Business News of 2014-03-04

Committee on Subah scandal concludes probe

The technical committee set up by the government to investigate the payment of GH¢75 million by the Ghana Revenue Authority (GRA) to its assign, Subah Infosolutions, for no apparent work done, has concluded its work, but details of its report have been wrapped tight.

A member of the committee and Head of Tax Policy at the Ministry of Finance, Mr Tony Dzadzra, told the Daily Graphic Monday that the committee had presented its report to the Chief Director of the ministry.

He would, however, not be drawn into further discussions on the investigation beyond the submission that it had been completed.

Mr Dzadzra could also not tell when exactly the committee began or finished its work, except to say that it had started work long before the President gave a directive for an investigation into the matter.

His responses leave questions still lingering in the minds of many people on the GRA/Subah contract, three months after President John Mahama had ordered an investigation into the contract between the two institutions. GRA tight-lipped

Officials at the GRA have not commented on the issue, one week after the Daily Graphic had sought to find out the current status of the contract and other related matters.

The Daily Graphic had written a letter to the GRA, addressed to the Commissioner-General of the authority and delivered on Monday, February 24, 2014, to request for information on latest developments.

But at the last call at Mr George Blankson’s office yesterday, the Daily Graphic was told the letter was still receiving attention by the Commissioner-General.

The President’s order

President Mahama had, in November 2013, ordered the Minister of Finance and the Attorney-General and Minister of Justice to, among other tasks, seek the prosecution of persons indicted in the GRA/Subah scandal and recover the money paid to Subah.

“I have instructed the Minister of Justice and Attorney-General/EOCO and the Minister of Finance to work with the Minister for Youth and Sports to achieve the following by 31st December, 2013:

Secure refunds of monies wrongfully paid to or appropriated by any individuals or companies from contracts with SADA, GYEEDA and the Ghana Revenue Authority (GRA) and to retrieve the monies wrongfully paid to Waterville and Isofoton initiate legal action against the individuals or companies to secure the refunds and/or to punish them for wrongdoing,” he had sad.

Interacting with anti-corruption campaigners at the Flagstaff House on November 15, 2013, President Mahama had made his intentions clear: "It is not only my duty as President to fight corruption but it is also my civic duty as a Ghanaian to champion this fight."

But more than two months after the December 31, 2013 deadline to get the job done, and at a time when the national kitty is crying for cash inflow, officialdom is silent on the matter in respect of recovering the GH¢75 million paid to Subah and/or sorting out persons indicted in the scandal for prosecution.

No official explanation has also been given for the apparent delay in the work of the investigating committee.

Background of story

Some time in 2010, the GRA contracted Subah Infosolutions to electronically monitor domestic call data records (CDRs) of the telecommunication companies in the country on its behalf for the purpose of collecting appropriate taxes from the companies.

The move was in line with the Communication Services Tax (Amendment) Act, 2013 (Act 864) which imposes an obligation on telecommunication companies to grant the Minister of Finance physical access to their facilities to electronically monitor their CDRs for tax purposes.

The GRA, acting on behalf of the Minister of Finance, had contracted Subah to undertake that task, with an agreement to pay Subah 13.5 per cent of incremental revenue collected thereof.

Incremental revenue is the revenue collected in excess of what the GRA projects to collect within the year.

Having paid Subah GH¢75 million between 2010 and 2012, the GRA had suggested that there was incremental revenue of more than GH¢555 million from the telecommunication companies over the period based on the work of its assign.

Issues on incremental revenue

But many mind-boggling issues have been raised over those claims and the integrity of the GRA/Subah contract as a whole.

Some industry analysts contend that the declaration of incremental revenue by GRA/Subah suggests that some or all the telecommunication companies had under-declared their taxable revenues.

That being the case, industry analysts are asking why GRA/Subah did not disclose the names of the telecommunication companies involved in such under-declaration and take appropriate action against same.

Again, industry analysts are wondering why Subah should be paid the GH¢75 million from the VAT Fund and not the incremental revenue it collected per the GRA/Subah contract which entitled Subah to 13.5 per cent of incremental revenue collected.

GRA’s letter

Another issue agitating the minds of industry analysts is that the GRA had informed the telecommunication companies about the appointment of Subah to undertake the electronic monitoring of CDRs for the first time on October 28, 2013 per a letter signed by the Commissioner-General, Mr Blankson.

Some are also asking that if the Communication Services Tax (Amendment) Act became effective in 2013, on what basis did Subah undertake the purported electronic monitoring of the CDRs between 2010 and 2012 to warrant a payment of GH¢75 million?

Moreover, the telecommunication operators claim nobody had ever installed equipment on their facilities for the purposes of electronically monitoring their CDRs.

They also indicate that they submit only foreign CDRs to the National Communications Authority (NCA) and not domestic CDRs.

NCA denial

The NCA is on record to have denied giving domestic CDRs to any entity, including Subah, for analysis or any other purpose.

According to the NCA, it had only dealt with a Haitian-based company, Global Voice Group (GVG), which had been contracted to fix real time verification equipment on the international gateway systems of the telecommunication companies to monitor incoming international traffic.

This means before October 28, 2013 when the GRA wrote to the telecommunication companies announcing the appointment of Subah to undertake electronic monitoring of domestic CDRs, no official action had been taken in that regard.