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NPP AVERTS $20m BOST FRAUD: MAHAMA CRONY KINGSLEY AWUAH-DARKO UNDER FIRE

Politics

A committee set up to investigate claims of losses made against the Bulk Oil Storage and Transportation Company Ltd (BOST) by some bulk oil distributing companies (BDCs) in oil lifting deals has concluded that a huge chunk of the claims was frivolous and “cooked” to siphon state funds.

A committee set up to investigate claims of losses made against the Bulk Oil Storage and Transportation Company Ltd (BOST) by some bulk oil distributing companies (BDCs) in oil lifting deals has concluded that a huge chunk of the claims was frivolous and “cooked” to siphon state funds.

The claims had, however, been conceded by Kingsley Kwame Awuah-Darko, the man then President John Mahama found fit to oversee the management of BOST. In 2015, he made Mr Awuah-Darko concurrently chief executive of the Tema Oil Refinery (TOR).

BOST under the Mahama government triggered processes to pay the claims made against it by the BDCs.

Plan to loot

According to the 45-page report of the independent committee, a copy of which is in the possession of the Daily Statesman, the BDCs would have made away with “loot” of 13,00,000 litres of oil or its equivalent, worth over US$20 million.

The BDCs had claimed huge volumes of gasoline in their litigation processes. However, a careful audit reduced the claims from 22,736,375.46 litres to 9,723,010 litres ‒ a saving of more than 13 million litres ‒ “after a thorough crunching of the figures”.

Official recommendations as stated in the report reduce the claims from just over $35.9m to less than $15.36m, giving the state net savings of $20,555,104.50.

The committee was instructed to identify the possible causes of the claimed losses, establish the veracity or otherwise of the claims, and recommend ways of curtailing further occurrence of the phenomenon.

Detailed probe

The Chamber of Bulk Oil Distributors (CBOD) wrote a letter requesting a refund from BOST in respect of alleged losses of 22,736,375.46 litres of gasoline, 1,212,165 litres of gasoil and 142,542.64 litres of fuel oil.

The claims, especially those in respect of gasoline and gasoil, were based on the volumes conceded by BOST in a letter written to that effect, after reconciliations were conducted pursuant to a request by the then managing director, Mr Awuah-Darko, in 2014.

The committee however noted that because some of the BDCs even owed BOST for throughput charges on the products for which they were claiming losses, it would have been appropriate for BOST to have proceeded “to establish the tentative figures and invoice them accordingly”.

The committee added that BOST also should have charged interest on the amounts involved.

After the reconciliation and review of further and better particulars and oral testimonies from the affected BDCs, the committee found, for instance, that even though Sage Group had claimed 11,264,206 litres of gasoline, the revised position was 1,144,586: a difference of 10,119,620 litres.

The committee’s revised position however confirmed the 1,915,531 litres claimed by Oil Channel.

The committee’s report further reveals that even though Fueltrade made a claim of 2,763,823 litres, the actual amount came to 1,352,922 litres, a difference of 1,410,901 litres.

Similarly, Cirrus Oil claimed 1,028,000 litres though the actual amount was 400,000 litres, while Chase made a claim of 1,032,065 litres instead of 172,850.

On the other hand, the claims of 1,480,989, 2,674,309 and 1,205,452.46 litres of gasoline respectively made by Ebony, Vihama and Hask Oil were confirmed to be true.

Poor record-keeping

Significantly, the audit report identifies “poor record-keeping as a weak link which could result in product losses and attendant liabilities to BDCs”.

“Poor supervision over stock accounting and reconciliations was also identified as a major issue which could result in the manipulation of stock positions and related product balances of BDCs in the BOST system,” the report says.

The report further notes that the concession letter from BOST to the BDCs “was core to the respective weak claims of the BDCs”.

Played to gallery

The report accuses one Seth Asante Wiafe, a former official of BOST who carried out the reconciliations, of connivance which facilitated the frivolous claims by the BDCs.

“A careful analysis shows the figures did not add up. Interestingly, the additions or subtractions permitted by him always played to the benefits of the concerned BDCs.

“The committee believes he possibly threw the figures about to give undue advantage to some BDCs in terms of their product accounting to cheat the system," the report says.

It notes that the stock audit process could therefore be deemed incomplete without the signed-off positions after the requested reconciliation.

For instance, Chase Petroleum wrote to BOST “to dispute the frozen product figure and offered explanations why they should be paid 1,032,065 litres as opposed to the conceded 800,000 litres”.

“Chase Petroleum showed bad faith by writing two letters quoting different rates at which they allegedly purchased dollars with the GHC3,000,000.00 paid them by BOST in respect of lost products,” the report says.

Unregulated

The claim by Cirrus Oil Services in respect of fuel oil “was occasioned by temperature variations for which there is a trading regulation that sellers of products are not liable”, the report adds.

Worse still, “from 2010 to 2014, Cirrus Oil Services had variations in their figures which systematically reduced their over-liftings from the BOST system and added to their positive stock balances as and when they occurred”.

“The records show the company was granted a total of 1,428,000 litres to the detriment of BOST over the period under consideration.”

The report finds that Cirrus, according to the concession letter, had overdrawn its volumes of gasoline in the BOST system by 1,083,342 litres by the cut-off point of March 31 2014.

It also says Chase Petroleum was granted delivery of 627,150 litres without any documentation or evidence of authorisation in that regard.