Officials From Social Security and Housing Finance Corporation.
By Ramatoulie Jawo
The National Audit Office (NAO) has disclosed that tenants owe the Social Security and Housing Finance Corporation (SSHFC) D12.1 million in arrears due to improper documentation by the institution.
Mr. Omar P. Sabally, a Senior Audit Manager at NAO, told members of the National Assembly Standing Committee on Public Enterprise Committee (PEC) that their review revealed SSHFC has not efficiently monitored its investment portfolios.
“Our review of the Internal Audit Report on Investment revealed that SSHFC has not effectively monitored its investment portfolios. For instance, for the year 2019, investment properties accounted for 34% of the investment portfolios of the NPF. SSHFC Activity Report for 2019 stated that the return on the investment properties portfolio was 25.4%, being the highest return on the many portfolios held by SSHFC.
“However, the Internal Audit Report on Investment stated that the Department of Finance and Investment has not maintained proper documentation and review of the annual tenancy agreement for one of the investment properties (The NTC Complex) since January 2015. This has resulted in GMD12.1 million arrears owed to SSHFC by the tenants of these properties. For the year 2019, this represents 8.9% of the total income that the Corporation reported. It is 137.5% of rental income from investment properties that the Corporation held” Mr. Sabally revealed.
Mr. Sabally told the PEC that the Internal Audit Reported the failure to effectively collect rents due on investment properties held by the SSHFC was attributed to SSHFC not actively pursuing the tenants for the rents.
Mr. Sabally said, for instance, the tenants that were occupying the NTC Complex were last officially communicated to in January 2015 ( 4 years ago) about the rent payables.
“The non-payment and low-interest rates affected the growth of members’ funds. Member’s funds are affected by Contributions and fewer benefits and Interest paid to the members of SSHFC have seen growth in member’s funds for each of the years under review.
“The growth in member funds for the years 2018 and 2019 is wholly due to member contributions net of benefits paid to claimants. This is because no interest is paid to the members. For the year 2020, the interest on member’s fund accounted for 27.2% growth in the member’s fund and the contribution net of benefits accounted for the other 73.8%,” he said.
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Mr. Sabally further told PEC that the Social Security Committee should have the function to consider and review investment policies and decisions.
“According to the Internal Audit Report of SSHFC titled “Benefits Process Audit for the period July 2019 -December 2019.” The Board Investment Committee has not been active as of 31 December 2019. According to our interview with the Department of Finance and Investment, the Investment Committees were last active in 2018.
“This was because of a change in the Corporation’s leadership. Therefore, investment decisions were taken by the Board based on the recommendation made by the Managing Director and the Investment Department. This has impacted negatively on the ability of SSHFC to effectively undertake investments that maximize returns for the members as a result,” He stated.
Mr. Sabally disclosed that the member’s fund for NPF has grown from GMD3.8 billion to GMD3.9 billion (3%) in 2019 to GMD4.2 billion (8%) in 2020.
Mr. Sabally further disclosed to PEC that the growth in 2021 is wholly due to the contributions net of benefits.
He said this is due to the reason that interest rates were not yet declared at the time of their audit.
Mr. Sabally said SSHFC has not effectively protected the welfare of its contributing members for the period under audit.
“This conclusion is based on the rate of interest that members received on their savings with SSHFC. Compared to similar Social Security funds in Africa, the Corporation has not satisfactorily performed. This means that contributors were effectively receiving only their contributions made to the fund.
“We recommend that SSHFC establish a structure that ensures that investment policies, undertakings, and performance are regularly reviewed. This structure should ensure that investment portfolios are well diversified, and the performance of the portfolios is effectively monitored and reported. So that the Board has timely information for corrective actions,” He said.
The Management of SSHFC responded that as per the 2019 internal audit report, medical and health rent Owings amounted to D4.1 million dalasis out of the D12.1 contained there.
“The Auditors reported that the Corporation has not effectively protected the welfare of the members for the period under audit. However, we need to put this into context because we were affected by the impact of the various Executive Directives amounting to over GMD2.0 Billion in principal, recovery of which is still a challenge not including the lost interest which could have amounted to over GMD315 million,” SSHFC told PEC in respond to the NAO reports.
The Management also indicated in their response that this list of investments was imposed on the Corporation through Executive Directives and the directives included; Galia (two ferries), Qatari (GFFI), GAMCO Police Barracks, GCAA (fire tenders and ambulances), GGC Loan Guarantee, GRTS Satellite, GIA Hajj, NAWEC Loans, and Kanilai Housing Project.
“All the above investments are red herrings including one NAWEC Loan (Build Own and Transfer). The amount of this loan is D74,517,000. The overall recoveries to date
(December 2022) is D384,325,843.10, leaving an outstanding amount of D1,615,674,156.90.,” SSHFC told the PEC.