An audit covering the period from January 2022 to June 2024, presented to the Public Enterprise Committee of the National Assembly, has raised serious concerns about a government-backed loan used to finance the procurement of 70 buses, citing the absence of loan repayments, unexplained financial discrepancies, and significant weaknesses in governance and procurement practices.
According to the auditors, the government had made no repayments on the loan as of the completion of the audit. The report also identified a discrepancy of D18,699,602 between the loan schedule and reported figures, noting inconsistencies between an amount of D791,907,968.60 and a total payment of D872,607,570.60 associated with the bus procurement.
The auditors found that no formal loan agreement existed between the government and the Social Security and Housing Finance Corporation (SSCHF), leaving repayment terms, obligations, and enforcement mechanisms undefined. They further noted that the procurement process did not involve competitive bidding, nor was there evidence that alternative suppliers were considered—raising questions about transparency and due diligence.
The report warned that the scale of the expenditure may exceed the corporation’s financial capacity and could pose a risk to the long-term sustainability of pension funds. Auditors said it remained unclear how a total amount of D872 million, D670,000, and D570,000 was expended in the procurement process.
In assessing the broader implications, the auditors noted that internal controls and co-governance arrangements were insufficient for a transaction of such magnitude, placing an excessive due diligence burden on the corporation.
“There is a risk that the Social Security and Housing Finance Corporation may lack leverage to secure actual repayment, threatening financial stability and the security of pension funds,” the auditors said.
The audit recommended that the SSCHF Board of Directors, working with the government, formalize a loan agreement that clearly outlines repayment schedules, interest rates, and penalties for default. It also called for the establishment of a structured loan management framework, proper credit assessments, and mandatory competitive bidding with full documentation for future large-scale procurements.
In its response, the SSCHF acknowledged that no formal loan agreement had been signed but said a repayment schedule and interest rate were attached to the loan. The corporation maintained that the procurement followed best practices and defended the selection of TK Exports as the sole supplier, citing the company’s experience with Astroturk Newland buses.
The board said the procurement package went beyond the buses themselves, including spare parts, tools, 70 solar-powered bus shelters, ticketing software, a refurbished mobile workshop, and the deployment of three engineers for a 24-month period. It added that the corporation’s involvement in the procurement was undertaken at the government’s request and insisted that no state funds were misappropriated.
“Choosing TK Exports therefore fulfills the single-source condition and makes more economic sense, given the benefits of uniform pricing for spare parts and the expertise of engineers on the brand,” the board said.
The auditors, however, rejected the response as inadequate, stating that it failed to address the core concerns of the audit. They reiterated that there was still no formal loan agreement with the government, no clear repayment plan, and no evidence that the funds would be recovered.
“Your response is noted; however, it fails to address the key concerns raised in the audit findings,” the auditors said. “There is no concrete assurance or formal agreement from the government specifying when and how the Social Security and Housing Finance Corporation will recover the funds.”
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