GRA terminates 2 SML contracts, suspends upstream and minerals audit deal

The Ghana Revenue Authority (GRA) has terminated the transaction Audit and External Verification Service Contract (AEVS) with Strategic Mobilisation Ghana Limited (SML).

GRA has also decided to amend the measurement Audit for the Downstream Petroleum Products Contract by revising the fee structure to a fixed fee structure.

The move is a directive from President Nana Akufo-Addo to the GRA, according to a letter sighted by asaaseradio.com. It forms part of the audit firm KPMG’s recommendations to the President.

According to the letter titled “Compliance with Presidential Directives on Recommendations in KPMG Report on the Transactions Between GRA and SML,” dated Friday, May 3, management of GRA said, “the Upstream Petroleum and Minerals Revenue Audit portions of the contract has also been suspended pending further review of the contract details.”

Moreover, the authority indicated that it will “thoroughly review other provisions such as service delivery expectations, termination, and intellectual property rights.”

“This is about the presidential directives dated 18 April 2024 on the recommendations of KPMG concerning the Contract for Consolidation of Revenue Assurance Services between the Government of Ghana acting per the Ministry of Finance, Ghana Revenue Authority (GRA) and Strategic Mobilisation Ghana Limited (SML).

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“Following the directives of the President, GRA has undertaken a thorough review of the Consolidation of Services (Transaction Audit and External Verification Services) contract dated 3 October 2019, the Measurement Audit for Downstream Petroleum Products Contract dated 3 October 2019, and the Contract for Consolidation of Revenue Assurance Services (Upstream and Minerals Audit) contract dated 25 October 2023.

“Based on the review, the following actions are to be taken: First, The Transaction Audit and External Verification Services Contract will be terminated. Secondly, the Measurement Audit for Downstream Petroleum Products Contract will be amended.

“Specifically, the fee structure will be revised to a fixed fee structure. In addition, other provisions such as service delivery expectations, termination, and intellectual property rights will be subjected to a thorough review.

“Thirdly, the Upstream Petroleum and Minerals Revenue Audit portions of the Contract for Consolidation of Revenue Assurance Services cannot take effect until a comprehensive technical needs assessment, value-for-money assessment, and relevant stakeholder consultations have been achieved,” the GRA letter to the Managing Director of Strategic Mobilisation Ghana Limited (SML) read.

In addition, copies of the GRA letter have been sent to key officials, including Vice President Dr. Mahamudu Bawumia, Chief of Staff Akosua Frema Osei Opare, Secretary to the President Nana Bediatuo Asante, Finance Minister Mohammed Amin, the Ministry of Finance’s Legal Director, and the Deputy Commissioner responsible for Legal Affairs at the GRA.

Akufo-Addo ordered a review of GRA-SML deal

On April 2, President Nana Akufo-Addo ordered a careful review of the contract entered into between GRA and SML.

He directed the Ghana Revenue Authority (GRA) and the Ministry of Finance to renegotiate the revenue assurance contract with SML.

The President, having accepted the KPMG’s recommendation, emphasised that the renegotiation should be closely monitored and evaluated periodically to ensure it meets expectations.

“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,” portions of a press statement released by the Communications Director at the Presidency, Eugene Arhin, said.

The Fourth Estate Documentary

The Fourth Estate and Manasseh Awuni Azure released an investigative documentary titled “The GHC3 billion lie” in December last year that implicated Strategic Mobilisation Ghana Limited (SML), the Ghana Revenue Authority (GRA), and the Ministry of Finance.

The documentary claimed that SML was granted a 10-year contract by GRA with an annual payment of $100 million, sparking concerns over potential irregularities.

SML countered this by stating that they actually held a five-year contract.

On December 20, 2023, GRA released a statement asserting that proper procurement procedures were followed.

Subsequently, on January 3, 2024, SML expressed approval of President Akufo-Addo’s decision to suspend their ongoing revenue assurance operations.

They agreed to undergo an audit of their contract with both GRA and the Ministry of Finance.

President Akufo-Addo then appointed KPMG, a specialised firm in audit, tax, and advisory services, to conduct the immediate audit.