THE COMMISSION ON HUMAN RIGHTS AND

ADMINISTRATIVE JUSTICE

INVESTIGATION REPORT:
(INTERIM ONLY)
PROFESSOR STEPHEN K. ASARE
V.
CLERK OF PARLIAMENT.

INVESTIGATOR
AYAMDOO CHARLES
HEADQUARTERS

APRIL 2003

1
 INTERIM INVESTIGATION REPORT

COMPLAINANT PROFESSOR STEPHEN K. ASARE

RESPONDENT THE CLERK OF PARLIAMENT

INVESTIGATOR PRINCIPAL INVESTIGATOR, AYAMDOO.

NATURE OF COMPLAINT CORUPTION AND ABUSE OF OFFICE

_____________________________________________________________

1.0 THE COMPLAINT

The Commission on Human Rights and Administrative Justice (the Commission)
received a complaint from Professor Stephen K. Asare (“the Complainant”)
requesting the Commission to investigate the grant of car loans to Members of
Parliament (MPs) of the First, Second and Third Parliaments of the Fourth
Republic of Ghana. According to the Complainant, the car loans granted to the
MPs in 1993 and 1997 were not car loans at all but gifts disguised as loans, which
he contended constituted a bipartisan raid on the consolidated fund warranting
investigations by the Commission. The complainant said that the Clerk of
Parliament (Clerk) denied him access to documents on the granting of the loans to
the MPs, claiming that the documents constituted privileged information.

The complainant further alleged that pieces of information publicly available

indicate that the interest rates in 1997 were over 50 per cent, and the principal
amount was $15,000 repayable in 4 years. He said that based on this information,
and assuming a concessionary interest rate of 40 per cent was placed on the loans,

2
the payment terms must have been the equivalent of $630 per month. Therefore,
if the payment terms laid out for the MPs fell short of $630 per month, then the
MPs had not paid for the loans fully.

The Complainant drew the attention of the Commission’s to an article he had

earlier written on the subject and which was published by an Accra newspaper,
the Accra Mail on 17/10/2001. In that article, he discussed extensively about the
proposed loans to be granted to the MPs in 2001, which arguments, according to
him, apply mutatis mutandis to the 1993 and 1997 loans. That publication,
entitled “When is a Loan not a Loan?” in brief, is as follows:
“Our poor MPs have taken a severe beating from the media and the
internet chat rooms (especially Okyeame and SIL) for their recent attempt
to “borrow” ¢28 billion ($4,000,000) from the already bankrupt
consolidated funds to help them acquire cars…
The car loan saga raises two interrelated issues: (1) when is a loan not a
loan? (2) do our MPs need cars and, if so, what is the best way to solve
the transportation problem?
I do not consider the ¢140,000,000 ($20,000) “loan” proposal as a loan
proposal at all! Rather, I consider it as gift, sloppily disguised as a loan,
from the consolidated funds to the MPs. I base my conclusion on the
purported loan amount (¢140,000,000 each), purported monthly
installments (¢1,400,000) purported payment periods (48 months) and a
30 per cent interest rate. The loan amount does not appear to be in
dispute. The purported monthly installment is based on a statement
attributable to Rex Owusu Ansah, the Clerk of Parliament and reported by
various media. No MP has challenged this amount and a September
deduction has, allegedly, already been effected. The payment period is
based on the history of similar loans to MPs in 1993 and 1997.

To understand how our MPs were using this loan proposal as a means to
“steal” from the consolidated funds require a little discussion of the

3
mechanics of a loan. A loan is nothing more than a contract which
commits a borrower to make a series of specified future payments to a
lender in exchange for an immediate consideration that the borrower
receives from the lender. The loan contract is consummated because the
lender and the borrower have different time preferences for money. The
MPs want the money today to buy their cars and promise to repay the
consolidated fund at a future date. The trick to making the contract
workable is a concept, called present value, which simply requires the
MPs to return to the consolidated funds an amount in the future that is
worth the same amount of money that they are borrowing today. This is
where the interest rate comes in….

Consider an example of an MP who borrows ¢1,000 when the interest is

30 per cent and promises to pay this amount at the end of the year. The
MP must pay ¢1,300 at the end of the year to cover the principal and the
interest. If he pays only ¢1,000 then he has “stolen” ¢300 from the lender.
The lender demands ¢1,300 because he could simply dump ¢1,000 in a
bank and allow it to grow to ¢1,300. The interest rate acknowledges things
like inflation and riskiness. Put another way, “a cedi in hand now is worth
thirty next year”, a saying that is easily understood by any Ghanaian.

Which brings us back to the MPs attempt to borrow ¢140,000,000 from

the consolidated funds. Given a payment term of 48 months and a
concessionary interest rate of 30 per cent, what should be the monthly
installment on the loan? The answer turns out to be ¢5,040,839.13 which
is significantly higher than the ¢1,400,000 that is being quoted as the
installment amount on the proposed loan.

So exactly what is a monthly payment of ¢1,400,000 over 48 months

worth? Well this is sad news. It turns out that 48 sequential monthly
payments of ¢1,400,000, at an interest rate of 30 percent, is only worth

4
 ¢38,882,415. The difference of ¢101,117,585 (140,000,000 – 38,882,415)
would have been a clever transfer from the consolidated funds to the MPs.
It is important to understand that this calculation is based on the 30 per
cent interest rate and the 48 months. If one changed these assumptions,
one would come out with different numbers but the same qualitative
results. By way of sensitivity analysis, consider the situation where the
loan was given at zero percent interest rate for 48 months. Even making
this highly unrealistic and certainly foolish assumption, will still imply
that the MPs will only be paying the equivalent of ¢67,200,000 (or
$9,600). The difference of ¢72,800,000 (or $10,400) is a net raid on the
consolidated fund and can buy a nice used BMW in Europe or USA. For
the deal to work at zero percent and be a real loan, the MPs must pay
¢2,916,667 every month for 48 months.

But the analysis should lead us to ask for the full terms of the car loans
(and any other loan granted to MPs) in 1993 and 1997. We know that
¢890 million were disbursed to 178 MPs to acquire vehicles in 1993. We
also know that MPs were given loans of ¢26 million each ($15,000 at the
time) in 1997 to acquire vehicles. What we do not know for sure are the
payment terms and whether the MPs have paid the full amount of the
loans using the concept of present value as explained earlier.”

The Complainant requested the Commission to “…have the contracts re-looked

at such that the MPs’ repayments fully repay the amount that they borrowed
plus the appropriate interest, which should be based on the inter bank lending
rate at the time the loan was consummated. I also believe that penalties must be
imposed on any non-payments on the contract as written in 1997 and 1993, as
well as the contract as should have been written in those years. Paying less than
one borrows from the government is worse than tax evasion and should exact

5
 significant consequences, especially when those involved are the nation’s
lawmakers.”

The complainant then concluded his complaint thus: “The zero tolerance for
corruption slogan will be meaningless unless CHRAJ’s investigative arsenal is
brought to bear on key political leaders who abuse their power or engage in acts
of corruption…”

2.0. ASSIGNMENT OF CASE

On 20th December 2001, the Director, Promotion and Anti-Corruption, of the
Commission designated me to investigate the issues raised by the Complainant.
This report concerns that investigation and it covers the processes used in the
investigations, as well as the findings and recommendations for action by the
Commission

3.0. INVESTIGATION
3.1. Persons Interviewed/ contacted.
I interviewed/contacted the following:
Office of Parliament;
i. Hon. Kenneth E. K. Tachie - Clerk to Parliament
ii. Mr. Dan Chirawura - Internal Auditor
iii. Mr. Amponsah Boateng - Head of Finance
iv. Mr. Agama. - Deputy Clerk
v. Mr. Azumah - Former Auditor

Ghana Commercial Bank;

vi. Ms. Nimako-Boateng - GCB, High Street Branch
vii. Mr. Chombui J.W. - Legal Officer (Counsel for GCB)
viii. Mr. Julius Tamakloe - GCB Ring Road West Branch
ix. Mrs. Matilda Obeng Ashong. - Managing Director

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 Social Security Bank;
x. Mr. Kojo Thompson - Managing Director
xi. Mr. Jackson Abbiw - Legal Department
xii. Mr. Mark Ofori- Kwafo - Legal Department

3.2. Documents
I also inspected a few documents, including the following:

i. Salary Payment Vouchers of Members of Parliament for the

period 1996-2000, 2001and 2003

ii. Payment Vouchers covering the payment of ex-gratia awards to

Members of Parliament in 1996 and 2001

iii. Report of the Committee Appointed by the President to Advise on

the determination of Emoluments of Specified State Functionaries
(“the Greenstreet Report”)

iv. Prevailing Interest Rates For the Period 1994/1995

v. Debit –Transfer Cards of some MPs at the GCB

vi. List of MP’s who took loans from the GCB and SSB

vi. Others

3.3. Written Response from the Respondent

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 Upon receipt of the complaint, the Commission submitted a copy of it to the Clerk
to Parliament, (the respondent), Hon. Kenneth E.K. Tachie, who submitted to the
Commission his written response to the allegations made against it by the
Complainant.

3.3.1. First Parliament of the Fourth Republic

The respondent stated that following meetings with the leadership of the First
Parliament, the then Minister for Finance and the then Governmental Advisor, in
1993, it was agreed that members of Parliament (MPs) opened personal accounts
with the GCB and SSB for loans of 5,000,000 cedis, which members did. The
Ministry of Finance guaranteed the loans.

He said that consequently, the salaries of the MPs were paid through the MPs
banks and those banks made monthly deductions in respect of the loans, which
they granted to the MPs up to December 1996, when that Parliament stood
dissolved. According to the respondent, any remaining balances were deducted
from exgratia awards granted to the MPs at the end of that Parliament.

He concluded that, “ in effect members contracted loans directly with their

bankers to purchase means of transport with only a guarantee by the Ministry
of Finance that members salaries would pass through those banks to enable the
latter recover the said loans”.

3.3.2. Second Parliament

With regards to the Second Parliament of the Fourth Republic, the respondent
stated that Government provided MPs with loans worth thirty one million and six
hundred thousand (31,600,000) cedis to purchase brand new roadworthy cars. He
said the loan consisted of the following:
Purchase price - 26, 000,000
Insurance - 2,600,000
Duty - 3,000,000

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 Total 31,600,000

He stated further that the money was released through the Office of Parliament for
the purchase of the cars and deductions in respect of the said loans also
commenced the same month that payment was made for the cars.

The respondent disclosed that by 1999, a total deduction of 7,193,000 per MP had
been made and the remaining balance of 21,827,000, presumably with interest,
was fully deducted at source at the Ministry of Finance against the exgratia award
paid to each MP in December 2001

3.3.3. Third Parliament of the Fourth Republic

In 2001, a different arrangement for car loans was made. The respondent stated
that following a meeting held on 4th Sept, 2001, it was agreed that MPs be assisted
to purchase transport “…for official duties under an equitable and economic hire
purchase agreement”. The amount agreed upon and approved was an all inclusive
credit ceiling of US$ 20,000 for each MP.

Each MP was to select a vehicle of his/her choice provided that the cost of
Insurance and Freight (CIF) value of such vehicle, together with taxes and
Comprehensive Insurance Cover did not exceed US$20,000.00 ceiling to the
dealer.

He disclosed that installment re-payment by each MP had already been effected at

source since 30th September 2001 at the rate of 1,200,000 per month, even
before the commencement of the grant of the credit facility. The Respondent said
that at the end of the parliamentary term of four years, any unpaid balance of the
US$ 20,000 would be settled from other entitlements due to the MPs concerned.

The process of payment for the vehicles includes the completion of application
forms as required by the Public Services Regulations and the establishment of

9
 Letters of Credit by the Controller and Accountant General to enable the various
motor firms import the said vehicles.

The respondent disagreed with the complainant that “… the car loans for
Members of Parliament in 1993 and 1997 were not car loans at all but gifts
disguised as loans.” According to him, in so far as any amount advanced or
loaned to any Member of Parliament for the period covered has been fully
recovered, it is difficult to see how even “an expert” can classify this as a case of
“gifts” and not loans. Most certainly, the description of the arrangement both in
1993 and 1997 as “a bipartisan raid on the consolidated funds” is an extreme
exaggeration and totally without foundation. There is no basis, therefore, for the
allegation that the arrangement constituted instances of corruption and abuse of
power justifying an investigation by the Commission under article 218 of the
Constitution”

3.3.4 The Controller and Accountant-General(C&AG)

The Controller and Accountant-General’s Department was requested to provide
the following information to the Commission:

i. Copies of salary payment vouchers of Members of Parliament of

the First Parliament of the Fourth Republic for the periods 1994
and 1996;

ii. Copies of salary payment vouchers of Members of Parliament of

the Second Parliament of the Fourth Republic for the periods 1997
and 2000 (November and December only);

iv. Copies of salary payment vouchers of Members of Parliament of

the Third Parliament of the Fourth Republic for June and
September 2001;

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 vii. Copies of payment vouchers covering the payment of ex-gratia
awards to Members of Parliament of the First and Second
Parliaments of the Fourth Republic.

On 21s August 2002, the C&AG wrote to the Commission thus:

“… the personal emoluments of members of Parliament are not
processed by the Controller and Accountant-General’s
Department. Consequently, the salary payment vouchers are not
available in the Payroll Processing Division of the Controller and
Accountant-General’s Department

It is suggested that you direct your request to the Office of

Parliament as it subsists on subvention and thus discharge its own
financial obligations, including the payment of salaries and other
expenses…”

3.3.5 The Ministry of Finance

Following the response from the respondent that “…members [of Parliament]
contracted loans directly with their bankers to purchase means of transport with
only a guarantee by the Ministry of Finance that members salaries would pass
through those banks to enable the latter recover the said loans”, the
Commission requested the Ministry of finance to furnish it with the following
information:
i. Copies of Guarantees for car loans executed during the period of 1994-
1996 between the Ministry of Finance and the Ghana Commercial Bank,
and the Social Security Bank (the Banks) for the grant of car loans to
Members of Parliament (M.Ps) of the First Parliament of the Fourth
Republic;

ii. Evidence of deductions made against the Ex-gratia award of M.Ps of the
Second Parliament of the Fourth Republic, which was paid in December
2001.

The Ministry regretted that it was unable to accede to the Commission’s request.
The Ministry’s reply is as follows:
“We acknowledge receipt of letter no. CHRAJ/2102/2001/
648 of 27th November, 2002 in which you requested the
Ministry to furnish your Office with copies of loan
guarantees issued to Ghana Commercial Bank and the
Social Security Bank in favour of Members of Parliament
(MP) of the First Parliament of the Fourth Republic
together with Evidence of Deductions made against Ex-
gratia awards of MP’s in December, 2001.

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 We regret to inform you that we are unable to accede to
your request as the required documents are not readily
available to us. The Office of Parliament operates with
some level of autonomy and as such has not been relating
with this Ministry in all aspects of their accounts and
financial matters”

4.0. FINDINGS
4.1. The Car Loans of the First Parliament
Documents from Parliament reveal that the respondent did not only facilitate
Members of Parliament of the 1st Parliament of the 4th Republic to obtain car
loans from the GCB and SSB but also from the NIB and Barclays Bank as shown
in Table 1.
Table 1: MPs Car Loans (1994) and Banks
S/No No. of MPs Bank Amount Interest
(Millions - ) Rate
(%)
1. 111 GCB 5 & 5.5 2
2. 72 SSB 5 &5.5 2
3. 1 NIB - -
4. 1 Barclays - -

Source: MPs Car Loans File, Office of Parliament and GCB

The Ghana Commercial Bank (GCB) and the Social Security Bank were
contacted and requested to provide information regarding the loans.

4.2. Ghana Commercial Bank

Ms. Phyllis Nimako-Boateng, Assistant Manageress, accompanied to the
Commission by Mr. Chombui J.W, a Legal Officer of the GCB and Julius
Tamakloe, a staff of the Ring Road Branch of the GCB( he was on loans schedule
at the time the loan facility was granted to the MPs in 1993/1994, and did handle
some aspects of the M.P loans) provided some information to the Commission

12
regarding the car loans the GCB granted to the MPs of the First Parliament of
1993-1996.

The GCB confirmed that it granted car loans to about one hundred and eleven
(111) MPs between August 1993 and November 1994 (Appendix A). The loan
amount was 5,000,000 and 5,500,000 (While some MPs took 5,000,000
others took 5,500,000.)

The Office Of Parliament undertook to pay the salaries of the MPs through the
GCB to enable the GCB to deduct monthly installment payments from the MPs
salaries, which was done. Accordingly, the MPs salaries were paid to them
through the GCB and the GCB made monthly deductions from the salaries. The
amount of monthly deductions made from each MP’s salary depended on the
amount of loan taken and the number of months within which to pay. Thus, those
MPs who took 5,000,000 and had 38 months to pay, suffered deductions of
131,578. 94 and those who were to pay within 25 months installment period
were to have 217, 391.30 deducted. For those who took 5,500,000, the
monthly deductions were 144,736.84 for 38 months duration and 239,130.43
for 25 months duration. (See Table 2)

Table 2: Debit-Transfer( monthly deductions), 1994

S/No Name of MP Date loan Deductions per

approved month (cedis)

1. Hon. John Brobbey - 143,042.02

2. Hon. Larbi Amoako - 180,291.72
3. Hon. John Aitpillah 15/10/93 150,238.32
4 John Ernest Ekuban 3/2/94 156,250.00
5 Hon. Dr. A. Ababio 17/12/93 163,095.18
6 Hon. Mary Ankomah 2/9/94 154,089.63

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 8 Hon. Paul K. Peprah 27/8/93 154,084.63
9 Hon. Seidu Yahaya 9/8/93 142,928.38
10 Hon. Joseph E. Ackah 15/10/93 150,238.32

Source: GCB, High Street, Accra

4.1.2. The Interest rate

The GCB revealed that it placed an interest rate of 2% on the loans that the MPs
were granted. At that time, the prevailing interest rate was 32%1. Ms. Nimako-
Boateng could not explain why the GCB did so, as she was not involved at the
time. Mr. Julius Tamakloe, the schedule officer at the time could not do so either.

During investigations, it was confirmed that pubic servants do obtain loans from
Government to purchase means of transport an interest rate of 2% is placed on the
loan, and the loan is deducted at source on monthly installments until the loan
amount plus the interest is fully recovered. However, where a public servant
obtains a loan from the Bank to purchase means of transport, the usual bank
interest rate would apply.

Documents from the GCB reveal that a sum of between 416,666.662 and
2,105,263.043 was deducted from the salary of each MP in repayment of the
loans they took from that bank4. The deductions were effected at source from the
beginning up to December 1994 and not December 1996, as stated by the
respondent5. Consequently, the loan was not fully recovered from the monthly
deductions. As the documents reveal, the MPs had over 2,000,000, each as debt
due and owing to the GCB as outstanding balance on the loans.

1
List of interest rate provided by the GCB
2
Hon. Domnic Azimbe Azumah
3
Ho. Nketia Johnson Aseidu and many others
4
GCB.8 “Debit-Transfer
5
see schedule to letter submitted by Office of Parliament dated 6th February 1994, under the heading” CAR
LOAN REPAYMENT-MEMBERS OF PARLIAMENT” REF. No. NA/GCB/95

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4.1.3. How were the balances to be paid?
The Respondent stated that “… the salaries of the MPs were paid into the MPs
banks and those banks made monthly deductions in respect of the loans they
granted to the MPs up to December 1996, when that Parliament stood dissolved.
Any remaining balances were deducted from ex gratia award to the MPs as
provided for in the Greenstreet Report”

4.1.4. Ex-gratia award

The MPs were paid exgratia award at the end of their term. Those MPs whose
appointment date was 7th January 1993, were paid 6,623,493, as ex gratia award,
whilst those who served a part of the full term were paid accordingly6. As such
the Hon. Achuliwor, (now Late), Hon. Nana Kodua Kwarteng, Hon. Baffoe Joice
Theresa, and Hon.Osei Kwadwo Hayford, received less than the 6,623,493, as
they served less than the 4 years.

The following items of deductions were to be made from the exgratia awards:
CEPS Deduction (Car); GCB Shares; and other loans. Save the GCB shares item,
for which some deductions were made from those who bought shares, no other
deduction was made from the exgratia award of the MPs, not even the car loan
installment. Therefore, the balance outstanding was not deducted from the ex
gratia award of the MPs.
4.1.5. How was the Outstanding Balance paid then ?
On 20/1/95 and 6/02/95, and before that Parliament stood dissolved in December
1996, the Office of Parliament paid 234,919,129.20 to the GCB to offset the
outstanding balances on the car loans due that bank “…on behalf of Members of
Parliament as per schedule attached”7

6
The Speaker, Ministers and Deputy Ministers are not on this list”
-payment of exgratia award to MPs
7
letter submitted by Office of Parliament dated 6th February 1994, under the heading” CAR LOAN
REPAYMENT-MEMBERS OF PARLIAMENT” REF. No. NA/GCB/95 confirming that it had paid for the
MPs

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(See Box 1)
Box 1- Parliament’s Letter Confirming Payment

“ CAR LOAN REPAYMENT-MEMBERS OF PARLIAMENT

I wish to inform you that an amount of 234,919,129.20 (Two
hundred and thirty-four million, nine hundred and nineteen
thousand, one hundred and twenty-nine cedis, twenty
pesewas) has been paid to Ghana Commercial Bank, High
Street Branch (vide Chaque Nos. 591387 of 20/1/95 and
591393 of 6th February 1995) being car loan repayment on
behalf of members of parliament as per schedule attached
Please acknowledge receipt for the amount paid.
AG. CLERK TO PARLIAMENT
(S.N. DARKWA)”

Source: Office of Parliament, Accra

It is quite clear from the foregoing that, if indeed, the MPs “… contracted the
loans directly with their bankers with only a guarantee by the Ministry
(which the Ministry denies) that Members salaries would be passed through
those banks to enable the latter recover the said loans”, then Parliament
should and ought not to have paid for the MPs even before the end of their term of
office (only within one year into their assumption of Office). Parliament, even
after paying off the loans for the MPs failed/refused to deduct it from the exgratia
awards, when it was paid to the MPs.

From the conduct of the respondent with respect to the payment of the car loans
for the Parliamentarians, it is reasonable to infer/conclude that, the car loans
granted to the Parliamentarians of the 1st Parliament of the 4th Republic (1994-96)

16
 “… were not loans but gifts disguised as loans.” When the low interest rate the
GCB placed on the loans for the MPs, is added, it makes the assumption even
stronger.

4.2. The Social Security Bank

The Social Security Bank failed to produce the documents/information requested
for despite repeated demands. As a result, it could not be confirmed if the
facilities granted the MPs who opened accounts at the GCB were extended to
those who opened their accounts at the SSB. A subpoena would be issued to
compel it to furnish the Commission with the required information.

4.3. Other Banks

The Barclays Bank and the National Investment Bank (NIB) were not contacted
for the reasons that:

i. only two MPs took the loans through those banks( one through Barclays
and the other through the NIB)
ii. it is reasonable to assume that the facility granted to the 111 MPs at GCB
would have been extended to the other two from those banks

4.4. The Car Loans of the Second Parliament

4.4.1. The Loan Amount
MPs of the Second Parliament of the Fourth Republic, were provided with loans
worth thirty one million and six hundred thousand (31,600,000) cedis consisting
of the following, to purchase cars8:
Purchase price - 26, 000,000
Insurance - 2,600,000
Duty - 3,000,000
Total 31,600,000

8
See Respondent’s written Comments to the Commission dated 17 th April 2002, ref. No. OP/A.001, titled
“Car Loans for MPs and signed by Hon. Kenneth E.K.Tachie, Clerk To Parliament, p.3

17
 An interest rate of 2% per annum was placed on the loan, bringing the total
amount of the loan to 37,920,000.

4.4.2. Deductions
Monthly deductions were made from the salaries of the MPs but the exact amount
per month, which was deducted, was not accessible to me. However, P.V.s of the
ex gratia indicate that by the end of the term of Second Parliament, a total of
7,193,000 was deducted from each MP’s salary9. If this amount were taken
away from the 37,920,000, each MP should or ought to have paid to government
an amount of 30,727,000( 37,920,000 minus 7,193,000= 30,727,000.)
Thus, the outstanding balance to be paid by the MPs after the deductions from
their salaries was 30,727,000 and not 21,827,000, as stated by the respondent.

4.4.3. How was the outstanding Balance paid?

The respondent said that “… the remaining balance of 21,827,000, presumably
with interest, was fully deducted at source at the Ministry of Finance against the
ex gratia award paid to each MP in December 2001” but the Ministry of Finance
denied that it has any dealings with Parliament in respect of personal emoluments.
In a letter to the Commission (ante) the Ministry wrote: “… The Office of
Parliament operates with some level of autonomy and as such has not been
relating with this Ministry in all aspects of their accounts and financial matters”.

Similarly, the C&AGD wrote to the Commission saying that “… the personal
emoluments of members of Parliament are not processed by the Controller and
Accountant-General’s Department. Consequently, the salary payment vouchers
are not available in the Payroll Processing Division of the Controller and
Accountant-General’s Department. It is suggested that you direct your request

9
Except the following MPs, who paid of the loans from the exgratia at a go; Hon. Akuffo-Addo Nana, Blay
FWK, Nortey Okuley Victor,Dzirasah kenneth, Boon Teni Alice, Koi Larbi Agyare, Mensah Joseph,
Henry, Yankah Kojo and A,Rt.Hon. Justice DF Annan

18
 to the Office of Parliament as it subsists on subvention and thus discharge its
own financial obligations, including the payment of salaries and other
expenses…”.

This implies that both the Ministry and the C&AGD did not have anything to do
with the recovery of the loans taken by the MPs and they did not deduct any
monies from their salaries. Therefore, if the MPs fully paid their loans it ought to
been done at the Office of Parliament.

Documents procured from the Office of Parliament disclose that the MPs had not
fully repaid their car loans. The amount paid by each MP was 29,020,000.10 The
mode of payment is as summarized in Table 3.

Table 3: Mode of Payment of Outstanding Balance

S/N Ex Gratia Prin. Car loan Amount Car loan
O paid Difference
1. 65,513,200 29,020,000 7,193,000 21,827,000
Source: Office of Parliament, Accra

Even based on the respondent’s understanding of the loan, which he said

comprised thirty one million and six hundred thousand ( 31,600,000) cedis,
there remains unpaid an amount of 2,580,000 by each MP. If the actual loan
plus the interest of 2% is considered, then the outstanding balance due to be paid
by each MP is 8,900,000. Thus, whichever way one looks at the issue, the MPs
have not fully repaid the loan they took during the term of the second Parliament.

4.5. The Car Loans of the Third Parliament

10
Extracted from a document labeled “ Computation of Difference in the Payment of Ex-gratia for
Members of the 2nd Parliament”

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4.5.1. Loan Approval
Following negotiations by the leadership of Parliament and Government, on 4th
September 2001, Hon Yaw Osafo-Marfo wrote to the Majority Chief Whip, under
the heading: PARLIAMENT CAR LOAN ACCOUNT, (Ref No/OOP/003)
thus:
“ The ministry of Finance approves that an all inclusive credit
facility amounting to $20,000 be granted to each MP, to purchase a
car for official duties under a Hire Purchase Agreement to be
approved by the Ministry of Finance. This is consistent with
similar arrangements made for MPs in 1997
Installments will be deducted at source with effect from September
2001 at the rate of 1,200,00 per month. Unpaid balance is to be
settled from other entitlements of MP’s at the end of
parliamentary term of 4yrs.

Pursuant to this letter, a $ 20,000 loan facility was granted the MPs’ and
deductions of 1,200,000 started in Sept 2001, which means that the MPs had 40
months from September 2001 to December 2004 to pay for the loans.

4.5.2. Deductions
Total expected deductions from the salary of each MP would look as follows
(Table 4:
Table 4: Expected Total Deductions(Sept 2001-December 2004)11
S/No Year Monthly deduction Total Deduction
(cedis)
1 2001(Fro
2 m Sept) 1,2000,000 4,800,000
3 2002 1,2000,000 14,400,000
4 2003 1,2000,000 14,400,000

11
Based on the respondent’s confirmation that deductions started in September 2001 at 1,200,000 per
month.

20
 2004 1,2000,000 14,400,000
Total 48,000,000

Table 4 shows that by the end of the Third Parliament in December 2004, a total
amount of forty eight Million (48,000,000) cedis would have been made from
the salary of each MP in repayment of the car loan of US$20,000.

4.5.3. Outstanding balance Per MP by 2004

The twenty thousand (US $20,000) United States Dollars given to the MPs
translates into one hundred and forty million ( 140,000,000) cedis12. By
December 2004, each MP would have an outstanding balance of ninety-two
million ( 92,000,000) cedis to pay for the loan, which does not include interest.

According to the respondent any “unpaid balance is to be settled from other

entitlements of MP’s at the end of parliamentary term of 4yrs. Following from
this statement, each MP would have to pay 92,000,000 from their end of term
entitlements. The end of term entitlements for the MPs have been provided for
based on the recommendations made to the President of the Republic in 1998
regarding the emoluments of certain functionaries of state (the “GREENSTREET
REPORT”) The Greenstreet Report states in part, as follows: Box 2

Box 2: Extract of the Greenstreet Report on Ex-Gratia Awards.

“Ex-Gratia Awards
14. The executive and the legislative positions are often occupied by officers
whose appointments are transitory and contractual.
Thus, except for the President who is to retire on his salary, the
Vice President, the Speaker, the Ministers and Deputy Ministers as
well as Parliamentarians are paid ex-gratia awards on completion of

12
The exchange rate of the dollar to the cedis at the time the loans were granted was 1 dollar : 7,000

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 their term of office. These awards take the form of a lump sum paid
at the end of a defined period.

15. The Committee recommends the Payment of an ex-gratia award at a

uniform rate of three-month salary for each year served or part
thereof, to all top state functionaries on such limited/contractual
appointments, including the Vice-President, the Speaker, Ministers
and Deputy Ministers as well as Parliamentarians…”13

38. “The Committee reiterates its position on

ex- gratia awards and pensions as follows:

(i) ex-gratia awards should be paid

to Public officers whose appointments
are transitory and contractual. In this regard, the affected top state
functionaries include the Vice President, the Speaker, the ministers
and Deputy ministers as well as Parliamentarians. They are to be
paid ex-gratia awards at the rate of three months salary for each
year served or part thereof based on their terminal salaries…”

The recommendations contained in the Greenstreet Report were accepted and

used by the Office of Parliament to pay ex gratia awards to Members of
Parliament of the 1st and 2nd Parliaments of the 4th Republic in 1996 and 2000
respectively. The ex gratia award to the present Parliament would also be paid in
accordance with the Greenstreet Report.

4.5.4. Expected Ex-gratia Per MP

The Greenstreet Report provides that “…they [MPs] are to be paid ex-gratia
awards at the rate of three months salary for each year served or part thereof
based on their terminal salaries…” (i.e. No of years (or part thereof) served x 3
x Monthly Salary.)

13
Report of the Committee Appointed by the President to Advise on the Determination of Emoluments of
the Specified State Functionaries, June 1998, p.7

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 The MPs of the 3rd Parliament are on a monthly salary of 5,216,278.1514
Assuming that by 2004, the salary remains the same, each MP would be entitled
to 4 years x 3x 5,216,278.15, which equals 62,594,373.80.

Quite clearly, this amount would not fully repay the outstanding balance of
92,000,000 cedis. There will still be a balance of 29,406,627.80 to be paid by
each MP. Indeed, it will require raising the salary of the MPs significantly to be
able to recoup the loan fully from their end of term entitlements as envisaged.

5.0. SUMMARY OF KEY FINDINGS

5.1. Parliamentarians of the 1st ,2nd,and 3rd Parliaments of the Fourth Republic were
given car loans to purchase means of transport. Those members who retained their
seats since the 1st Parliament of the Fourth Republic in 1993 and who have
retained their parliamentary seats have therefore benefited three times each, one-
car very four years.

5.2. The 1994 Car Loans (First Parliament)

5.2.1. In 1994, the MPs obtained from the GCB worth five million ( 5,000,000) cedis
and in some cases five million, five hundred thousand ( 5,500,000) cedis each to
purchase cars.

5.2.2. Whereas, the prevailing interest rate at the time the GCB granted the loans to the
MPs was 32% the GCB placed an interest rate of 2% n the MPs’ loans.

5.2.3. The GCB made monthly deductions from the salaries of the MPs in respect of the
loans it granted to the MPs up to December 1994, when the Office of Parliament
paid off the balance outstanding as at that date for the MPs.

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5.2.4. The amount paid to the GCB by the Office of Parliament was Two hundred and
thirty-four million, nine hundred and nineteen thousand, one hundred and twenty-
nine cedis, twenty pesewas (¢234,919,129.20) vide Cheque Nos. 591387 of
20/1/95 and 591393 of 6th February 1995

5.2.5. No deductions were made from the ex-gratia awards paid to the MPs in 1996 in
repayment of the outstanding balances of the loan as suggested by the respondent.

5.2.6. Each MP of the First Parliament owes the state about 2,000,000

5.3. The Loans of the Second Parliament

5.3.1. MPs of the Second Parliament of the Fourth Republic were provided with a loan
worth thirty one million and six hundred thousand ( 31,600,000) cedis with an
interest rate of 2% per annum, which brought the total loan amount 37,920,000.

5.3.2. A total of 7,193,000 was deducted from each MP’s salary and the outstanding
balance to be paid by the MPs after the deductions from their salaries was
30,727,000 and not 21,827,000, as stated by the respondent.

5.3.3. Each MP had paid a total of 29,020,000 ( 7,193,000 monthly deductions and
21,827,000 from ex gratia award)

5.3.4. Each MP of the Second Parliament owes the state 8,900,000.

5.4. The Car Loans of the Third Parliament

5.4.1. The Government approved (Ministry of Finance) on 4th September 2001 approved
“… an all inclusive credit facility amounting to $20,000( 140,000,000) be

14
Reference, “Payroll Spread Report for the Month of September 2001(Normal Payroll)M.U. MP 001”

24
 granted to each MP, to purchase a car for official duties under a Hire Purchase
Agreement to be approved by the Ministry of Finance.

5.4.2. Almost all MPs of the Third Parliament have availed themselves of this facility
and an amount of 1,200,00 per month is being deducted (with effect frorm
September 2001) from the salaries of the MPs for the payment of the loans.

5.4.3. The MPs have 40 months from September 2001 to December 2004 to pay for the
loans from the monthly deductions and from any end of term entitlements

5.4.4. Total expected deductions from the salary of each MP for the 40 months
would add up to 48,000,000 and expected end of term entitlements are expected
to amount to 38,002,345.2815 based on the Greenstreet Report and provided the
salaries of the MPs are not increased substantially before end of December 2004,
when that Parliament is dissolved.

Should the Office of Parliament decide to use the gross salary of the MPs for the
calculation of their end of term entitlements, the MPS would be receiving
¢129,768,848(footnote 16)
6.0. CONCLUSION/RECOMMENDATIONS
Considering the importance of this matter, I recommend that the Commission
initiates a formal investigation into this matter if warranted.

15
Monthly salary of about2,375,146.58 cedis basic as at May 2003
16 Monthly gross salary(including all allowances) was 8,110,553 as at May 2003.

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