the matter compelling the Commercial Court to enter a default judgement in favour of the claimant.

Documents available to the commission indicated that the debts owed by the government to AAL stood at GH¢145,917.76 but it ballooned to GH¢8.3million in 2010 due to compound interest on the debt.

Furthermore, in the 2006 audited report of the company, the amount owed by all AAL debtors including the Ministries, Departments and Agencies (MDAs) stood at GH¢96,823.51 but when the company sued in 2006 they claimed that the total debt owed by the MMDAs was GH¢145,917.76.

AAL’s justification
When Mohammed Hijaazi, Executive Chairman and Managing Director of AAL appeared before the commission recently, he confirmed that AAL had indeed been paid GH¢ 8.3million as judgement debt and justified the payments.

When Counsel for the commission, Dometi Kofi Sorkpor asked Mr. Hijaazi whether he paid GH¢6.1million as tax on the GH¢ 8.3million collected as indicated by the GRA, the witness said he did not intend to pay.

“The interest was a loss that the creditor suffered at the hands of the MDAs and I would not declare that as a profit. I have not and I would not. It was a loss and not profit.”

When counsel asked further whether AAL sued for loss of business he said “No, I haven’t. In fact you have reminded me now and I am going to do that.”

“For 15 years, we have been reminding the MDAs of their contractual obligation but they did not but here I am today trying to make my claims and I am being branded a criminal,” Mr. Hijazi lamented.

Independent referee
Testifying yesterday, Mr. Korley said he did not refer to the MDA’s to have their comments because the AG was the defendant and they had written specifically to them for information on the matter saying “there was no response from the AG following the letter we sent to them to help us reconcile the figures put before the court by AAL..”

“There was no defence…the order from the court requested that all information should be routed through the Registrar but it never came.”

Mr. Korley added that it did not come to his notice that the MDAs prior to the matter going to court had denied owing AAL for services the company had rendered them and added that he based his work on the purported agreement signed between the AAL and the MDAs.

Financial statement
He said he did not study the financial statement of AAL in the course of the work for the simple reason that the matter before the court had specific information for them to validate adding “what we set out to do was to confirm and obtain information from both parties to validate the claim and to apply the interest as stated in the agreement that was before the court. It did not refer to the financial statement of the plaintiff at that time.”

Mr. Korley said they analyzed documents from 1993 to 2008 adding “the compound interest was applied on the basis of the agreement. It was 30 days credit and that was used to calculate per the agreement. It was such that if payment was not done within 30 days, it was to start accruing interest monthly.”

The challenges we face was that the defendant (AG) did not help our work at all. At the time the calculation started, the actual claim was GH¢1,053.09 and the total amount at the close of 2006 stood at GH¢154,717.76. This ballooned to GH¢8.3million in 2010 due to compound interest on the debt.”

“In my opinion that agreement was an unfair one knowing that in the government system it will take more than 30 days by just the processes and giving a credit for just 30 days was rather on the low side,” and added that “it could have happened that because they (AAL) were not getting their money, they might have understated their income.”

“The government accounting system is on cash basis and if the person who received the invoice did not submit it for processing, it will never show in the government’s account. And it will make the claimant look as if he’s claiming for something that did not belong to him,” before calling for an improvement in the government accounting system.


The Sole-Commissioner has expressed dismay at the attitude of the AG’s office for its handling of cases before the commission and subsequently directed the commission to write to the AG to urge them to respond to its subpoenas. 

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