It has emerged from the audit conducted by KPMG that, the politically-favoured Strategic Mobilisation Ghana Ltd (SML) was paid GH¢720 million out of GH¢2.45 billion revenue raised from the Energy Sector Levy Act (ESLA) under its revenue mobilisation transaction with the Ghana Revenue Authority (GRA).
The deal hatched at the Ministry of Finance by Ken Ofori-Atta, has been revealed by the KPMG report did not receive appropriate approvals from the Public Procurement Authority (PPA) as well as Parliament for the contract, yet the company was getting massive sums of money.
Despite these infractions and many more, President Nana Akufo-Addo, still keeps Ken Ofori-Atta, his cousin, as the Senior Presidential Advisor and Special Envoy for International Finance and Private Sector Investments.
The GH¢720 million was raised between May 1, 2020 and December 31, 2023. The revenue translates to 1.70 billion litres for the period with an average of 38.6 million litres per month.
Documents presented to KPMG for the audit, indicated that GRA and SML, asserted that the commencement of the contract by SML led to incremental volume liftings and tax revenue of GH¢12.98 billion for the period 1 May 2020 – 31 December 2023.
“Based on analysis using ESLA reported liftings as the pre-SML, the incremental reported volume that is attributable to the involvement of SML is determined as 1.70 billion litres for the period. This works out to a monthly average of 38.6 million litres per month.
“The incremental revenue that is attributable to the involvement of SML is GH¢2.45 billion for the period. The fee of GH¢720 million paid to SML for the same period constitutes 29.41% of the incremental tax revenue,” the report said.
The report also has revealed that SML owes GRA a total amount of GH¢31.88 million.
The report indicated that from September 1, 2020, to April 30, 2021, a bulk payment to SML covering invoices for eight months, did not have Value Added Tax (VAT) and Withholding Tax (WHT) deductions amounting to GH¢13.38 million.
It stated that this contradicts GRA’s standard practice of deducting such taxes for payments to SML between June 1, 2020 and August 31, 2023.
Again, the report disclosed that the SML failed to fulfil its statutory obligations by neither filing returns nor remitting the taxes to GRA.
As such it said that the accrued interest on the tax liability was estimated at GH¢18.50 million owed by SML to GRA as of January 31, 2024.
“During the period from 1 September 2020 to 30 April 2021, a bulk payment to SML covering invoices for an eight (8) month period, did not have VAT and WHT deductions, amounting to GH¢13.38 million. This contradicts GRA’s standard practice of deducting such taxes for payments to SML between 1 June 2020 and 31 August 2023.”
“Additionally, SML failed to fulfil its statutory obligations by neither filing returns nor remitting these taxes to GRA. Pursuant to Section 71(1) of the RA Act, the accrued interest on the tax liability is estimated at GH¢18.50 million owed by SML to GRA as of 31 January 2024. Consequently, the total liability incurred by SML amounts to GH¢31.88 million,” the KPMG report stated.
It further indicated that at the time of the firm’s review, it noticed the discrepancy and informed GRA, leading to their subsequent communication with SML, demanding a settlement of the outstanding amount.
“At the time of our review, we noticed the discrepancy and informed GRA, leading to their subsequent communication with SML, demanding settlement of the outstanding amount,” it said.
The KPMG report disclosed that the contract did not receive appropriate approvals from the Public Procurement Authority as well as Parliament for the contract.
The report also outlines that SML performed partially under the contracts under review.
The report noted that the terms of the contract were undertaken by existing stakeholders within the petroleum sector.
The said contracts covered the monitoring and auditing of revenue within the petroleum downstream sector and a subsequent contract for similar activities to be undertaken in the upstream petroleum sector.
After KPMG’s audit was made available to the president, a statement from the Presidency accepting the audit directed the cancellation of the contract with SML for the upstream sector and a renegotiation of the contracts for the downstream sector.
Anti-corruption agencies partially commended the President for the directions but requested a release of the full report.
The Media Foundation for West Africa, for instance, filed for a release of the report under the Right to Information Act.
The president, however, disagreed, stating that the audit report falls under information that can be excluded from publication under the Right to Information Act.
The Presidency, however, upon further consideration, published the report, citing the need for transparency and accountability as the reason for the change in position. The report reveals that SML was incorporated on February 14, 2017, as SMEL.
The Ghana Revenue Authority, however, between June 16, 2017, and the same September, made three attempts to contract SMEL under a single-source contract but was rejected by the Public Procurement Authority.
The report notes that in November 2017, SMEL changed its name to SML and in June 2018 the following year, was appointed as a subcontractor of West Blue Ghana Limited, who at the time were service providers for the GRA.
The GRA is alleged to have, since the appointment of SML as subcontractors, engaged SML as main contractors on five different contracts under sole sourcing without approval from the Public Procurement Authority.
The report also recorded that GRA entered into some contracts without parliamentary approval even though the Public Financial Management Act stipulates that an entity that enters into contracts that seek to bind the government of Ghana financially for more than one year ought to receive ministerial and parliamentary approval.
KPMG notes that some of the contracts were for a five-year period. GRA is also said not to have sought board approval for some of these contracts.
KPMG also notes in the report that the GRA did not undertake any needs assessment to ascertain the relevance of the contract with SML.
KPMG’s assessment of the contract performance of SML with respect to some of the contracts, including the transaction audit services and External Price Verification Services, concluded that SML delivered partially on the service requirements, suggesting that the GRA may not have obtained all the expected benefits from the service.
