In 2020, the Kumasi Metropolitan Assembly used the District Assembly Common Fund for developmental projects to pay four contractors GHS670,720.78 in judgment debts.
The payments were made in response to legal action taken by the contractors against the assembly, according to an audit report published by the Auditor-General on the usage of the District Assembly Common Fund.
“The Assembly defaulted on payment of contractual duties in all four instances, prompting the contractors (Kerecom, Osbon, Sapsco, and Saboadu) to seek legal action, and the court granted judgment debts in their favor,” according to the study.
According to the study, the assembly had violated section 7 of the PFMA, 2016 (Act 921), which states that “a covered entity’s Principal Spending Officer must oversee the regularity and correct use of money allocated in that covered organization.”
The assembly was unable to meet its payment commitments to the contractors on time, and it also failed to reach a resolution via Alternative Dispute Resolution rather than going to court.
According to the study, this resulted in the settlement of judgment debts.
Read Also: Audit report recommends GHS95 million spent on the Accra waste treatment facility be reclaimed
The Auditor-audit General’s report stated, “The use of DACF money to settle judgment debts that were not planned for robbed the Assembly of funding to implement projects in the Metropolis.”
As a result, the Auditor-office General’s advised that the default penalty be returned from the Assembly’s IGF account to the DACF account.
“Management should negotiate for arbitration to settle contractual issues in the future,” the report said.
One other assembly also fell short of section 7 of the PFMA, 2016 (Act 921).
The Birim Central Municipal Assembly used an amount of GHS 234,200.00 from its Common Fund allocation to settle judgment debt.
This occurred because the Assembly unilaterally suspended the construction of a three-storey 18-unit classroom block at Akim Oda Presby School as far back as August 2001.
As such, the contractor, Messrs Petrado Ltd, took the Assembly to court and was awarded the judgment debt.
In this case, the report also noted that the use of DACF funds to pay judgment debts deprived the Assembly of funds to provide amenities for the communities.
Source: CITINEWSROOM
