The Social Security and National Insurance Trust (SSNIT) has indicated that it has not sold its hotels.The Director General (DG), Kofi Bosompem Osafo-Maafo, announced this at a press conference on Monday, July 8, 2024 when he briefed journalists on the issues surrounding its hotels.
According to the DG, the negotiations have hit a snag, as SSNIT did not agree with the payment terms by Rock City Hotels, the preferred investor.
“We have gotten to the point where we are negotiating on the price. The negotiations fell through, and by that, what I mean is that we failed to agree on the payment terms. We are currently engaging all stakeholders on the way forward with respect to the negotiations.
“And that is, by the way, what can be done under the Memorandum of Understanding that we signed with the preferred bidder. That it allows us to negotiate on the payment terms,” he stated.
RATIONALE
SSNIT has suffered criticisms following the decision to put its 60% shares in its hotels across the country on sale.
In 2018, the Trust stepped up to find a strategic investor to revamp their loss-prone hotels, which are La Palm Royal Beach Hotel, Labadi Beach Hotel, Elimina Beach Resort, Busua Beach Resort, Ridge Royal Hotel and Trust Lodge.
Addressing journalists yesterday, the DG, Mr. Osafo-Maafo, stated that their hotels were constantly making losses.
He argued further that Labadi Beach Hotel, which is making some profit, was not at the level expected by the Trust.
He said that the hotels were frequently requesting SSNIT to fund maintenance and operational activities and worker emoluments.
Also, the hotels required a regular injection of significant capital to run effectively, thus the decision to allow investors to participate in the hotels.
He ran journalists through the performances of each of the hotels to justify the decision to sell the Trust’s investments.
“I don’t think anyone running an investment fund in the world would be sitting and earning substandard returns. We have to address the issue,” he explained.
He added, “If you look at these hotels, they are capital-intensive businesses; they require… continuous capital expenditure.
“SSNIT doesn’t have the necessary funding to do that. The businesses have been making consistent losses,” he remarked.
DUE PROCESSES
The DG debunked claims that due processes were not followed and that the state had been short-changed.
He told journalists that SSNIT went through international competitive tendering processes as prescribed by the Public Procurement Act to settle on the preferred investor, who bid more than what had been valued.
He said the independent Transactional Advisor guided the selection of a strategic investor and advertisements for an expression of interest for a strategic partner for the SSNIT hotels were placed in the dailies.
He also debunked claims that Rock City Hotels did not submit a Tax Clearance Certificate, which is a legal requirement.
“To answer that question, Rock City submitted a Tax Clearance Certificate. We verified the Tax Clearance Certificate,” the DG responded to The Chronicle’s question.
BEST OPTION
The DG told journalists that considering the circumstances, changing the management of the hotels was not considered prudent due to the continuous losses the hotels had been accruing.
“We’ve been through quite a lengthy process to do so. Bear in mind that we’ve also tried having external management companies run the SSNIT hotels and that hasn’t resolved the problem either.
“So, for us, we look at it twofold: that we are looking to resolve a problem and do so with the introduction of a strategic investor and we outlined the reasons there.
“Consistent losses by almost all of our hotels, I know you are aware that Labadi doesn’t make profit but the returns are below [expectation]. They haven’t paid us (SSNIT) any dividends, with the exception of Labadi. Labadi Beach Resort only started paying dividends for the last two years. They haven’t from inception,” he stated.
OBJECTIVE
According to him, the Trust added Labadi Beach Hotel to the sale, though it is making a profit, because SSNIT wants to maximize overall returns.
“We want to maximize what we get out of it and the question that I asked somebody the other day is, if you were selling your car or even your house, you will make an attempt to actually paint it.
“You wouldn’t wait for your car to be put on stone and then say now this is the time to sell it. You make it look good. There’s no reason why if a business is doing well and we seek to maximise capital from it to invest elsewhere, we shouldn’t do so.
“The reason is simple. Returns are lower than we believe they should be, but cash always has alternative uses. So why not? There’s a good investment rationale for that,” he stated.
Meanwhile, he debunked claims that the son of the former National Chairman of the NPP, Freddie Blay, bid for $200 million but was turned down.
The SSNIT DG explained that Spartan Ives, the company owned by Freddie Blay’s son, failed the bidding process at the first stage, so his bid was not even opened in the first place.
