Local contracts like SML-GRA fall outside parliamentary approval requirements

Alexander Kwamina Afenyo-Markin, leader of the Majority Caucus in parliament, has stated that the multi-year contract between the Ghana Revenue Authority (GRA) and Strategic Mobilisation Limited (SML) does not necessitate parliamentary approval as it is an agreement between two local entities.

SML, a wholly Ghanaian-owned company, has been at the center of this debate, with critics arguing that the multi-year nature of the SML contract with the GRA should have mandated parliamentary oversight.

However, Mr. Afenyo-Markin, during an interaction with the press, challenged this interpretation, asserting that it misrepresents the legal requirements. He suggested that critics are conflating different legal provisions, thereby misleading the public and complicating the contractual process.

He was unhappy with what he described as the “generalization of the issues,” particularly the notion that all government contracts – especially those spanning multiple years – must undergo parliamentary scrutiny.

“You cannot get up and generalize it,” he stated, while calling for a nuanced understanding of the legal framework governing these agreements.

“Our argument is that this assertion is wrong,” the Majority leader insisted. He referenced Article 181 of the constitution, stating that this article pertains to international commercial transactions. He highlighted Section 5 of Article 181, which specifies the need for parliamentary approval for international agreements, not local contracts like the one with SML.

“Section 5 talks about an international commercial transaction. So, local contracts or MOUs or agreements of multi-year value that are local cannot come under the anticipation of Article 181, Section 5,” he explained. This distinction, he noted, is often overlooked, leading to confusion and misinterpretation.

Article 181(5)

Article 181(5) of the 1992 Constitution mandates that all international business or economic transactions involving the government must be presented to parliament for approval before taking effect.

For a transaction to be governed by Article 181(5), it must meet two criteria – it must be an international business or economic transaction, and the government of Ghana must be a party to the transaction.

A business transaction is considered ‘international’ under Article 181(5) if it involves a significant foreign element. This can mean that the transaction itself has an international nature, the parties involved (aside from the government) are foreign nationals, reside in different countries, or – for companies – are managed and controlled from outside Ghana.

Although many government transactions may be international, not all will fall under the scope of Article 181(5). Only those with a ‘significant’ foreign element qualify. The term ‘significant’ implies that the foreign elements or contacts must undergo a qualitative assessment to determine their relevance to the transaction’s international character.

Background

On January 2, this year, President Nana Addo Dankwa Akufo-Addo tasked KPMG with conducting an urgent audit of the transaction between the GRA and SML after a media report suggested the deal was suspicious and financially harmful to the state.

Following receipt of the audit report, the president directed that the downstream petroleum audit services provided by SML should continue, as KPMG’s findings indicated these services were essential and had resulted in significant savings for the state.

However, the president also ordered a review of the contract – specifically to change the fee structure from variable to fixed. Additionally, other contract provisions, such as those concerning intellectual property rights, termination conditions, and service delivery expectations, were to be revised.