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General News of Wednesday, 30 July 2003

Source: Elvis Kwashie for Network Herald

Former TOR boss Faces prosecution

Network Herald inquiries on the final forensic audit into the operations of the Tema Oil Refinery (TOR) suggest that the audit committee has recommended to government to institute criminal action against the former chief executive of the Refinery, William Parker for causing financial losses to both the refinery and the state.

The report also recommended civil action against Mr. Parker for the recovery of $1,001,712 for his role in the irregularities in the award of contract for the construction of 3 storage tanks and an 18-inch pipeline from the refinery to the oil jetty at the Tema habour. The construction was to facilitate the delivery and receipt of products to and from the jetty and to reduce the cost of demurrage.

It also asked government to consider the possibility of prosecuting the entire technical committee of TOR for loss of the refinery’s property and losses to the state.

According to the report, a glance at the transaction and the circumstances surrounding those transactions reveal such major weaknesses as; improper planning and budgeting, lapses in tendering procedures, lack of clear-cut policy on transactions that required board approval and the risk of being sued for unlawful termination of contracts and unfair commercial practices, in TOR’s management.

The forensic audit carried out by the government on TOR among 12 public institutions in 2001 established that the Tender Board after evaluating proposals from five companies, including S.K. Engineering and Construction Company Limited (SKEC) and Motherwell Bridge Projects (MBP), concluded that SKEC was the most competitive company. Subsequently, on 3rd June 1999, TOR by a faxed message, award the contract to SKEC for the construction of three tanks at the value of $5,346,080.

However, on June 07, 1999, TOR cancelled the contract award to SKEC and notified Motherwell of an award of the contract, though the company’s bid showed a higher contract price and a longer delivery time in relation to that of SKEC. Motherwell thereafter produced a bank guarantee after the contract award with TOR’s assistance. The company was also given the free hand to vary its bid terms after the tender evaluation. This afforded Motherwell the opportunity to reduce the delivery time from 80 weeks to 45 weeks.

After awarding the contract to Motherwell, TOR was significantly instrumental in facilitating the acquisition of a bank guarantee for Motherwell, though it had rejected SKEC’s earlier request for a one-week period within which to produce a bank guarantee. Mr. Parker signed the contract between TOR and Motherwell on July 09 1999 for the design, engineering, procurement, construction, calibration and commissioning of the three fuel storage tanks within the refinery. Mr. L. Prempeh, the then deputy Managing Director, Finance and Administration witnessed it.

Motherwell’s contract was valued at $6,347,792, exceeding the most competitive bid by $1,001,712. TOR was to make an advance payment of $952,168.80 representing 15 per cent of the total contract value on execution of the contract and on presentation of an Advance Payment Guarantee. An amount of $5,395,623.20 representing 85% of the contract amount was to be sourced from Standard Chartered Bank.

Work was to commence on the occurrence of both the receipt of advance payment by Motherwell and the entry into a loan agreement between TOR and Standard Chartered Bank. The loan was obtained on September 1, 1999 for a draw down of up to $5,395,623.20, repayable over nine months, with interest at LIBOR plus 1% per annum. According to the report, the transaction did not comply with internal procurement policies.

Under the terms of TOR’s corporate policy for awarding engineering construction contracts, prices, quality, technical ability and completion schedule are among the most essential grounds on which contract is awarded. The report pointed out that this policy was contravened when the SKEC contract was abrogated and replaced with Motherwell, after the latter had been allowed to change its delivery schedule.

”Members of the technical committee at the time who allowed Motherwell to amend its bid after the evaluation process, and awarded the contract to Motherwell, and also Mr. W.S. Parker who signed the contract with Motherwell Management may be held liable for the extra liability of $1,001,712 the company was committed to.” or loss of the refinery’s property and losses to the state. This is just the begining, there is more to come.