STC reels under debt

Business News of Wednesday, 25 February 2015

Source: B&FT

Stc StationAccra

The Intercity STC Coaches Limited (STC) has piled on more debts less than a year after the majority shareholder, Social Security and National Insurance Trust (SSNIT), intervened to halt the sale of its assets by creditors, B&FT investigations have revealed.

At the same time, STC’s revenue capacity has dipped significantly. From a promising company a decade ago that made about GH¢100,000 per day, the company now makes between GH¢5,000 and GH¢10,000 per day with its limited fleet, which is not enough to sustain its operations.

Checks by this paper reveal that the company is piling on the new debts as a result of questionable acquisition of spare-parts for its existing fleet.

The public transport provider — which had over 70 buses few years ago — now has only 12 functional buses in its fleet. However, the sudden surge in spare-parts purchases a year after SSNIT intervened has raised serious questions.

STC for instance owes one spare-parts supplier about GH¢479,000 for parts purchased between May 2014 and February 2015. “How can you claim to have purchased so much spare-parts when you don’t even have enough buses to repair?” a source said.

The company, checks have revealed, also has many unrecorded liabilities. Those liabilities have been deliberately kept outside the company’s ledger.

The once-vibrant company, whose debts stood at GH¢40million as at 2012, has not seen any significant capital injection since SSNIT acquired an 80% controlling stake from VANEF STC in 2001. Government owns the remaining 20%.

SSNIT, distraught about the lack of progression on the part of STC, last year indicated that it was willing to listen to offers for its stake in the company. The Ministry of Transport which has the first option to buy SSNIT’s stake, acting on behalf of government, said it was going to acquire SSNIT’s stake owing to the strategic and social importance of STC.

Currently, government is making arrangements to acquire 50 new buses for the troubled company. The Ministry of Transport two weeks ago said that arrangements were being made to acquire 50 buses for STC as part of the consignment of buses meant for full implementation of the Bus Rapid Transit system.

A report sighted by the B&FT and titled “Disciplinary Committee ISTC 2014” has exonerated a small group of staff who were accused of embezzling one percent of the staff Provident Fund estimated at GH?13,000 — which led to a series of demonstrations at the company’s head office in Accra.

The Committee, the second set up to investigate the issue surrounding payment of the GH?13,000 to the concerned staff for working on ISTC staff Provident Fund, found that: “There was sufficient evidence before the Committee that the Board of Trustees of the staff Fund had agreed that generation of the statement of accounts for the staff Provident Fund should be done internally, and one percent be paid to whoever did the work. Thus, there was no conflict of interest.”

The Joseph Appiah-chaired Commission called for reinstatement of the concerned workers, and payment of half the salary of affected staff withheld during the interdiction period (February-November 2014).

The B&FT in September 2014 reported that the first Committee constituted by the majority shareholder of Intercity STC, SSNIT — to investigate an alleged conflict of interest in the payment of GH¢13,000 to some STC employees — received over GH¢14,000 as sitting allowances.

The background to creation of the first committee is that from June 2009 to July 2012, STC deducted monies from employees’ salaries to be paid into a staff provident fund. However, due to the financial challenges the transport company was going through, it was unable to pay the money to the provident fund manager.

Subsequently, employees of STC at a union meeting passed a resolution for the monies deducted to be paid back to them. However, it was not clear how much each worker was owed; thus the union passed a resolution to pay one percent of the deductions to whomever was able to accurately determine what was due to each employee.

A small group of employees allegedly completed this task and was paid GH¢13,000 — being one percent of the deductions.

But following agitation by the workers over the GH¢13,000 payment and other issues they were unhappy about, the board of STC wrote to SSNIT to inform it of causes of the workers’ disturbances. SSNIT then appointed the four-member committee, aided by a secretary, in 2013 to investigate and address issues raised by the workers.

Chief among the committee’s duties was to investigate the circumstances surrounding payment of the said GH¢13,000.

The members received a total of GH¢14,780 in cheque payments between October 2013 and January 2014 for their work.

But the committee’s remuneration was in excess of the amount being investigated — and even though the committee had submitted a report to the board of STC, a second committee (the Joseph Appiah-chaired Commission) was commissioned to investigate the same issues.

Sources reveal that the second committee also spent about GH¢10,000 to complete their assignment. In sum, STC’s committees spent about GH¢25,000 chasing GH¢13,000.