The current management of the Bulk Oil Storage and Transport (BOST) Company Limited is accusing its former Managing Director under the NDC, Kwame Awuah Darko of peddling falsehood regarding the profitability of the company under his watch.Â
The former BOST MD had reportedly said in the past that the company was profitable during his tenure of office between 2014 and 2016. But in the statement titled “RE: BOST made profit under NDC; Stop Propagating Falsehood – Awuah Darko”, the current management said none of Kwame Awuah Darko’s claims are true.
They pointed out in the statement that separate audits by PricewaterhouseCoopers and Deloitte indicated for all the three years Awuah Darko was MD for both BOST and Tema Oil Refinery (TOR), BOST incurred heavy losses, adding that the he left the company with over US$600 million of debt.
Below is the full 12-point statement from the BOST management;
RE: BOST made profit under NDC; Stop Propagating Falsehood – AwuahDarko
We have taken notice of a statement made by the former Managing Director of BOST and TOR, Mr. Kwame Awuah Darko to the effect that BOST was profitable during his tenure of office between 2014 and 2016. He references an earlier statement put out by the Managing Director of BOST, Mr. Edwin Provencal, stating the status of BOST as at January 2017. We wish to respond to his statement as follows:
1. PricewaterhouseCoopers audited the accounts of BOST from 2015 to 2016 but the audit
happened in the year 2018.
2. The 2015 audited accounts was signed by George Mensah Okley who was appointed
Managing Director in June 2018. He signed the completed accounts on the 20th December,
2018. Could this audit have taken place under Mr. Awuah Darko?
3. In all the three years, i.e., 2014, 2015 and 2016, BOST incurred losses on its business.
4. The highest loss was in 2016, which year the company had the highest volume of business.
5. The specific losses incurred over the period were as follows:
ï‚· 2014-GHS89,365,054
ï‚· 2015-GHS36,341,669
ï‚· 2016- GHS458,638,724
6. We wish to provide help in regard to the confusion of having stocks of products and how
profits are made in a corporate operation. The stocks of goods are classified as inventory
in line with the International Financial Reporting Standards, IFRS and are recorded in the
Statement of Financial Position which was hitherto referred to as the Balance Sheet.
The Statement of Comprehensive Income, which is the result of operational activities and
other incomes of the entity, provides information regarding how much revenue was made
per the period under consideration and compares same to the cost of carrying out those
operations. Operational efficiency can result in a high gross profit but where cost
management is not properly carried out, the bottom line, which is the net profit for the
period suffers.
It should be noted that all staff related costs including emoluments and related allowances affect the bottom line, which is the net profit. Mr. Awuah Darko should know that, no technically competent management will over-emphasize the gross margin in taking employee reward decisions since the bottom line is what defines whether the owners
of the business get paid dividends or otherwise.
7. The next mistake Mr. Awuah Darko makes is to state that by having cash on hand, the
company could not have made a loss in 2016. This does not meet the financial knowledge
litmus test. Cash is an asset: a current asset which has no place in determining whether a
company makes profit or not. Whilst profit is calculated in the Statement of Comprehensive
Income, thus, the Statement of Profit or Loss for the period, cash sits on the Balance Sheet
as a current asset. The tentative statement of the Managing Director of BOST is ‘BOST
made a loss of GHS458,638,724.00 in 2016’. He did not say there was no cash per the
Statement of Financial Position.
8. We would also like to emphasize that operational profit is not a decent measure of corporate performance especially where the interest of shareholders is concerned. Operational profit focuses on the ability of the entity to use its assets to generate revenue. The shareholders only benefit when this ability to raise revenue is coupled with the wisdom and tact to contain cost and reduce the administrative expenses of the company to hit a larger bottom line, thus, net profit. The operational profits made in 2015 and 2016 could not overcome the huge administrative expenses the company incurred in both periods and ended up with losses of GHS36,341,669 and GHS458,638,724 respectively.
9. We also wish to emphasize that the announcement of profit in 2015 on the basis of which huge bonuses were paid to staff was just a calculated attempt to throw dust in the eyes of the public. This is VODOO ACCOUNTING. From the attached audited financial statement in respect of 2015, the company incurred a loss of GHS36 million. The external auditor in this regard was PricewaterhouseCoopers, PWC.
10. Regarding trade receivables, we would like to remind Mr. Awuah Darko that HIS OWN
COMPANY, CONVENIIO ENERGY LIFTED PRODUCTS FROM BOST AND IS
OWING BOST ABOUT GHS2.3 MILLION TO DATE. Due to lack of proper structures
and adherence to procedures in the sale of products on credit to dealers, a chunk of the
receivables including his company’s are outstanding. We have proceeded to engage private
debt collection firms in this enterprise, and we are hopeful of retrieving all those monies
owed BOST including that of the company he leads as CEO, CONVENIIO ENERGY. .
11. Mr. Awuah Darko references the 2016 audited financial statements of BOST in his
statement to our surprise. The very statement he references as signed by the Board
Chairman, Mr. Ekow Hackman and audited by PricewaterhouseCoopers STATES A
LOSS OF GHS458,638,724. So, why reference notes to the statement and categorically
deny the fact that a loss was made?
Regarding his leadership of BOST and TOR at the same time, it will surprise the public to
know that the two companies had separate boards of directors and Mr. Awuah Darko had
no deputies in this enterprise: One Man Show. In the final analysis, BOST under his watch
was made to pay $5.50 per barrel in tolling fees to TOR whilst the same TOR is today
charging a tolling fee of $2 per barrel in refining products for private businesses.
Despite the high charges, Mr. Awuah Darko ensured that TOR was over-paid by $5.2 million as captured in the BOST and TOR debt validation carried out by Deloitte in November 2018.
A total of $10 million which Sahara Oil should have paid to BOST in respect of products
sold to the NNPC of Nigeria was also retained by Sahara in settlement of TOR debts simply
because the two companies were mistakenly bundled together and handed to one man to
be sent to the slaughterhouse.
12. We maintain that his stewardship left BOST with a total debt of $624 million to suppliers and related parties and a total debt of GHS273 million which was owed to banks in the country including GCB, Standard Chartered and Universal Merchant Bank.
BOST has cleared over 90% of the trade debts and has cleared all the legacy debts owed
the banks. The decommissioned tanks are being refurbished and the two pipelines have
been fully repaired to resume operations to take the company to the next level.
We are focused on the job and are hopeful the company should be able to pay dividends to
government within the next twenty-four months.
In conclusion, we would like to say that, though BOST made profit during the era of the
NDC, it was in the year 2012 under Prof. Mills as President and Dr. Yaw Akoto as
Managing Director. BOST made no profit according to the audited financial statements of
the company for the period covering 2013 -2016 within which Mr. Kwame Awuah Darko
served as Managing Director of both BOST and TOR.
We urge the public to treat assertions like what Mr. Awuah Darko made with the contempt
it deserves and look forward to realizing the objectives that BOST was set up to achieve.
