Financial Trickery at American International School: Controlling party ordered to refund $800,000

An Accra High Court, Commercial Division, presided over by Mrs. Justice Gertrude Torkonoo, has ordered the controlling party at American International School (AIS) in East Legon to refund nearly $800,000 to the school. The controlling party is the Network of International Christian Schools (NICS), based in Tennessee, USA.

The court also ordered the Ghana Revenue Authority to audit the financial records of the school and determine all unpaid taxes the school owes the state, and it appealed to the American Embassy for help in collecting that revenue.

In her ruling, Judge Torkonoo also strongly chastised the Registrar of Companies for its failure to recognize companies that register as charities but engage in fraud.

Since the inception of American International School in 2006, NICS had shipped more than $798,000 it described as service charges out of Ghana under clandestine circumstances without paying taxes on it. To stop the practice, Mrs. Laurie Korum, represented in court by Lawyers Philip Addison and Kwame Akuffo, sued NICS.

Evidence presented in court led the Judge to draw very damning conclusions about NICS, and she ordered the organization to refund the said moneys and pay the corresponding taxes.

Judge Torkonoo ruled that NICS had established AIS as a “cloak” for making money and not as a charity. AIS, which charges high fees in dollars, is registered in Ghana as a non-profit company limited by guarantee.

The Judge also confirmed in her ruling that since the school started, NICS, under its President Dr. Joe Hale, had “lugged” $798,000 non-taxed income out of the country, and ordered the immediate return of that money to Ghana.

“What is clear from this evidence is that under the cloak of being a non-profit organization, NICS was being given money from the income of AIS for whatever activities on top of the reimbursements that NICS had bothered to present records to Ghana in the form of vouchers or receipts to prove their expenses. They were not paying taxes for this fee they were earning for whatever services the flat fee covered,” Judge Torkonoo said.

She further stated, “I was not at all impressed by the glib ‘Christian’ posturing of Dr. Hale regarding the work NICS was doing at AIS when it came to the records placed before him on the mechanism NICS had designed to move the school’s money out of Ghana.”

NICS forged evidence

To justify the transfers, NICS, represented in court by Ace Ankomah, tendered into evidence a Memorandum of Understanding—Exhibit J—purportedly drawn up between NICS and AIS in 2006, but Judge Torkonoo said the MOU was forged.

“Exhibit J is an obvious sham, bogus, and has no Christian integrity, and I think it’s a real shame that Dr. Hale swore on a Bible, talked extensively about prayer and Scripture, and sought to hoodwink this court with it to justify the monies being lugged out of Ghana for alleged services. Indeed the situation is even more horrifying when one examines his evidence that all the NICS’ affiliated schools in developing countries were sending these monies to NICS in the United States for these services, and yet he could not attest that due taxes were being paid on them,” she stated.

Judge Torkonoo therefore appealed to the U.S. Embassy to assist in the collection, and she ordered the head of Ghana Revenue Authority “to audit AIS’ books to determine what taxes are payable for any sums retained by NICS as fees for services it purportedly performed for AIS.”

She said the audit is to cover all the levies that NICS charges to AIS and all student tuition fees that were paid directly into NICS’ stateside accounts. She also ordered that the audit is to be completed within six months and reports filed to both the register of companies and the registrar of the court.

The Judge expressed her “profound dismay” with the Registrar of Companies for the "unbelievably reckless and feckless manner in which so many ventures are set up as non-profit organizations, with no mechanism for monitoring that their income is used for charity instead of as a scheme for persons to earn money without paying tax to a country brought to its knees by poverty."

"I believe it is high time Parliament took up its responsibility of setting up a Charities Authority to ensure that income obtained through the activities of alleged non-profit organizations such as churches and other institutions are actually used to partner social development instead of being taken by organizations that effectively dodge the tax net," Judge Torkonoo wrote.

The case was ultimately a tussle between NICS and Mrs. Laurie Korum regarding the money transfers and whether Mrs. Korum had any controlling interest in AIS. Regarding the refund of moneys, the court clearly ruled in favour of Mrs. Korum. But in the matter of controlling interest, Judge Torkonoo ruled in favor of NICS. This was despite NICS’ financial chicanery.

Judge Torkonoo dismissed all charges and counter-charges involving a former director of the school, Marsden Crosby, who was also a party in the case.

American International School