GRA-SML deal: There is evidence of multiple violations of PPA, GRA Act, others – Kwaku Azar tells Akufo-Addo

A US-based Ghanaian lawyer and scholar, Prof Stephen Kwaku Asare, widely known as Kwaku Azar, has added his voice to calls for President Nana Addo Dankwa Akufo-Addo to take action on the KPMG report on Ghana Revenue Authority’s revenue assurance contract with Strategic Mobilisation Limited (SML).

In a post shared on Facebook, on Thursday, April 25, 2024, Kwaku Azar indicated that Akufo-Addo ordering the Ghana Revenue Authority (GRA) and the Ministry of Finance to renegotiate the revenue assurance contract with SML, is not enough.

He said that the KPMG report shows that there were a lot of violations in the signing of the contract which must be dealt with.

Kwaku Azar added that the president should at least form a committee to look into the report for the sake of transparency and accountability.

“The white paper on SML raises many questions and suggests more actions are needed. There is evidence of multiple violations of the PPA, GRA Act, and other laws. Even mere Board approvals were not obtained on some key contracts. Further, there is evidence of the absence of parliamentary involvement in multi-year contracts with billions of dollars at stake.

“Finally, KPMG appears to have raised questions about value for money. Even where the white paper suggests that there has been an increase in the volume of petroleum or tax revenue, there is not enough information to allow one to determine the source of these increases. Such increases, without a volume and revenue expectation model, cannot be unequivocally attributed to the SML contracts,” Kwaku Azar wrote.

He added “In light of these questions raised by the white paper, GOGO calls for an immediate release of the KPMG audit. Moreover, GOGO calls for the formation of a 3-person implementation team to study the report and suggest a way forward, including clear directions on disgorgement, civil penalties, and criminal prosecutions”.

Background:

President Akufo-Addo in a press statement released by the Communications Director of the Presidency, Eugene Arhin, instructed the GRA and the Ministry of Finance to renegotiate the SML contract.

The president emphasized 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," he wrote.

The decision to renegotiate the contract follows the president's acceptance of the recommendation by KPMG after its audit of the deal.

The audit findings prompted the need for a review of the revenue assurance contract, highlighting areas where improvements are necessary to enhance its effectiveness.

On January 2, 2024, President Nana Akufo-Addo commissioned KPMG to investigate the contract between SML and GRA, prompted by an exposé by media outfit, the Fourth Estate.

President Nana Addo Dankwa Akufo-Addo has since received the KPMG audit report regarding the revenue mobilisation contract between GRA and SML.

The report was delivered to him on Wednesday, March 27, as announced in a Facebook post by Eugene Arhin, the Director of Communications at the Presidency, on Wednesday, April 3.

BAI/NOQ

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