1D1F Hotel: Finance Commitee Chair omits facts on The Fourth Estate’s interview request

The Chairman of Parliament’s Finance Committee, Kwaku Kwarteng, was not transparent with facts when he claimed that The Fourth Estate failed to reveal specific details of the interview it sought with him regarding a $ 4million tax exemption the House granted for the construction of a hotel under the 1D1F policy.

In his latest rejoinder, dated August 28, 2023, which is to counter The Fourth Estate’s response to an earlier one he sent, the Obuasi West MP said, “If the journalist had asked me to speak to 1D1F tax waivers being recommended for a hotel in a Finance Committee’s report, there is no way I would have referred them to the Ministry of Finance.”

In fact, there were three messages from The Fourth Estate to Mr Kwarteng in that regard.

On July 31, 2023, The Fourth Estate’s Victoria Enyonam Adonu reached out to the legislator via a phone call, but he did not answer the call.

The reporter then sent him a Whatsapp message which said “My name is Victoria Adonu, a journalist, I am filing a report on the progress made on the Tax Exemption Act and other tax incentives in Ghana and their impact. I called earlier to request an interview with you this week. I will be standing [by] for your response.”

On the same day, Mr Kwarteng responded by directing the journalist to the Ministry of Finance.

“Thanks for getting in touch. Please speak with the Ministry of Finance and GRA, they are implementing the Exemptions Act and other tax related legislations.

The following day, August 1, 2023, The Fourth Estate sent another message to Mr Kwarteng.

“Good morning, Sir. Noted with thanks. The Ministry of Finance is part of the story. But I want to talk to you for the parliamentary perspective. Given that you’re the Chairman of the Finance Committee, your insight will be extremely important.”

Mr Kwarteng did not respond to the message, although he received and read it.

Two weeks later, The Fourth Estate received a response from the Office of the Registrar of Companies (ORC) which at the time indicated that the company details were not in its system.

With this information in hand, The Fourth Estate sent Mr. Kwarteng another message on August 15, 2023, stating the findings from the ORC and requesting an interview.

“Dear Sir,

I trust you are well. I am Victoria Enyonam Adonu. I reached out to you a fortnight ago regarding our coverage on tax exemptions, and you kindly directed me to the Ministry of Finance for the answers.

Our search at the Office of the Registrar of Companies has revealed that 4-Mac Limited, which was granted close to $4 million in tax exemptions to build a hotel under the 1D1F policy, is non-existent in their database.

Given your role as the Chairman of the Finance Committee, which endorsed the tax waiver, we would greatly appreciate the opportunity to engage in a discussion regarding this matter.

Thank you.”

Again, the lawmaker read this message but failed to respond.

From the evidence above, it is clear that The Fourth Estate informed Mr. Kwarteng about the details of the interview six clear days before the first story was published.

Mr. Kwarteng also claimed in his second rejoinder (point 7) that The Fourth Estate “insists that the Minister came to Parliament with a request under 1D1F tax incentives.”

The Fourth Estate’s report made reference to the Finance Committee’s Report dated November 25, 2022.

Section 4.0 of the report titled “Required Waiver” made reference to the Ministry of Finance as the requesting agency.

“To ensure the execution of the projects and in line with the tax exemption regime under the One District One Factory Program, the Ministry of Finance is seeking Parliamentary approval to exempt import-related taxes and domestic VAT up to the Cedi equivalent of US$6,389,428.00. on materials and equipment to be imported and procured domestically for the Construction of the facility,” it said.

A video The Fourth Estate found on Parliament’s YouTube page showed that the Second Deputy Speaker of Parliament, Andrew Asiamah Amoako, presided over proceedings in the House on December 7, 2022, the day recommendations of the Finance Committee were adopted by the House.

As Mr Kwarteng read excerpts of the Finance Committee’s report, copies of it were distributed to lawmakers in the House.

Errors that were corrected in the report on the floor of Parliament

  1D1F Hotel: Finance Commitee Chair omits facts on The Fourth Estate’s interview request

The MP for Asuogyaman, Thomas Nyarko Ampem, who is also a member of the Finance Committee, rose to support the motion and made three corrections to the report.

He referred to various sections of the report, including Section 5.1, which is one of the many paragraphs on One District, One Factory but said nothing about it as an error.

 

“Thank you Mr. Speaker, I rise to support the motion, and in doing so, I just want to draw our attention to a few typos that need to be corrected. Mr. Speaker, on page 4, under paragraph 5.1, we see that the project for the construction will also contribute significantly to creation of employment in the Tourism and the Hostility Sector, it should be hospitality sector.

“Also, under paragraph 5.2, the board of GIPC have therefore, ‘it should has therefore [been] satisfied itself that the construction of the Meridien Hotel is a strategic investment that deserves, so, there should be an ‘s’ there.  And then finally, under paragraph 5.4, the last sentence, we see that the hotel will be operated by Marriot International in accordance with international operational standards. So, ‘internals’ should be changed to international operational standards,” he said of the errors that needed corrections.

He continued:

“Mr Speaker, the IEA, in one of its reports, estimated that Ghana loses over GH₵5 billion annually to tax exemptions, that and many other reasons is what pushed us as a House to pass the new tax exemption law that we are operating with currently. And so, that is what has actually supported your committee to downwardly reduce the amount requested from [$]6,398,428 to [$]3,919,628.

“So, we have actually got a saving of [$] 2,469,800 and that is significant. And as the Chief Whip said earlier on, it is not just this House. The message must be sent to ministers and government officials who negotiate contracts on our behalf to be abreast with the new tax exemption law. So that they incorporate that in the negotiations before the document even comes to us, Parliament, for us to approve. And so this message must be sent out clearly,” Mr. Ampem said.

At this point, the Second Deputy Speaker told the House that the Resolution had been moved and seconded for consideration of the House. But with no voice in opposition, he asked for a voice vote which had a resounding ‘yes’.

 It took Parliament less than 10 minutes to adopt the report.

 Background

In December 2022, Parliament granted a US$4 million tax waiver under the One District (1D1F), One Factory programme to 4-Mac Limited, a company that is building a hotel at Airport Residential in Accra. The waiver is to cover import bills and other import-related taxes of the company. The company also received a five-year tax holiday.

However, Mr Kwarteng insisted in an earlier rejoinder stated that it there was no tax exemption for the hotel construction under the 1D1F programme.

The parliamentary approval followed a request from the Ministry of Finance dated July 25, 2022. The ministry initially sought approval for almost US$6.4 million in import tax relief for the construction of the four-star, Le Meridien hotel.  The 160-room hotel is expected to open its doors to customers in 2025.

This tax exemption was packaged under the government’s flagship industrialisation policy, ‘One District, One Factory’. The committee in its report to the House dated November 25, 2022, recommended that the request be approved, but it reduced the amount from US$6,389,428 to US$3,919,628.

“That this Honourable House adopts the report of the Finance Committee on the Request for waiver of Import Duties, Import VAT, GETFund Levy, NHIL, EXIM Levy and Domestic VAT amounting to the Ghana Cedi equivalent of Three Million, Nine Hundred and Nineteen Thousand, Six Hundred and Twenty-Eight United States Dollars (US$3,919,628) on materials and equipment to be procured for the development of the Meridien Hotel by 4-Mac Limited.”

Compliance with Tax Obligations

The Committee’s report further stated that the company, 4-Mac Limited, fulfilled all its tax obligations to the state.

A telephone number associated with the company’s GRA registration bears the name of one Bubu Gedza who told The Fourth Estate that he had nothing to do with the company.

“I think you are making a mistake. I don’t know what you’re talking about. It could be a mistake,” he said when asked about his association with the company.

Although The Fourth Estate made efforts to reach out to 4-Mac Limited, they were futile as the company’s digital footprint is scanty and provided no contact details.

The Fourth Estate did not find the company’s official website, email address, contact, and social media handles online.