An audit spanning from January 2022 to June 2024, submitted to the Public Enterprise Committee of the National Assembly, has highlighted serious issues regarding a government-backed loan utilized for the acquisition of 70 buses. The report points out the lack of loan repayments, unexplained financial discrepancies, and notable deficiencies in governance and procurement practices.
The auditors reported that the government had not made any repayments on the loan by the time the audit was completed. The report identified a discrepancy of D18,699,602 between the loan schedule and reported figures, highlighting inconsistencies between an amount of D791,907,968.60 and a total payment of D872,607,570.60 related to the bus procurement.
The auditors discovered that there was no formal loan agreement in place between the government and the Social Security and Housing Finance Corporation (SSCHF), resulting in undefined repayment terms, obligations, and enforcement mechanisms. They also observed that the procurement process lacked competitive bidding, and there was no indication that alternative suppliers were taken into account—prompting concerns regarding transparency and due diligence.
The report cautioned that the magnitude of the spending might surpass the corporation’s financial capabilities and could threaten the long-term viability of pension funds. Auditors indicated that it was still uncertain how the total sums of D872 million, D670,000, and D570,000 were utilized in the procurement process.
The auditors observed that the internal controls and co-governance arrangements were inadequate for a transaction of this scale, resulting in an undue due diligence burden on the corporation.
“There is a risk that the Social Security and Housing Finance Corporation may lack leverage to secure actual repayment, threatening financial stability and the security of pension funds,” the auditors said.
The audit recommended that the SSCHF Board of Directors, in collaboration with the government, establish a loan agreement that explicitly details repayment schedules, interest rates, and penalties for default. The proposal also emphasized the need for a structured loan management framework, thorough credit assessments, and the implementation of mandatory competitive bidding accompanied by complete documentation for future large-scale procurements.
The SSCHF, in its response, recognized that a formal loan agreement had not been executed; however, it stated that a repayment schedule and interest rate were associated with the loan. The corporation asserted that the procurement adhered to best practices and justified the choice of TK Exports as the exclusive supplier, referencing the company’s expertise with Astroturk Newland buses.
The board indicated that the procurement package encompassed more than just the buses, incorporating spare parts, tools, 70 solar-powered bus shelters, ticketing software, a refurbished mobile workshop, and the assignment of three engineers for a duration of 24 months. The corporation stated that its participation in the procurement was carried out at the government’s request and emphasized that no state funds were misused.
“Choosing TK Exports therefore fulfills the single-source condition and makes more economic sense, given the benefits of uniform pricing for spare parts and the expertise of engineers on the brand,” the board said.
The auditors, however, deemed the response insufficient, indicating that it did not adequately tackle the fundamental issues raised in the audit. They emphasized that a formal loan agreement with the government had yet to be established, there was no definitive repayment plan in place, and no proof existed that the funds would be recouped.
“Your response is noted; however, it fails to address the key concerns raised in the audit findings,” the auditors said. “There is no concrete assurance or formal agreement from the government specifying when and how the Social Security and Housing Finance Corporation will recover the funds.”
