President Nana Addo Dankwa Akufo-Addo has acted on the report presented to him by accounting and auditing firm, KPMG on the agreement between the Ghana Revenue Authority (GRA) and the Strategic Mobilization Limited (SML).
The President has made a number of directives upon reviewing the report.
A statement issued by the Presidency on Wednesday, April 24 highlighted the directives saying “The upstream petroleum audit and minerals audit services have not yet been
commenced, and no payments have been made in respect of those services; therefore,
they may be terminated.
However, given that the upstream petroleum audit and minerals audit services could prevent significant revenue leakages, the President has directed that the Ministry and GRA conduct a comprehensive technical needs assessment, value-for money assessment, and stakeholder engagements before implementing such services.
“The transaction audit and external price verification services may also be terminated.
According to KPMG’s findings, GRA obtained partial value or benefit for those services.
This was also due to a lack of monitoring on the part of GRA to ensure that SML performed the services as stipulated in the contracts. KPMG’s investigation found that GRA has introduced external price verification tools as part of ICUMS, among its other functions. This renders the reliance on SML for external price verification redundant.
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“There is a clear need for the downstream petroleum audit services provided by SML. GRA and the State have benefited from these services since SML commenced providing them. There has been an increase in volumes of 1.7 billion litres and an increase in tax revenue to the State of GHS 2.45 billion. KPMG also observed that there were qualitative benefits, including a 24/7 electronic real-time monitoring of outflow and partial monitoring of inflows of petroleum products at depots where SML had installed flowmeters and six levels of reconciliation done by SML.
This minimises the occurrence of under-declarations. However, it is important to review the contract for downstream petroleum audit services, particularly the fee structure. Given the experience and proficiency of SML over the last four years of providing this service, the President has directed that the fee structure be changed from a variable to a fixed fee structure. Other provisions of the contract worth reviewing include clauses on intellectual property rights, termination, and service delivery expectations.
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“SML’s performance in any renegotiated contracts should be monitored and evaluated
periodically to ensure that it meets expectations. Any renegotiated contract should be
compliant with section 33 of the PFMA.”
It added “The Ministry of Finance and the Ghana Revenue Authority are to give effect to the above directives of the President immediately, and provide the Office of the President with an update on the steps taken. The President has extended his sincere gratitude to KPMG for the thorough nature of the audit conducted.”
President Nana Addo Dankwa Akufo-Addo had appointed accounting and auditing firm, KPMG to audit the contract between the Ghana Revenue Authority (GRA) and the Strategic Mobilisation Ghana Limited (SML).
This matter came uo after a year-long investigation by Evans Aziamor-Mensah, Adwoa Adobea-Owusu and Manasseh Azure Awuni of The Fourth Estate, it was discovered that the company (SML), with the help of a section of Ghana’s media, had made false and unsubstantiated claims of its operations that have served as the basis for the payment it received.
The Fourth Estate asserted that, it appears the Ministry of Finance and the GRA were aware the claims were false, for some officials of the GRA said they had confronted the company about its claims of savings and volumes on two separate occasions.
A few hours after the reporters confronted the management of SML with the findings of the investigation and asked for a response, the major services it claimed to render to the government disappeared from the company’s website.
The investigation also uncovered that at a time players in the downstream petroleum sector were questioning the relevance of SML’s involvement, the Minister of Finance, Ken Ofori Atta, initiated a more outrageous deal that would entitle the company to over $100 million every year for the next 10 years.