The Social Security and National Insurance Trust (SSNIT) has decided to sell a 60% stake in four of its hotels to Rock City Hotel, which operates with only a two-member board. This move has sparked concerns about corporate governance within the transaction.
SSNIT’s rationale for offloading its stake is its inability to manage the hotels efficiently despite having a diverse 12-member board. Ironically, the Trust believes that Rock City Hotel, with its two-member board, can better manage these assets.
In defense of the transaction, SSNIT stated, “The Trust is seeking to partner with a strategic investor to raise capital to invest in the hotels and assist in their management. The primary objective of finding a strategic investor is to increase efficiency, profitability, shareholder value, and the long-term sustainability of the SSNIT Pension Scheme.”
Bryan Acheampong, the owner of Rock City Hotel and the Minister of Agriculture, confirmed in an interview with Joy FM that he is a non-executive director on the two-member board.
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“I am a non-executive director of Rock City, but if you are registering at the Registrar General, you just have to bring two directors, and so definitely I am one of them,” he said.
Documentation from the Registrar General’s Department corroborates that Rock City Hotel has only two board members, including Acheampong, who is also listed as the beneficial owner.
While it is possible for a smaller board to effectively manage a corporate entity, choosing a company with only two board members through a competitive tender process raises questions about the appreciation for a well-constituted board.
It suggests that both the transaction adviser and the SSNIT board placed little emphasis on the quality and composition of a board, which is crucial for effective management.
SSNIT will retain a 40% stake in the four hotels, meaning the future of SSNIT contributors and their pensions remains tied to the success or failure of these hotels even after the transaction. This decision has prompted scrutiny over the choice of Rock City Hotel.
The decision has been met with significant opposition from various groups. A coalition of civil society groups, led by the Citizens Movement Against Corruption, is the latest to voice concerns. Edem Senanu, its Co-Chair, argued that Rock City Hotel should not have been considered, citing a potential conflict of interest due to Mr. Acheampong’s position of power.
Anti-corruption advocate Vitus Azeem echoed these concerns, suggesting that Mr. Acheampong might have used his influence as a Minister of State to sway SSNIT’s board. Organized labour has also opposed the transaction and threatened to demonstrate if it proceeds.
With seven of the 12 SSNIT board members representing labour employers association and pensioners association, pushing through with the transaction amid mounting pressure will be challenging for the Trust.
