Business News of Sunday, 18 January 2015
Source: The Chronicle
Speculations are rife within the corridors of SIMNET that the Ghc30million paid by the National Lotteries Authority (NLA) at the instance of a Court has neither reflected in the accounts of the ICT firm nor its parent company, the Social Security and National Insurance Trust (SSNIT).
The above-mentioned amount with interest was advanced to the ICT firm for delayed payment of invoices. Lawyers for SIMNET led by Mr. Tony Lithur are currently in court pursuing the NLA for US$45million as damages for breach of contract between the two entities.
The suspicion was occasioned by the influential personalities behind SIMNET using their political connections to maneuver their way through. A former Board Chairman of the NLA, Dr. Sali Agbozo, in an interview with Citi Eyewitness News last week over the matter said the management of the NLA might have been intimidated by SIMNET because of the political personalities behind the firm.
Dr. Agbozo insisted that the SIMNET contract was never terminated and wondered why the ICT firm was in court again pursuing the NLA for additional $45million having already won GH¢30 million with interest from the lottery regulator.
He explained that when he took over in 2009, they were supposed to complete an automation of the lottery system with the aim of halting the lapses in the system.
He said: “before we got there, there has been various correspondences between NLA and SIMNET to bring more portable point of sale terminals for the lotto business,” adding that “NLA before our tenure had already gone to PPA to secure approval for the purchase of 2,000 point of sale terminals for the lotto business.”
He said they later increased the number of terminals to 10,000 “because we need to cover the whole country. We actually corresponded with them [SIMNET] on several occasions to bring in more terminals, and we informed them that we were ready to go and purchase terminals…we didn’t hear from them so we acted as such.”
He said even after securing the terminals, they wrote a letter to SIMNET informing them of the move “and for that matter, we assured them that we will run our business whereby they will operate their equipment and the NLA too will handle their own business, so we never terminated any contract with them.”
“What happened was that they were unhappy, so they were using various means to frustrate us,” he was quoted as saying by Citi Eyewitness News. He added: “because they owed SIMNET, they issued post-dated cheques, which SIMNET was cashing”.
He said his outfit later told SIMNET to submit an IT audit report, but the situation ended up in court, adding that, “when we requested the audit, they refused to comply and before we realized they took us to court,” he lamented adding, “we told the court that if they do the audit we will pay them.”
According to our sources, sometime in 2011, the Board of NLA, in keeping with best practices, called for an audit of the SIMNET process in order to ascertain that all was well with the SIMNET infrastructure and that, Ghana was not losing revenue.
This request was informed by a data analysis performed by Ernst and Young on existing sampled lottery data, which raised some fundamental concerns, including training machines, trading and paying wins and other issues.
However, SIMNET was said to have refused to co-operate with the audit process as they cited witch-hunting, among other concerns.
The Board of NLA, as a result, decided to withhold payments from SIMNET in view of SIMNET’s refusal to co-operate with the audit process, which development led to a significant bad-blood developing between SIMNET and the NLA Board, which forced SIMNET to proceed to court to seek redress.
Sources within SSNIT and NLA said both parties agreed in court to recruit an independent firm (a firm other than Ernst & Young) to undertake the audit exercise, which finally led to the granting of SIMNET’s request of some payment of its overdue invoices to be made by the NLA to enable them meet some operational commitments, which this paper learnt, was honoured by the NLA.
Our information is that, whilst the court proceedings and the audit process continued, SIMNET unilaterally shut down the lottery system in the first week of October 2012, informing first NLA via SMS followed by a letter.
The Chronicle is well informed that this was done to embarrass the NLA leadership and to create a crisis situation for the NLA as the INGENICO program was not yet fully implemented to serve as a viable alternative, a development which made the NLA’s revenue suffering a dent.
The dip in revenue was short-lived, according to inside sources, because the Board had earlier initiated the implementation of the LOTS-Services platform, which brought the needed extra capacity to absorb the displaced retailers from the SIMNET platform.
It would be recalled that, Dr. Agbodzo, Board Chairman at the time, addressed a press conference to explain and to apologize for the disturbances in the services that were occasioned by the shutdown and announced that, the NLA would find alternative solutions to the situation in the absence of SIMNET platform.
Judgment on the lawsuit was not delivered before the appointment of a new Board by President John Dramani Mahama, when he took over the Presidency.
As the matter progressed in Court, both parties, the NLA and SIMNET, agreed on the appointment of Price Waterhouse, as another expert, to conduct another independent audit following disagreements on some aspects of the work done by KPMG.
Price Waterhouse was said to have extracted data from the system to do their work and after the completion of the first draft, SIMNET protested that additional data was available that needed to be taken into account and requested another extraction of data by Price Water House.
The Chronicle is informed that after this second extraction, SIMNET became satisfied and the final report submitted by Price Water House favored SIMNET, while the judge ruled that, the delayed invoices be paid with interest and the NLA was believed to have paid this amount to SIMNET estimated at thirty million Ghana Cedis (GHc 30 million).
Included in this amount, this paper learnt, is another two million Ghana Cedis (GHc 2 million) paid to SIMNET as the legal fees for their lawyers.