The Vice Chancellor of the Takoradi Technical University formerly Takoradi Polytechnic together with some management members are under pressure to explain why they invested the university’s money in a private financial institution which is reportedly experiencing cash flow problems.
The university invested a whooping GH¢2,550,000.00 of school fees, the management claimed did not want to use in the interim, in Brooks Assets Management and this had been done without the prior approval of the institution’s council.
31% Interest
Daily Guide investigations showed that the university started dealing with Brooks around April 2016 when it invested around GH¢26,000 but by August the same year, a whooping GH¢ GH¢2,550,000.00 had been sent to Brooks who were offering 31% interest for the investments.
Somewhere in December last year, the Finance Directorate of the university had to file a complaint against Brooks at the regulatory body -Security and Exchange Commission (SEC) – to get the private firm to pay a tiny fraction of the total the investment recalled by the university.
The university currently has around GH¢5.6 million investments with both investment and commercial banks and other financial institutions with Brooks alone sitting on about GH¢2.5 million of the funds which they management claims is ‘excess money we did not need’.
Vice Chancellor
When Daily Guide met the university’s officials, in Takoradi, the Vice Chancellor Rev. Prof. John Frank Eshun said as far as he was concerned there was nothing untoward about the whole transaction.
He said that he did not think “the investment with Brooks is any problem,” and added that the council was ‘very happy’ with the investment they made.
In an initial telephone interview, the Vice Chancellor had said “I work through the council (University Council),” and queried “How can I invest the university’s money without the council’s consent?”
When pressed further if it was prudent for the university to invest such an amount in a private entity he had said “I can’t talk to you on that.”
Finance Director
The university’s Finance Director Emmanuel Boadi granted extensive interview to Daily Guide where he also defended that through the investment strategy they adopted, the management had been able to bring more money to run the institution.
He confirmed that the university had investments with Brooks and said the banks were giving around 27.5% as interest asking “why would I take a loan at 27.5% and go out there to invest for 28%? It doesn’t make sense! Brooks was giving 31%.”
The Finance Director explained that “when school fees came around August we had so much money we didn’t need immediately so per our statutes under the Finance Committee we are allowed to invest.”
Cash Flow
He said they made the investments in order to ensure that the university did not run out of cash for the day-to-day management explaining that “in most times by May the money is finished in the school but we brought in new measures to check the problem.”
He said the student population which was around 9,000 kept dwindling as they faced stiff competition in the tertiary education sector and added that their expenditure continued to rise in spite of the dwindling number of students.
“Our population has dropped considerably but our expenditure continues to go very high. The staff strength is the same and therefore, we have had to spend more,” adding “we looked for attractive investment package to cater for the shortfall.”
Due diligence
He said was appointed Finance Director in January 2016 and after going through the records to trace the university’s investments he did not find any permission given by the council so he wrote to the body for the permission to be granted.
“When I checked through the records I realized that I didn’t sight the permission given for the investments so I said if that is the case let me make a recommendation to council to give us approval so that if something happens we are covered.”
“We have these investment friends there and we saw Brooks to be active. Before we went in for Brooks, as a finance man you need three year financial statement to know how they are performing,” and proceeded to show Daily Guide 2013, 2014 and 2015 financial statements from Brooks endorsed by Securities Exchange Commission (SEC).
“Brooks has a cash flow problem”he admitted when he was asked if he was aware the private firm was going through problems, saying “we relied on the regulator. The regulator had sanctioned it meaning it is correct.”
“They have a cashflow problem and I have written to the regulator (SEC) asking them to investigate Brooks because it was based on the regulator’s stamp that gave us the comfort.”
Investment Policy
“Council said we should make investment policy and the policy was that we should make 75% investment into investment banks and 25% into commercial banks. McOatley, Legacy and Brooks form part of the investment banks.”
The Finance Director said “we have people here who have their investments with Brooks so that gave us the comfort. When I went online to check their board of directors, the Director of Finance of a prominent university was there and that gave us the comfort.”
Recovery Effort
“We were told at SEC that they used short term investment for long term. That is their problem. And the former management had all left and they have brought a new team that is recovering the money. It is not that the money is lost they are working on it,” adding “I am telling you on authority that we are retrieving this money. Everything is coming!”
He said that “we have recovered some money. We have times that we make the payments. We did not make onetime payment. We invested in bits of GH¢200,000 and the rest. We invested in three months periods.”
He said “if the auditors come today I will be able to prove that the council gave us approval to invest the excess money. The approval should reflect in the minutes.”
He dismissed allegations that they had invested a loan of GH¢5 million loan they took from Zenith Bank to construct a lecture hall for the university saying “it was GH¢5 million and not GH¢2.8 million as they claimed.”
“It is GetFund that will pay for the cost of the project but if you don’t start they will not give you the money. That’s why council gave approval that they should take the loan to start the project.”
