Gov't dashes cash to foreign companies

It has emerged that government, through the Ghana Highways Authority (GHA), doled out huge sums of money to 15 foreign companies, some unregistered, without the appropriate withholding taxes.

In the 2011 Auditor-General’s Report, GHA facilitated the payment of contract fees under various loan agreements totaling $161 million to the companies without the withholding of the mandatory 5 percent tax due the government.

The report said the move was in contravention of Section 84 (2) and 87 of the Internal Revenue Act, 2000 (Act 592), which require MDAs to withhold tax on gross amount of payments made to suppliers for the supply of goods and service.

The report cited 14 companies that were awarded contracts but were not registered in Ghana. They are China Int. Water & Electric, which was paid $932,015.85 out of $ 4,758,571.97, A & R Hartoum, which was paid $ 1,578,730.03 out of $ 2,126,206.58 and United Engr. & Tech Consultant, which was paid $561,247.61 out of $ 934,587.61.

Also, China Railway-Wuju was paid $174,754.37 out of $ 1,482,814.69 and another contract for $ 2,437,970.41 out of $ 14,882,202.19 as well as Lious Berger, which was supposed to be paid $ 814,257.57 but has not received payment.

Lious Berger, which was supposed to be paid $1,969,385.84 and MSF/SOECO/JV expecting $ 50,911,081.53 were yet to receive payment. Gaufflngenieure, which is expecting two payments $262,958.06 and $ 814,341.23 respectively and China Int. Water & Electric, which is expecting $26,962,962.41, have not received anything.

Finally, China Int. Water & Electric, which is supposed to be paid $ 4,624,443.76 and $ 1,624,200.00, has been paid $811,333.04 and $ 1,624,200.00 respectively. The total payment as at December 31, 2011 for both registered and unregistered companies stood at $160,629,934.49 while payment for 2011 for all the companies was $ 35,101,872.92.

The report recommended that the GHA should liaise with the Ghana Revenue Authority (GRA) to ensure that all taxes due the government from contractors were paid into the Consolidated Fund. When the Controller & Accountant-General was notified about the situation, it said that “some funding agreements with development partners exempt companies from the payment of tax.”

It explained that “out of the companies listed, four are exempted from tax. GHA should liaise with GRA to ensure that all taxes due are retrieved.”

It justified the selection of foreign companies, saying “Schedule 3 of the Public Procurement Act provides for International Competitive Bidding (ICB). On this basis, the companies, which are deemed not to have registered by the Registrar-General, are eligible to execute the projects.”

However, the Auditor-General urged the Controller to identify four exempted companies and substantiate the claims with relevant documentation. Main Treasury Account of the government was overdrawn by GH¢ 527,234,555 in 2011.

According to the Auditor-General’s Report of 2011, the overdrawn amount had credit balance of only GH¢ 806, 285,499 in the Collection Accounts.