Reaction to SML press statement on President’s directives on findings of KPMG audit of GRA-SML contract

Introduction

1. We have seen and read the press statement by SML rejecting almost all the findings in the KPMG audit as revealed in the statement from the Presidency, except the few points that appeared to be in its favour. We react as follows:
2. On April 24, 2024, the Director of Communications at the Presidency issued a statement announcing the position of the President on the findings made by KPMG in its audit of the contract between the Ghana Revenue Authority (GRA) and Strategic Mobilisation Ghana Limited (SML) as directed by the President on January 2, 2024.
3. The appointment of KPMG to audit the contract followed investigations and revelations by The Fourth Estate, the non-profit investigative journalism project of the Media Foundation for West Africa (MFWA). The Fourth Estate’s publications revealed several public-interest questions and anomalies surrounding the multi-million contracts, questions about value-for-money, and the propriety of public claims made by SML about the benefits of the contract to the nation.
4. SML did not limit itself to the statement from the Presidency and its disagreements with the findings in its statement. It also went on to deride the report by The Fourth Estate and pronounced verdict on the work of The Fourth Estate by describing its publication as false and misleading.
5. We are compelled to react and state that what is contained in the President’s statement accentuates the fact of the questionable nature of the GRA-SML contract revealed by The Fourth Estate.

How audit findings as revealed by the President’s statement vindicate us

6. We feel happy and vindicated that the President’s statement on the KPMG audit findings confirmed the following, which indeed, makes the GRA-SML contract questionable, our publications justifiable and of significant public interest:

How audit findings as revealed by the President’s statement vindicates us 

I. No technical needs assessment was done as would have been prudent before the contracts were awarded to SML.

II. SML’s experience in the services they were contracted to perform is only limited to the period of the contract. There is no confirmation of any prior experience on the part of SML before they secured the multi-million contracts.

III. On three occasions in 2017, GRA sought approval of PPA to use single source procurement to award the contract to SML. But PPA did not grant approval.

IV. Despite the PPA’s disapproval, SML was engaged as a subcontractor to another company called West Blue, which was already providing services to GRA.

V. SML was then contracted by GRA when the contract for West Blue ended in December 2018.

VI. All contracts above were done without PPA approval contrary to the laws of Ghana.

VII. The procurement processes (not specified) that were used to engage SML were subsequently ratified by PPA in August 2020. Question is, which procurement processes were those?

VIII. Then in 2023, the Ministry of Finance (MoF), GRA and SML signed another contract. This expanded the scope of the contract to include upstream petroleum and mineral audit services.

IX.  PPA is said to have approved the 2023 contract but we are not told the type of procurement method or process that was used.

X. By law, all the contracts awarded to SML required Parliamentary approval. But there were no parliamentary approvals.

XI. By law, policy and sound corporate practices, the SML contracts required the approval of the GRA Board, but this was not done in the case of the 2018 and 2019 contracts

XII. Even though the GRA Board did not approve the 2018 and 2019 contracts, it approved the expansion of the contract for SML in 2023 to include upstream petroleum and mineral audit services.

XIII. On Transaction audit services, SML partially delivered on the service requirement and GRA may not have obtained all the benefits of the service.

XIV. On external price verification service, SML delivered partially on the service requirements and GRA may not have obtained all the benefits of the service.

XV. GRA had introduced external price verification tools as part of its ICUMS. This made SML’s service redundant

XVI. By the time of the suspension of the SML contract after The Fourth Estate’s exposé, SML had been paid over GHC1 billion (over $83million using a conservative average exchange rate of GH12 to US$1)

XVII. But for the work of The Fourth Estate, the amount that would have been paid to SML for the next five years under the 2023 contract would have been over GHC5.1 billion or more than GHC1 billion each year.

XVIII. SML said it had invested US$44 million to provide the price verification and petroleum downstream services, but did not provide any evidence to back the investments they claim to have made.

XIX. SML’s services have not yielded over GHC 3billion to the public coffers as it had publicly claimed.

 Conclusion and Recommendations

1. We feel proud about how we have used our constitutional mandate in credible investigative journalism to serve the interest of the public by shining light on a questionable multi-million state contract.
2. We are proud that the President of Ghana and the Parliament of Ghana, found our work credible and took separate actions to ensure the propriety of the contract.
3. We object to the President’s attempt to turn a blind eye to the serious breaches of our procurement laws in the award of the contracts and rather asking for the downstream petroleum contract to be renegotiated. This falls short of the principles of rule of law and accountability. It is also in contrast to the President’s campaign promise in August 2016 that “the era of sole sourcing will come to an end.”
4. We call on the President to ask for the outright cancellation of the GRA-SML contract.
5. We call on the President to set up a Presidential Committee to investigative the circumstances under which procurement laws were breached in the award of the contracts.
6. We expect the President to encourage the OSP to expedite its investigations for immediate prosecution of all those behind the contracts that were illegally awarded in 2018 and 2019 and recover all payments made during the period.
7. We call on the President to make public the full report of the KPMG audit into the GRA-SML contract.