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President Akufo-Addo has ordered an immediate suspension of the contract between the Ministry of Finance and Ghana Revenue Authority (GRA) and Strategic Mobilisation Ghana Limited (SML), the company contracted to undertake revenue assurance services in the downstream and upstream petroleum sector and the mining sector.
The president has also directed an audit firm, KPMG, to investigate the services SML renders to the GRA and submit its report in two weeks.
According to a statement signed by the communication’s director at the presidency, Eugene Arhin, President Akufo-Addo “also directed the Ministry of Finance and the Ghana Revenue Authority to suspend the performance contract pending the submission of the audit report, including any payments presently envisaged under its terms.”
KPMG has also been directed to “assess the appropriateness of the contract methodology, verifying compliance with legal standards and industry practices in the procurement process for the selection of SML.”
The president also tasked KPMG to, among others “evaluate the value benefit that SML has so far offered to the GRA through this engagement.”
The intervention of the President is in response to The Fourth Estate‘s investigation of how the GRA and the Ministry of Finance signed a shady deal with SML, an offshoot of a timber company in Ghana. The downstream petroleum sector contract earns SML up to GH₵24 million a month.
The investigation also revealed that SML has been awarded an expanded consolidated contract worth nearly US$100 million a year for revenue assurance that will now include the upstream petroleum and gold mining sectors.
The Fourth Estate investigations also showed that SML had made false claims that it was checking under-reporting, diversion and dilution in the country’s downstream petroleum sector. When The Fourth Estate team pointed the false claims to the company, the Managing Director, Christian Tetteh Sottie, admitted the company was not into those services.
“Oh no, we are not involved in diversion. We are only at the depots. If the thing [petroleum product] is lifted, we don’t know if [it is diverted],” Mr. Sottie said.
The President’s directive comes barely two weeks after Parliament had directed the Ghana Revenue Authority (GRA) to suspend payments to SML.
The Finance Committee’s resolution adopted by Parliament on Friday, December 22, 2023, stated that the multi-year contract signed with SML should have been approved by Parliament but this was not done.
“The committee noted that the contract between GRA and SML being a multiyear commitment requires parliamentary approval under section 33 of the Public Financial Management Act 2016. The committee recommends that all payments beginning the next fiscal year be suspended until this house considers the committee’s report on its investigations,” the resolution stated.
A contract is deemed to be multi-year when it goes beyond a year, according to the Public Financial Management Act 2016. This means that the first contract for revenue assurance in the downstream petroleum sector in 2019 and the second covering the upstream petroleum and the gold mining sector in 2023 are in contravention of the law.
Aside from this, Parliament also said it would investigate the matter.
“The Committee further decided to investigate these projects in accordance with article 103 of the national constitution and will be submitting its report to this house.”
The minority leader in parliament, Dr. Cassiel Ato Forson, said the deal in its “current shape is not valid.”
President Akufo-Addo’s appointment of KPMG to audit the so-called revenue assurance agreement between Ghana Revenue Authority (GRA) and Strategic Mobilisation Limited (SML) has come too late in the day.
Parliament has already directed the Finance Committee to audit the infamous… pic.twitter.com/HiEAfNRe1G
— Cassiel Ato Forson(PhD) (@Cassielforson) January 2, 2024
Dr Forson, in a social media post, has described the recent statement from the president as a “whitewashing attempt” since parliament had already “directed the finance committee to audit the infamous agreement and the committee is actively involved in the matter.”
He said the statement by the president would not deter parliament from investigating the matter and ensuring an end to corruption.
“The whitewashing attempt by the president in the name of an audit will not dissuade Parliament from looking into this matter to stop the siphoning of state resources into the private pockets of government officials and their crony business partners” the minority leader added.
KPMG’s practice oversight bosses should prudently preserve the firm’s reputation & drop this assignment. This issue is a hot political potato right now. The nature of the allegations requires an IN-DEPTH look by state bodies with the RIGHT POWERS & INDEPENDENCE. KPMG has neither. https://t.co/QFhgLQa8eW
— Bright Simons (@BBSimons) January 2, 2024
Meanwhile, the Vice President of the policy think tank, Imani Ghana, Bright Simons, has called on KPMG to reject the offer to investigate the deal between SML and GRA due to its political nature.
“KPMG’s practice oversight bosses should prudently preserve the firm’s reputation and drop this assignment. This issue is a hot political potato right now. The nature of the allegations requires an in-depth look by state bodies with the right powers and independence. KPMG has neither,” Mr. Simons stated on X(formerly Twitter).
KPMG has its integrity at stake if it accepts this job. It is a client of GRA and its investigation against the leaders of one of its LARGE portfolios is exceedingly suspicious. Simply unethical. https://t.co/vnn274HcEI
— Benjamin Boakye (@benboakye) January 2, 2024
The Executive Director of the African Centre for Energy Policy, Ben Boakye, who also reacted to the president’s statement has also cast doubts on KPMG’s ability to do an independent work.
“KPMG has its integrity at stake if it accepts this job. It is a client of GRA and its investigations against the leaders of one of its large portfolios is exceedingly suspicious. simply unethical,” Mr Boakye stated.
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