The Sierra Leone NASSIT Ferries debacle: What is the liability of DAMEN Shipyards?

The recent publication of the highly damning report by the Department of Intelligence, Investigations and Prosecutions of the Anti Corruption Commission (ACC),  into the procurement of dilapidated and non seaworthy ferries by the National Social Security and Insurance Trust (NASSIT) dated May 10, 2010, represents only a tip of the iceberg into how the management of the NASSIT and its board of directors and ministry of Labor, have and continue to collude in an unholy alliance to systematically plunder the resources of such a laudable institution. The activities and glaring failure of due diligence by DAMEN Shipyards in the purchase of these ferries also calls for additional investigations of their role in the fleecing of poor Sierra Leone workers hard earned contributions in the pension funds.

The ministry of Labor, which bears ultimate oversight responsibility over both the management and board activities of the nation’s sole workers pension trust fund, has largely performed a very poor oversight of the NASSIT as evidenced by its participation in the decision and purchase of these overinflated cost ferries. The inclusion of the responsible Minister in the NASSIT delegation  that traveled to the DAMEN Shipyard offices in the Netherlands, to inspect and purchase the vessels in June 2008, represented a naked attempt by the Trust’s management to ingratiate and incorporate a ministry, that largely lacks the requisite technical and professional expertise in the fields of actuarial risk management, pensions, acquisition of ferries and social insurance to effectively contribute to the weighty issues the Trust confronts in its investment strategies.

According to the expert report prepared on behalf of the ACC in its investigations, the NASSIT management headed by Edmund Koroma spent the unbelievable sum of 2,819,122 million pounds (two million eight hundred and nineteen thousand one hundred and twenty two pounds sterling) on 2 inoperable ferries that should not have cost more than 500,000.00 pounds (five hundred thousand pounds) inclusive of repair costs.

Board and Management fiduciary responsibility:

Whether the Board of Trustees, the Board Sub-Committee that authorized the purchase, the Trust’s management and investment sub-committees were all duped and or manipulated by the DAMEN Shipyards, who by their own admission have now been shown to have performed a very haphazard and unprofessional technical survey, or the usual corruption kickbacks which had the costs inflated and the overpayment estimated at 1.6 million pounds paid to the various functionaries that participated in the purchase of the vessels, either way the Trust must be made whole by DAMEN and or the recipients of the kickbacks.

While the recommendations of the ACC report are being politicized by some hired, unpatriotic and plainly uninformed editorial writers, it is worth reiterating that the very grave substantiated allegations the investigations revealed, into the blatant and reckless manner the hard- earned earnings of workers in the country have been subjected to, warrants expedited implementation of the report’s recommendations by the acting Commissioner of the ACC.  The acting ACC Commissioner must be made to understand that the quantum of the Trust participants’ contributions at stake is truly breathtaking considering the poverty in the country and as such every effort must be made to retrieve all ill-gotten gains from all the participants.

If the allegations are subsequently proven in a court of law, this represents the largest fraudulent conversion of employees’ wages and employer contributions into the pension scheme ever recorded in Sierra Leone. What needs to be reiterated and understood here is that the NASSIT contributions are not Sierra Leone government earnings, thus the reason they are not part of the nation’s general fund. These are earning contributions by participant employees in the pension scheme. The government like other private sector employers only contributes its statutory share on behalf of their employees-public sector employees and civil servants.

Indictments consistent with sections 48 and 129 of the ACC Act, 2008 and the NPPA Act 2004 must expeditiously be brought against the named culprits viz: Edumund Koroma, Mahmoud Idriss, Ibrahim Bah, Gibril Saccoh and the Trust Chairman, Jacob Kanu. Contrary to what some writers are postulating, the central issue here is not about personalities, economic and financial wizardry or political affiliations of the named managers but what as fiduciaries they failed to perform. Their actions are tantamount to stealing from the pockets of Sierra Leonean workers whose monthly meager earnings are deducted and entrusted to the NASSIT for maximization at time of their future retirement.

That DAMEN Shipyard Smoking Gun Liability Letter:

The letter from DAMEN Shipyards to The Director General of NASSIT dated March 24, 2009 reproduced in an article titled “Bogus Contractor Using ACC to Get Rid of Edmund Koroma” by John Sesay, published in Sierra Express Media of June 9, 2010 raises serious questions and requires a further in depth analysis beyond the usual unobjective rantings bothering on sycophancy now being displayed with this story. The parliamentary oversight committee responsible for the NASSIT’s operations must also as a matter of urgency schedule open hearings into this matter, especially as not only are all employees contributions at stake but the continued economic viability of the institution and the trust by its participants need salvaging.

A couple of fallacies that bear disposing of in some of the NASSIT defenders writings include but not limited to the following:

1)      That while DAMEN Shipyards has a worldwide reputation for building ships and reputable ferries, its contract with the NASSIT was not for the purchase of its ships or ferries to NASSIT, rather its services involved serving as only a broker for the sale  and the provision of a technical survey performed on the “COSTAS TH III” ferry.

2)      That based only on email specifications from DAMEN dated July 4, 2008 the NASSIT management purchased the  “COSTAS TH III” (renamed Bai Bureh), without inspections and or a new survey report from Capt. Bloomer, whom NASSIT had earlier taken to the Netherlands. This lack of due diligence has resulted in the spending of approximately 1.3 million pounds inclusive of repairs, from the Trust’s accounts.

3)       That several assumptions made by DAMEN in their technical assessments were borne out to be false just based on a cursory review of the post-damage March 24, 2009 letter by the DAMEN Regional Director Africa, Mr. Joustra. Firstly, that despite a risk advisory by the surveyor and the tow master that the heavy seas and high winds would have some impact on the vessel during the voyage, such risk was dismissed and “not considered to be a problem”, by DAMEN.  Secondly, NASSIT’s expectations of the ferry’s passenger areas were not met and the general condition of the ferry “had seriously deteriorated and was not operational”, according to DAMEN’s own assessments.

4)      The last paragraph of Mr. Joustra’s letter is most telling, and should serve to if not lay to rest the so called vaunted DAMEN technical expertise as opposed to the Sierra Leonean ACC expert, but clearly noted that the ferries were not manufactured nor sold by DAMEN, as some online writers have asserted . DAMEN states inter alia that “even though we (DAMEN) feel we have been misled by the sellers and that mistakes have been made during the tow from Greece to Sierra Leone, it is DAMEN’s responsibility to make sure NASSIT receives what it deserves, a safe and operational ferry.

5)      Despite promises by DAMEN to repair the vessel and “bring her back into operation within a period of one (1) month from date of letter dated March 24, 2009 it is disheartening and a clear contractual breach that as of writing the ferry is still not operational.

6)      The Lloyds Register survey report issued in August 2009 of the ferries concluded that “based on several deficiencies which prevent confirmation of safety adequacy, the Masimera is considered unsatisfactory and that of Bai Bureh (COSTAS TH III) considered poor”.

Conclusion:

In a prior article on the NASSIT’s exorbitant administrative Costs, published in 2008   http://www.articlesbase.com/insurance-articles/social-security-administrative-costs-a-receipe-for-collapse-of-sierra-leones-pension-program-571822.html, I sought to highlight through an analysis of the reported and published NASSIT actuarial, investment and financial reports to alert both the board and the Trust participants that the investments being undertaken were actuarially not sound and that management expenses were expanding at an astronomical rate.

Despite its constitutional requirement to have a second actuarial report of the Trust performed by 2008, it should be noted that as of this writing, the second actuarial report has not yet been conducted or published. In fact a check of the NASSIT website shows that no updates of reports relative to the Trust’s financial, actuarial and insurance performance has been posted since 2008. This state of affairs is clearly in contravention of the statute establishing the NASSIT and must be looked into by parliament, if only to ensure the effecient and transparent administration of workers earnings and forestalling of a potential financial and pension catastrophe in the future.

Both contractually and through its own admissions, DAMEN Shipyards as broker and technical surveyor and agent for NASSIT bears direct responsibility for the debacle of the ferries and must be made to provide not only repairs to the vessels but also to pay for income loss from operations of the vessels since there purchase in 2008. The NASSIT and by extension the government should consider instituting suit against DAMEN for a series of contractual breaches and poor performance, if not fraud in the handling the NASSIT ferries transactions.

While the influence and political persuasions of the named culprits maybe the motivating force with some writers, we as a society must be made to pursue evil and corrupt practices wherever it leads as only then can we muster the morality and courage to at least minimize the corruption our nation is currently fighting. 

Kortor Kamara – About the Author:

The author, Mr. Kortor Kamara has over 25 years experience in the insurance industry both in Sierra Leone and the United States. He is a Chartered Property & Casualty Insurer and holds the Workers Compensation Claims Professional (WCCP) designation. He is a Member of the Chartered Insurance Institute ( London); Certified Self-Insurance Claims Administrator-State of California; Registered World Bank Consultant and has served as a Consultant on various Insurance initiatives in Sierra Leone, including design of the country’s first Title Insurance Policy. In addition, Mr. Kamara is a graduate of Fourah Bay College, University of Sierra Leone, 1978-1981; studied Law at both the Univerisity of West Los Angeles School of Law and the California Southern School of Law in Riverside. He is currently a Doctoral Candidate in Insurance and Risk Management. Through association with Saddleback Re, were he serves as the Regional Manager, Africa Division, Mr. Kamara is intimately involved in the provision of reinsurance coverage, policy design, loss control, training and risk management services to the African Insurance marketplace. Mr. Kamara can be contacted at kortorkamara@yahoo.com.

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