SSNIT's ?50b investment in WAHOME crumbles

WAHOME Steel Ltd., a steel company in which the Social Security and National Insurance Trust (SSNIT) sensationally pumped over ?50 billion in 1993 and took over its management, has ceased production for the past three months, as a result of an accrued debt of over ?214 billion.

Furthermore, pressure is mounting on SSNIT, which holds majority shares to either inject a minimum of ?14 billion ($2 million) to save WAHOME Steel Ltd. from being liquidated, or lose their investment.

Following an Accra High Court ruling against WAHOME Steel Ltd., suppliers of raw materials to the company through the Registrar General's Department began the liquidation of the assets of the company but SSNIT stepped in and asked for a three-month grace period to put things in order. The grace period expires today.

Workers of the company have not received their salaries for the past three months as management has asked most of them to proceed on leave with pay because there is no work for them to do. About 400 workers stand the risk of being redundant.

Chronicle gathered that two weeks ago, the new director for SSNIT, Mr. Kwesi Osei tasked SSNIT's Investment Department headed by Mr. Asiedu Gyamfi to look into the issue and submit a report to him by tomorrow, Wednesday, August 1, 2001.

Before the appointment of Mr. Kwesi Osei WAHOME had earlier on appealed to the then acting Director General of SSNIT, Mr. Eric Adjei to pump in more funds to resuscitate the company, but no decision could be taken because Mr. Eric Adjei was still in an acting position and required SSNIT board's approval.

Chronicle learnt that one Mr. Agawu of SSNIT management took tons of steel pellets to neighbouring Liberia to sell, but could not collect payment for the goods. Agawu was recently promoted and sent to head office.

Speaking in an interview with the Chronicle yesterday, the Ag. Managing Director of WAHOME Steel Ltd., Mr. Asamoah-Mensah confirmed the company's debt situation and threats of liquidation from creditors but attributed the troubles of the company to lack of cash flow.

Mr. Asamoah-Mensah said that way back in 1996/7 when he was not with WAHOME Steel Ltd., they bought raw materials on credit from foreign companies but they could not pay until last year when the suppliers including SALGITTER, LAMBOURNE and MANUCHAR dragged them to court and obtained a ruling in their favour.

"We owe our suppliers about $2.7 million and SALZGITTER sold two of our vehicles… In February this year, LAMBOURNE petitioned the Registrar General's Department to liquidate the company and the process was started. However, SSNIT intervened", he said.

Asked about the percentage of Shareholding of SSNIT, Mr. Asamoah-Mensah said the Trust held 41%. Chronicle gathered that when SSNIT realized that trouble and crises was looming in the company they gave a loan of about ?36 billion which they later translated into shares last year. SSNIT again paid about ?25 billion on behalf of WAHOME Steel Ltd.' representing letters of credits that were guaranteed by the Trust.

Pressed for answers on why the company has ceased production, the Ag. MD told the Chronicle that since March last year, WAHOME has been relying locally on dilapidated raw materials because their suppliers ran out of patience.

"We have been buying scraps in the country to sustain the company. Workers have been asked to go on leave with pay because even if they come there is no work for them to do," he added.

Chronicle is aware that WAHOME Steel Ltd. has done Rights of issue, which is a call on the shareholders, which include International Finance Company (IFC) 6% are all silent and waiting on SSNIT who is the biggest single shareholder to make the first move.

WAHOME owes IFC about $1.5 million, Standard Chartered Bank ?4 billion, Electricity Company of Ghana (ECG) ?600 million, suppliers $2.7 million, Rockshell International 18 million pounds sterling, Social Security arrears ?200 million, and Internal Revenue Services about ?300 million.

As at yesterday when Chronicle visited the factory, the usually noisy premises was totally quite with the remaining workers either playing cards or sleeping. At the administration block, senior officers were busy compiling names of workers who were being asked to go on compulsory leave.

WAHOME Steel Ltd., which until its troubles was the biggest steel factory in Tema, has a production capacity of between 4000-5000 metric tonnes a month. The company also produces Oxygen (Industrial gas), Acetylene and nitrogen gas as well as nails. The company is also engaged in the importation and sale of steel products that are not produced in Ghana.

Chronicle sources hinted that the troubles of the company began when SSNIT took over the management of the company from Mr. Alan Chu, a Taiwanese who now holds shares in the company.

The sources noted that the debts had accrued to such a proportion because the new management at a point stopped paying the suppliers and other creditors. The new SSNIT management swerved the suppliers whom they owed billions and started taking supplies from other companies.

This action, they said, compelled the original suppliers to drag WAHOME Steel Ltd. to court to reclaim their monies.

"SSNIT should have appointed an independent management team to run the company, instead of bringing in personnel from their outfit on whom they had direct control", the source added.