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SML contract: Akufo-Addo rejects GRA’s request

President Akufo-Addo has denied the Ghana Revenue Authority’s request to allow for the running of the Strategic Mobilisation Ghana Limited (SML), system that has been installed to enhance revenue assurance, for control purposes.

This comes after the GRA had argued that the “system will continue to record data real-time until your further directive after the conclusion of the investigation.”

They made this request in a rejoinder to the President dated January 16, 2024, and signed by the Commissioner General of GRA, Rev. Dr Amishaddai Owusu-Amoah.

The request, according to GRA, stemmed from concerns raised by SML about operation ramifications and disruptions that would arise from the intended suspension of operations.

In a statement by the Jubilee House, the President “directed that the status quo, with respect to the suspension of the performance of the contract, should remain in effect until the completion of the audit and, subsequent, submission of the audit report by KPMG.”

Back in January 2, President Akufo-Addo appointed international audit and accounting firm, KPMG, to audit the contract and submit a report in two weeks.

But upon the firm’s request, the latest communique also revealed that the President has granted the extension to ensure a more comprehensive report.

“The President of the Republic, Nana Addo Dankwa Akufo-Addo, has extended the period within which KPMG is to complete its audit on the transaction between the Ghana Revenue Authority (GRA) and Strategic Mobilisation Ghana Ltd (SML), from the initial date of Tuesday, 16th January 2024, to a new date of Friday, 23rd February 2024.”

Find the full statement below:

Background

This come in the wake of a report by the Fourth Estate, which revealed that SML had made false claims about an earlier contract it had been awarded by the Finance Ministry and GRA to undertake revenue assurance in the downstream petroleum sector. 

The company is paid up to GHS24 million a month for that initial contract.

SML had claimed that its operations saved Ghana more than GHS3 billion. When The Fourth Estate confronted the management of the company with revenue figures from the sector, which was less than the amount SML claimed to have saved within the same period, SML denied ever claiming to save that amount.

The Managing Director of SML, Christian Tetteh Sottie, said that the media made a mistake in its reportage of the figure.

When it was pointed out to him that the same claim was on the website of SML even as the interview was taking place, he said he did not “know about any website matter.”

When the investigation was published, the GRA issued a statement and insisted that SML’s claim of saving Ghana GHS3 billion was true, even though the GRA failed to indicate how that money would have been lost but for SML’s intervention. 

Despite the admission by GRA officials in the investigative documentary that the Authority does not use the figures from SML’s measurement to calculate taxes and revenue, GRA claimed SML’s operation had resulted in a significant increase in volumes.

The Africa Centre for Energy Policy and IMANI Africa, however, countered the GRA’s claim of significant revenue increment, saying the claim is false.

The two civil society organisations said GRA’s data available on the Ministry of Finance’s website for statutory reporting under the Energy Sector Recovery Act (ESLA) and other statutory data on the website of the National Petroleum Authority (NPA) website did not support the GRA’s claim.

“In the year SML commenced operations (2019/2020), GRA’s data indicates a 5% growth in refined petroleum product consumption relative to the previous year (19.38 million litres). In the same period, the NPA reports a 7% growth (24.71 million litres) in product consumption. In the subsequent year (2020/2021), both GRA and NPA data align, indicating an 11% and 10% growth in product consumption, respectively,” the statement by the CSOs indicated.

They added: “The actual growth between 2018/2019 and 2020/2021 was about 62.95 million from NPA data and 60.15 million from the GRA Data. In the 2021/2022 year, the total consumption of refined products in the country declined by 5% and 7% according to NPA and GRA respectively.”

SML had also stated on its website that its operations had stopped “under-reporting, diversion and dilution of fuel products and general non-compliance in the petroleum industry sector.”

When The Fourth Estate team pointed to the company that the services that stopped those anomalies were performed by some other companies contracted by the NPA, the management of SML admitted the claim was false and deleted it from the company’s website that same day.

These anomalies notwithstanding, the Ministry of Finance, in June 2023, instructed the GRA to expand the scope of SML Ghana’s work.

Ministry of Finance letter said the “Honourable Minister [Ken Ofori-Atta] has determined that there is the need to monitor the production and shipment of oil and gold out of the country.

“To this end, he would like to expand the Revenue Assurance work being performed by SML to include upstream oil drilling by the production companies and the gold mining companies,” the letter, dated June 22, 2023, said.

Some members of parliament, civil society groups and anti-corruption campaigners have questioned the basis for the award of the contracts to SML. Like the downstream sector, the upstream and gold mining sectors already had systems in place to protect government’s interest.

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