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General News of Wednesday, 23 November 2016

Source: Graphic.com.gh

Gov't accounts frozen following NDK’s suit against State

The Attorney-General’s (A-G’s) Department is contesting the freezing of the government’s accounts, including that of the A-G’s Office, following a legal battle between the A-G’s Office and NDK Financial Services, a non-banking financial institution.

Hearing of the application for garnishee comes off on November 30, 2016. Lawyers for NDK Financial Services will move the application at the Court of Appeal on that day.

Meanwhile, the A-G’s Office has filed an application for stay of execution of the garnishee order being requested by NDK’s lawyers.

After hearing at the Supreme Court, the A-G’s Office received a certificate from the High Court asking the government to pay the full GH¢88 million to NDK Financial Services.

The  A-G applied to set aside the judgement because as far as it was concerned the Supreme Court held that all defendants were jointly and severally liable and for that reason the government was responsible for a quarter, translating into GH¢22 million.

However, the High Court, presided over by Mr Justice Richard Boadi, refused the A-G’s application and ordered the government to pay all the amount.

The A-G appealed the decision refusing to set aside the certificate and applied for stay, but the High Court refused. The court’s refusal resulted in the government and the A-G’s account being garnisheed.

Arguments that lawyers’ accounts could not be garnisheed were also refused. The government’s lawyer also argued that it was a nominal defendant, but the court disagreed, resulting in the state filing for stay of execution at the Court of Appeal.

The A-G’s office is currently pursuing the criminal aspect of the matter to bring the public servants and a contractor who caused the government to incur such debt to book.

Background

On December 21, 2009, NDK Financial Services issued a writ against Ahaman Enterprises Limited, the A-G, Alex Aduko and Aduko Kyeremanteng for the following reliefs: an order for the recovery of GH¢1,008,833.70, being the balance due and owing as of March 31, 2009 on account of credit facilities extended to Ahaman Enterprises by NDK Financial Services between August 26, 2005 and April 28, 2006; repayment of which was secured by Mr Aduko and Mr Kyeremanteng.

Mr Aduko and Mr Kyeremanteng, however, failed to repay after several demands. Interest on the amount at a rate of 6.5 per cent per month calculated at the close of each and payable at the end of every month from April 1, 2009 to the date of final payment was part of the relief.

The plaintiff also claimed jointly and severally against defendants the sum of GH¢286,250.52, being part of the debt balance due under the facilities granted to Ahaman Enterprises by NDK Financial Services between August 26, 2005 and April 28, 2006.

According to the plaintiff, the GH¢286,250.52 was secured together with other payments due Ahaman Enterprises Limited by the A-G but paid to Ahaman Enterprises on January 6, 2009 as a result of collusion by defendants, among other reliefs.

Brief facts

NDK Financial Services was approached by Ahaman Enterprises, a haulage company, for a credit facility and thereafter for several credit facilities over a period of time between 2005 and 2008 to enable the latter to execute contracts awarded it by the Ministry of Energy to haul electric poles and other electric materials from designated locations to various parts of the country under the National Electrification Project.

As a condition for approval of the credit facilities, NDK requested Ahaman Enterprises to secure a written undertaking from the Ministry of Energy that payment would be made in the joint names of NDK and Ahaman Enterprises. The undertakings were signed by the Chief Director and the Principal Accountant of the Ministry of Energy between 2005 and 2008.

Relying on the undertakings, NDK Financial Services advanced various sums of money to Ahaman Enterprises.

Messrs Aduko and Kyeremanteng also gave personal guarantees in favour of NDK Financial Services.

NDK’s position was that the defendants failed to honour the undertakings. The Ministry of Energy, in a letter dated June 17, 2008, directed the Ministry of Finance to pay GH¢286,250.52 to Ahaman Enterprises.

Ahaman received the money without paying NDK Financial Services and when all attempts by NDK to retrieve its money failed, it resorted to a court action. The A-G’s office denied it was in any way liable to NDK on the grounds that the undertaking issued was an undertaking to pay in the joint names and could not be construed as an undertaking to be liable for debts owed to NDK by Ahaman.

Decisions and appeals

On December 21, 2011, the High Court dismissed the case against the A-G, but NDK appealed and on March 28, 2013 the Court of Appeal held that NDK could recover GH¢286,250.52 from the defendants jointly and severally, at an interest rate of 6.5 per cent per month until the date of final payment.

The Court of Appeal further held that Ahaman and the A-G were jointly liable to pay NDK any other sums due under the haulage contract, in contravention of the undertakings, together with interest at 6.5 per cent per month to the date of final payment, but the A-G appealed to the Supreme Court.

However, the Supreme Court held all the defendants jointly liable and, accordingly, directed them to settle all debts arising from the haulage contract after accounts were rendered. It also directed the defendants to pay interest on the amount.   Crux of the matter

The crux of the A-G’s argument was that the Supreme Court had made it clear in its decision that all the defendants were jointly liable. It is, accordingly, arguing that the government was liable for only the sum of GH¢22,133,141.30 payable to NDK. Peasah-Boadu and Co. were the lawyers for NDK Financial Services.