…As KPMG’s credibility lands in danger
Civil Society Organizations (CSOs) have expressed their disapproval of President Nana Akufo-Addo’s handling of the Strategic Mobilization Ghana Limited (SML) transaction, which has been criticized for its lack of transparency and potential conflicts of interest.
Despite an initial recommendation from the international audit firm KPMG to terminate the contract due to value for money and statutory breaches, the President, has opted for renegotiation, putting KPMG’s credibility at risk.
The SML deal, brokered by former Finance Minister Ken Ofori-Atta, a cousin of the President, has been labelled as a “family retirement benefit” and has raised concerns about favouritism and corruption.
The company, owned by timber merchant, Evans Edusei, has received GH¢1 billion in payments, despite questions about its qualifications and the necessity of its services.
CSOs, including IMANI, ACEP, and the Fourth Estate, have demanded the immediate release of the SML report and expressed disappointment with the President’s handling of the situation.
They argue that the contract should be terminated and that any future revenue assurance contracts, should be subject to rigorous needs assessments and open, transparent procurement processes.
The controversy has sparked widespread concern about the integrity of the procurement process and the potential for corruption in the awarding of government contracts.
The Finance Ministry and GRA, have faced criticism for their roles in the SML deal, and the President’s decision to renegotiate the contract, has raised questions about his commitment to transparency and accountability.
Interestingly, just before the investigations commenced, the President shot down a letter from Rev. Dr. Ammishaddai Owusu-Amoah, not to terminate the ridiculous transaction. However, recent developments have confirmed it all that was a cleverly planned charade meant to hoodwink Ghanaians.
What’s more, Dr Ammishaddai, who was over-aged at the time but kept in office, has since been sent home and replaced by his deputy, Julie Essiam, who is also past the retirement age of 60. The 62–year–old will heed the renegotiation of the SML demanded by the President.
The extensive back and forth between KPMG and the president, sitting in the middle with the family on the other side, produced a watered-down version of the original KPMG report to appease the expectation of the family, according to sources at the presidency.
Readers will recall that The Herald has extensively reported on the genesis of the SML transaction spearheaded by Mr Ofori-Atta, who was the Finance Minister for over seven years.
Mr Ofori-Atta, acting as the principal agent of the transaction, directed the GRA to enter a revenue assurance contract without any rigorous needs assessment which The Herald pointed out in December last year. This has also been confirmed in the White Paper issued by the President.
Instead of taking bold decisions to cancel the contract, which was deemed unnecessary by the relevant institutions, including GRA’s Customs Division, the President has requested the Ministry of Finance to review and rectify the floors of the transaction and give it a clean bill of health to continue.
In another twist, the president has refused to produce the KPMG report for the public to know what the Audit firm recommended.
The Herald in picking the lead that the president may release the report after they are sure no one has any of the many versions they worked on with KPMG. The suspicion is that if different versions leak into the public domain, it will expose the collaborative output which produced the Whitepaper.
This is where the credibility of KPMG gets dragged further, given the suspicions CSOs had about their capacity to live above conflict of interest to produce an objective report, noting that the audit firm has an ongoing relationship with the government at multiple levels.
In response to the Whitepaper, Bright Simons of IMANI, Ben Boakye of the African Center for Energy Policy (ACEP), and Manasseh Awuni of the Fourth Estate, have taken to social media to demand the immediate release of the SML report. In one of the posts, Bright Simons summarises the demands of Civil Society as follows;
It is helpful that the President of Ghana accepts that infractions occurred in the award of the SML contracts that have so far netted the company more than 1 BILLION GHS.
It was inevitable that the attempt to extend this same troubling arrangement to the mining & petroleum drilling sectors for an additional ~$100 million a year would not stand scrutiny, so the decision to halt that process was expected. As is also widely known, the pre-shipment inspection work SML took from West Blue and was being paid for was a duplication of existing services. The President has finally come to that same conclusion.
The Presidency’s “whitepaper” also acknowledges that substantial work must be done to determine the country’s needs before the award of any contracts for revenue assurance in the “downstream” fuel market (especially the linkages between the wholesale depots and fuel retail outlets). And it is a no-brainer that if any company is to render any service in this area at all, then they must receive a fixed fee and not be paid percentages of taxes collected by the State, which was the case in the now-suspended SML contract.
However, we are seriously disappointed by a number of elements of the President’s “whitepaper”. We insist on seeing the full KPMG report. We dispute their apparent claim that any increase in petroleum consumption in Ghana should be attributed to SML. We demand an open forum to show that the weight of expert opinion in Ghana is against any such flawed reasoning.
Multiple petroleum economists are on standby to prove that no gains in consumption volume can be attributed to SML’s work. We also have tax specialists on standby to prove that no tax gains due to SML’s work can be ascertained to have occurred.
The needs assessment mentioned by the President must be concluded before SML or any other company receives a pesewa more of Ghana’s money. The 24 million GHS a month SML is currently taking is unconscionable. Civil Society activists in the energy sector have lined up a long list of specialists willing to support a value for money and needs assessment pro bono.
“We are thus challenging the President to accept this patriotic offer. Not one pesewa more of Ghana’s money should go to SML or any other company until such an open, transparent, rigorous, and meritocratic process has been completed.”
The Herald is monitoring the situation closely and will provide more context in the coming days to the new appointments at the finance ministry and the GRA, all to make the Family Pension a sustainable project.
Billions of taxpayers’ money, have been funnelled into this suspicious private entity, masked as revenue assurance initiatives, have been confirmed, sparking widespread apprehension at the Finance Ministry and GRA. One Worker of GRA, described the SML relationship as “a parallel revenue agency operating independentl while drawing resources from GRA”.
The meticulously planned collaboration between the Ministry of Finance and SML, dating back to 2017, has raised legitimate questions about the transparency and objectives behind major revenue stream takeovers disguised as revenue assurance initiatives.
SML, owned by one Evans Edusei, a timber merchant, turned into an IT and revenue assurance company in 2017, was first awarded a contract to inspect import data, with entitlements averaging US$35 million a year.
In 2020, SML’s operations expanded into the petroleum downstream sector through an undisclosed contract, effectively duplicating the functions of both GRA and the National Petroleum Authority (NPA). The obscure nature of this arrangement is underscored by the reported annual payment of about US$25 million to SML for its role.
A particularly troubling aspect of this saga is the alleged involvement of an ex-adviser to the Commissioner General of GRA, Christian Tetteh Sottie, who is said to have swiftly transitioned from an advisory role to securing deals from the former employer, GRA and operating as the front of the Finance Minister to lead the revenue assurance business of the new “Private GRA” as Managing Director of SML. This confirmed information raises ethical questions about the integrity of the procurement process.
A Ministry of Finance letter dated June 22, 2023, signed by a former staff of Databank, Ernest Akore with Chef De Cabinet as his designation tells a story of how SML is simply awarded Revenue Assurance deals at the whims and caprices of the finance minister.
The letter reveals an expansion of SML’s scope of work to monitor oil production and gold shipments, encroaching further on the functions of GRA and other regulatory bodies.
The letter titled “Expansion of the scope of work by Messrs Strategic Mobilization Limited” revealed how “The Honorable Minister has determined that there is a need to monitor the production and shipment of oil and gold out of the Country,” and “to this end, he will like to expand the scope of the Revenue Assurance work being performed by SML to include upstream oil drilling by the oil production companies and the gold mining companies”.
The letter sent to the Commissioner General of the Ghana Revenue Authority, had attached a 54-page revised contract, which it said had been reviewed by the Legal Department of the Ministry of Finance, adding, “However, because the Ministry of Finance (MOF) and the Ghana Revenue Authority (GRA) signed the original contract on behalf of the Government, there is a need for GRA to also review and opine on the expanded contract before signing. The GRA boss was thus instructed to “…forward the new proposed contract to the GRA’s Legal Department for their review and input”.
In terms of financial implications, the executed agreements would see SML’s annual entitlement confirmed to exceed US$140 million, a figure surpassing the budget allocations for several ministries.
