Ghanaian Chronicle

BLOWS OVER SSNIT MONEY …as NLA repudiates indebtedness …5,000 lotto receivers lose jobs

Date published: October 29, 2012


Story by Emmanuel Akli


It was a nice marriage contracted between SIMNET Ghana Limited, of which the Social Security and National Insurance Trust (SSNIT) controls 85% shares, and the National Lottery Authority (NLA) in 2006. The marriage has helped to bring substantial revenue to the NLA and the national coffers as a whole.

Unfortunately, this excellent relationship between the two state-owned institutions has fallen on the rocks, with the NLA accusing SIMNET of fraud, when the latter put in a request to be paid its mandatory 6% commission.

Available information indicates that both parties entered into an agreement for SIMNET to automate the dispensation of national lotto tickets to the lottery staking public.

SIMNET contracted EDITEC, a United Kingdom-based company, to provide technical services for the operations. SIMNET/EDITEC provided a satellite link between the NLA head office and telecommunication giants MTN and Vodafone, in addition to vending machines (TPMs) that were hooked up to the link.

This enabled lotto receivers to electronically sell the tickets to the public, with all the numbers being recorded at the data base in Accra.

Documents sighted by The Chronicle indicates that prior to the deployment of the automated services, the NLA was making around GH¢41 million annually, but the figure shot up to GH¢50,973,701 in 2006, when the two parties agreed for the automated services.

It further appreciated to GH¢85,029, 915 in 2007, and in 2008 the system generated an annual income of GH¢116,500,002.

The upward trend continued in 2009, where a figure of GH¢124,712, 367 was recorded.

Between January and September, when the misunderstanding between the two parties arose, the system had raked in revenue of GH¢206,074,023.

The fight between the two started when the NLA requested access to the data room of the SIMNET to access the system, a request which was turned down. The action infuriated the NLA, which also refused to pay SIMNET the mandatory 6% commission, which hovers between GH¢600,000 and GH¢800,000 every month.

The decision of the NLA crippled liquidity inflow for SIMNET, thus making it impossible for them to also pay EDITEC for the technical services it had provided for the running of the system.

For the past two years that the NLA stopped the payment of the 6% commission, SIMNET has had to borrow from the capital market to pay its workers and EDITEC, the technical provider of the new automated system.

The SSNIT-owned company could, however, not sustain the persistent borrowing from the money market to offset its indebtedness, especially to EDITEC, whose services were still being patronised by the NLA to raise substantial funds, but would still not pay the partners.

With EDITEC piling on the pressure for SIMNET to pay, the latter went to court over the NLA’s refusal to pay them, despite still using their system to generate revenue.

The NLA, however, argued in court that SIMNET’s invoices were a fraudulent misrepresentation of the actual sums generated on the vending machines deployed countrywide for the online lottery.

The NLA further argued in court, presided over by Justice Gertrude Torkornoo, that SIMNET deliberately prevented them from authenticating and validating the offending invoices by examining the systems on which the online lottery was operated.

It was again, the contention of the NLA that the plaintiff’s acts had led to it incurring huge financial loss through its having to pay on duplicate winning tickets, winning ticket uploaded after sale, winning ticket with no sale date, among others.

In her ruling after listening to arguments from both sides, Justice Torkornoo noted that while the NLA alleged that it was suffering from the fraudulent act of the plaintiff, who ought not to be paid anything for work done, it had not prayed the court to terminate the relationship. Rather the NLA rather continues to use SIMNET services for substantial income generation.

“The maxims of equity are quite clear. He who seeks equity must do equity. And equity imputes an intention to fulfill obligation. If the defendant is convinced the plaintiff is a fraudster, and yet is content to allow the plaintiff to generate income for it, then this court must impute the intention to the defendant, that it intends to pay due commissions to plaintiff if the fraud it alleges is not proven at the end of the day.

“Secondly, equity aids the vigilant and not the indolent. If the defendant is content in what it alleges to be a relationship grounded on fraud, then this court must not allow itself to be drawn into supporting that unlawful relationship by nonchalantly watching the sparring, while the defendant continues to take plaintiff’s business output, as if there is nothing at stake in the courts,” the judge noted.

Justice Torkornoo subsequently, ordered the NLA to pay SIMNET 50% of all outstanding payments for which it had received invoices.

“From the endorsement of the plaintiff’s last amended writ, and its statement of claim, this sum stood at GH¢4,945,922.38 by 31st May 2011.

“More invoices have been issued since then. My order is for the defendant to pay to plaintiff 50% of the total value of all invoiced sums as at July 2012, less the GH¢1,800,000 paid to the plaintiff in May 2012,” she ruled.

The court further ordered that the remaining 50% should be paid to the Registrar of the court, pending the finally determination of the case. The amount, if paid, should be held in a high yielding investment and account to be chosen by the plaintiff. The NLA, which was dissatisfied with the order, went back to the same court to reverse the order, which was again rejected.

The Chronicle has, however, heard that that NLA went to the Court of Appeal, which has reversed the order of the High Court.

The Chronicle established that whilst the case was pending in court, EDITEC wrote a series of letters to both SIMNET and the NLA, and copied to the Minister of Finance, Dr. Kwabena Duffour and the Lotto Receivers Union, drawing their attention to the fact that they had not been paid for the services they were rendering to both the NLA and SIMNET.

In one of such letters, the Chief Executive Officer of EDITEC, Franck Attal, wrote: “Regretfully, it appears that there is still a delay of four months in payment of the monthly service due to EDITEC in regards to our contract for the supply of technical services to the National Lottery Authority.

“Despite our letter dated 1st of May, 2012, the issue has not been solved, and EDITEC remains in a position where we would have no option than to shut down the computerised gaming system that were put at the disposal of the NLA.

“Once again, we would deeply regret this extremely demanding action, for which the NLA would have to bear the entire responsibility. For the record, the volume of sales expected to be generated during the month of June 2012 by EDITEC system is the highest ever in six years of operation, and should therefor, represent a record-high monthly sales volume for the NLA.

“We are still hopeful that the necessary actions will be taken in order to avoid EDITEC having to cease our operations.”

Unfortunately, despite this warning from the technical service provider, nothing was done about the payment, forcing EDITEC to shut down the system last month.

The decision has affected about 5,000 lotto receives who have had their investments locked up as they pre-financed the sales of the ticket.

The General Secretary of the Lotto Receivers Union, which is now called Lotto Marketing Companies, Kofi Frimpong told The Chronicle that the businesses of its members had been crippled, but nobody seems to be talking for them.

According to him, the NLA had gone to purchase 10,000 machines to sell tickets, but their system was not effective as that of EDITEC, as it persistently jams, thus making it difficult for them to make sales.

Meanwhile, The Chronicle is investigating an allegation that the Finance Minister, Dr. Kwabena Duffour, has not done much to help resolve the issue, despite being briefed about the development. Stay tuned.

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