The Saga Of Gaeorge Opesika Aggudey



MR. AGUDE A few years ago, Mr. George Opesika Aggudey, the Chief Executive Officer of Gocrest Security Company, was in the news for very good reasons. He was the flag bearer of the Convention Peoples Party (CPP) in the 2004 elections to lead the nation.

Today he is in the news again, but for very wrong reasons, for allegedly defaulting in the payment of Social Security tax or contributions for his workers and getting jail sentence.

He, however, applied to an Accra District Court for a stay of execution but to no avail. Consequently he has applied again, this time to an Accra High Court for a stay of execution of the judgement.

The payment of tax by citizens, be it social security tax, income  tax, property tax or any kind of tax has been a challenge to both tax collectors and tax payers since the time of biblical Zacchaeus, a Jewish Public Servant who was assigned to collect taxes in Jericho on behalf of the Roman Emperor at the time.

In ancient Egypt, cooking oil was taxed, and on top of that people had to buy their taxed cooking oil from the Pharoah’s monopoly and were prohibited from reusing previously purchased oil.

 

Purpose of Taxation

In most countries, Governments impose taxes on individuals, properties and businesses to finance infrastructural development and also make statutory payments and other commitments to improve the livelihood of citizens and promote social change. In effect citizens benefit either directly or indirectly from taxes paid monthly, quarterly or annually.

 

Social Security Tax

Social Security tax or contributions are much different in nature from other taxes. While other taxes are paid by individuals and businesses separately into the consolidated fund to benefit the nation as a whole, Social Security contributions are paid monthly by the employer on behalf of workers employed in the establishment.

This contribution is paid whether the worker is permanent or casual into the Social Security Pension Fund to benefit the worker on retirement, or the worker’s nominated dependants in the event of death of the worker.

 

Tax Evasion

In spite of the numerous benefits derived from taxation by nation and individuals, tax evasion has made it difficult for tax authorities to reach their full limits in tax collection.

It has been established that tax evasion is not only an issue with the less privileged in society but also affluent high class personalities in sports, entertainment, politics and business as well.

Tax evasion is illegal evasion of taxes by individuals and businesses. It often entails taxpayers deliberately misrepresenting the true state of their affairs to the tax authorities to reduce their tax liabilities.

It includes dishonest tax reporting, such as declaring less income, profits or gains than the amount actually earned or overstating deductions.

In Ghana, it is estimated that only 2 million people out of the estimated 25 million pay tax, but tax dodgers are the worst critics of government developmental agenda.

Social Security taxes or contributions do not depend on profits declared or the size of businesses but on the correct number of workers employed, declaration of right incomes and timely payment of contributions to SSNIT together with a contribution report to support monthly payments by employers on behalf of workers.

One of the objectives of the Social Security Scheme is to provide pension benefit to ensure retirement income security for each member of the scheme.

Being a contributory scheme, the Social Security Law requires every employer of an establishment to deduct from the salary of every worker an amount equal to five and halve percent (5.5 per cent) of the worker’s salary for the month whether or not the salary is actually paid to the worker.

The Law further states that an employer of an establishment shall pay for each month in respect of each worker an employer’s contribution of an amount equal to thirteen per cent(13 per cent) of the worker’s salary during the month.

Out of the total contribution of eighteen and halve percent (18.5 per cent), the employer is requested to make the following transfer within fourteen (14) days from the end of each month to the mandatory scheme on behalf of each worker.

* Thirteen and halve per cent(13.5 per cent) to the First Tier Mandatory Scheme; and

* Five per cent (5 per cent) to the Mandatory Second Tier Occupational Scheme.

 

Penalty for Non-payment

Any employer who defaults in the payment of contributions and submission of contribution reports is taken through a process to comply with the law.

A Demand Letter from the Trust stating the extent of default is issued and delivered to the employer with a thirty day grace period to negotiate with the Trust for an amicable settlement.

Failure on the part of the employer to respond escalates the issue to the next level – court action- where the employer is summoned to appear in court to defend his action.

SSNIT reserves the right to initiate criminal or civil action against non-complying employers depending on the circumstances of each case.

A Bench Warrant is subsequently issued for the arrest and prosecution of the employer who fails to respond to court summon.

Defaulting in the payment of Social Security contributions is bad, but deliberately declaring less income for workers or understating the labour force in the establishment with the intent to cheat is worse.

In case of any infringement on aspects of the Social Security Law SSNIT initiates a Criminal Action against the employer.

 

The Woes of Aggudey

The case against Mr. Aggudey is therefore not a witch-hunt, neither is it political. It is part of normal action by SSNIT to recover arrears from defaulting employers and has yielded massive results.

Mr. Aggudey’s woes did not begin and end in 2013. He was caught in the tentacles of the Social Security Law as early as 1995, and his first appearance in court was in November 8, 2006. Since then Mr. Aggudey and his Gocrest Security Company had been in and out of court several times.

He negotiated and defaulted on different occasions and had to face Criminal Action this year for the recovery of workers contribution which finally earned him a jail sentence.

Gocrest Security was registered with SSNIT as a security organisation on June 1, 1995 and given a registration number. Subsequently the employer failed to honour his obligations under the Social Security Law by not submitting contribution reports with the necessary contribution payment.

After several attempts, contribution reports from June 1995 were retrieved in July, 2006. Inspections conducted for the period June 1995 to June 2006 revealed an indebtedness of ¢8,150,882,076.72 (GH¢815,088.20) made up of ¢3,78,855,762.24 (GH¢337,885.57) as actual contributions and ¢4,772,026,314.48 (GH¢477,202.63) as penalty for delayed payment.

A demand letter was subsequently issued on July 28, 2006 advising the employer to fully settle the arrears by August, 2006 but the employer failed to settle the arrears by the expiry date.

Criminal Summons was therefore issued against the employer on October 24, 2006 for the recovery of the arrears and the case was first heard on November 8, 2006.

The SSNIT made available to Mr. Aggudey all available channels for negotiated settlement under the Law including alternative means of dispute resolution in legal matters. He would agree today and renege tomorrow.

For example the court at its hearing on February 19, 2007 granted the application made to the court by counsel for the employer for out-of-court settlement, but because of previous experience the case was not withdrawn from court until negotiation was finally entered into in February 2008 on a total indebtedness of GH¢1,237,521.36 as at December 2007.

This arrears was made up of GH¢514,973.15 as actual contribution and GH¢722,548.21 as penalties for delayed payment. By terms of the agreement the employer was to settle the actual contributions of GH¢722,548.21 by 48 monthly instalments of GH¢15,000.00 from February 2008 to December 2010.

It was categorically stated in the agreement that the employer should fully pay the current contributions concurrently with the negotiated arrears.

There was also the understanding that upon good performance by December 2010, a presentation would be made to the Director General for a possible consideration for a waiver of the penalty amount.

Unfortunately, as a trend Mr. Aggudey failed to comply with the terms of the agreement as the current contributions were not paid as required.

In addition, three of the cheques issued for the negotiated payments were dishonoured and in the final analysis he failed to continue with the negotiated payments.

Efforts to retrieve the arrears and current contributions continued until the new Pension Law 2008, (Act 766) came into effect in January, 2010 when inspection was again updated to June 2010, which brought the total arrears to GH¢1,708,806.03 for the First Tier comprising GH¢691,557.73 as actual contributions and GH¢1,017,248.30 as penalty, and arrears for Second Tier was GH¢24,749.56

As usual, a demand letter was delivered to the employer on November 10, 2010 advising Mr. Aggudey to settle the arrears by December 6, 2010 failing which legal action would be taken to retrieve the arrears.

The dead line in the Demand Letter expired but Mr. Aggudey made no effort to pay, neither did he communicate with the Trust.

Consequently, a Writ of Summons together with a Statement of Claim was filed on February 22, 2011 at the Fast Track High Court against Gocrest Security and Mr. George Aggudey.

The Aggudey saga had taken twists and turns over a seven year period and at the end Mr. Aggudey was on September 14, 2013 found guilty by an Accra Circuit Court and handed a 3 month jail sentence.

In 2006, his total indebtedness was GH¢815,088.20 but today it stands close to GH¢2.7Million as at April 2012.

Remember, the wheel of justice grinds slowly but it eventually catches up with offenders, and when it does, there is no escape.

 

Aggudey is not alone

This year has seen a mass publication of names of private and public companies indebted to SSNIT from all parts of the country in the print media. A number of employers have been prosecuted for not submitting contribution reports of workers and also defaulting in the payment of social security contribution.

Others have quickly and fully settled their arrears without recourse to the law courts.

So far close to GH¢30Million owed to defaulting employers has been retrieved through that effort.

It is in the best interest of defaulting employers to take advantage of negotiated settlement option available to all employers to fully settle their indebtedness. By George Yankah

 

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