The Fourth Estate CMS

Author: Evans Aziamor-Mensah

  • GRA failed to obtain PPA, Parliamentary approval for contracts with SML – KPMG audit finds

    GRA failed to obtain PPA, Parliamentary approval for contracts with SML – KPMG audit finds

    Audit firm, KPMG, has reported that the Ghana Revenue Authority (GRA) entered into various long-term revenue assurance contracts with Strategic Mobilisation Limited (SML) without the approval from the Public Procurement Authority and Parliament.

    This follows an audit of the contracts between the two organisations, commissioned by President Nana Akufo-Addo in the wake of series of investigative reports by The Fourth Estate. The reports raised questions about the circumstances surrounding the signing of the contracts, the possibility of duplication of roles already being performed by state institutions and SML’s claims about how its work had benefited the state.

    On Thursday, April 24, 2024, the presidency issued a statement revealing the outcome of the audit and announcing certain directives by President Akufo-Addo. It revealed that after three failed attempts to get approval to use the sole-sourcing procurement method to transact with SML, GRA decided to engage the company as a sub-contractor for West Blue, which was already providing services to GRA. SML was then engaged to provide transaction audit services when West Blue’s contract expired on December 31, 2018.

    “All these were done without PPA approval,” according to the statement from the presidency.

    It was not until 27th August 2020 that the GRA got the PPA to ratify the procurement processes used to engage SML. Three years later in 2023, GRA and SML with the blessing of the Finance Ministry entered into a revenue assurance services contract with PPA approval, which extended the scope of SML’s services to include upstream petroleum and minerals audit.

    KPMG also raised issues with the multi-year contracts which were signed without parliamentary approval, in contravention of the Public Finance Management Act. KPMG also received evidence to show that the contracts signed with SML in 2018 and 2019 (for transaction audit services, external price verification and downstream petroleum audits) were approved by the board of GRA, “contrary to the GRA Act, the corporate governance manual for boards/councils of public services and accepted corporate governance practices.”

    KPMG, according to the statement, found that SML failed to fully deliver on the service requirements in the transaction audit and external price verification services.

    “Regarding the downstream petroleum audit services, KPMG determined that there was an incremental volume of 1.7 billion litres and an incremental tax revenue of GHS2.45 billion for the period under review,” the statement said. “There were also qualitative benefits including a 24/7 electronic real-time monitoring of the outflow and partial monitoring of inflows of petroleum products at depots where SML had installed flowmeters. This serves as a deterrent for under declarations.”

    These notwithstanding, the KPMG audit questioned the variable fee pricing model used for the contracts which has led to the payment of more than one billion Ghana cedis to SML from 2018 to date. The auditors pointed out that such services are usually priced using a fixed fee model.

    Following the irregularities in the contracting processes, the auditor recommended the termination of the contracts but warned that “in the event of termination without cause government becomes liable to pay SML a return-on-investment equivalent to the fair value of SML’s investment in the respective [contracts].”

    The statement from the Presidency further said. “The total investment value for all the services provided by SML to GRA amounts to USD177,530,902.51.”

    The statement said President Akufo-Addo has accepted KPMG’s recommendations and issued several directives.

    Firstly, the GRA has been directed to conduct comprehensive technical needs and value-for-money assessments before implementation of the upstream petroleum and minerals audit services. These contracts may be terminated, but they “could prevent revenue losses”, according to the statement from the presidency.

    Secondly, President Akufo-Addo has asked the GRA to consider terminating the contract for transaction audit and external price verification services, which according to KPMG, has only been partially fulfilled by SML. “GRA has introduced external price verification tools as part of ICUMS [Integrated Customs Management System]. This renders the reliance on SML for external price verification redundant,” the statement said.

    Thirdly, the president has directed a review of the contract for the downstream petroleum audit services, changing in particular, the fee structure “from a variable to a fixed structure.”

    Finally, GRA is required to ensure that renegotiated contracts with SML are compliant with section 33 of the Public Finance Management Act.

    You may also read:
    10-year questionable contract by Finance Minister gives SML over $100 million annually despite false claims

  • The Fourth Estate petitions RTI C’ssion over KPMG’s refusal to provide information on contracts with govt

    The Fourth Estate petitions RTI C’ssion over KPMG’s refusal to provide information on contracts with govt

    The Fourth Estate has petitioned the Right to Information Commission (RTI) over audit firm, KPMG’s refusal to provide information on its contracts with the government.

    The Fourth Estate filed an RTI request on January 5, 2024, asking KPMG to provide copies of all the contracts it has signed with the Government of Ghana in the last 10 years.

    After 14 days of filing the request, the audit firm refused to grant the request.

    Subsequently, The Fourth Estate filed an appeal to the Chief Executive Officer (CEO) of KPMG Ghana on January 26, 2024, in line with section 31 of RTI Act 989 which states: “Except as otherwise provided in this Act, a person aggrieved by a decision of the information officer of a public institution may submit an application for internal review of that decision to the head of the public institution.”

    But more than 15 days after that appeal, the CEO has also not responded to the appeal.

    Section 35 of the RTI Act says: “Where the head of the public institution fails to give a decision on a request for internal review within 15 days, the head of that public institution is deemed to have affirmed the original decision of the information officer.”

    The Fourth Estate has, therefore, petitioned the RTI Commission to compel the firm to release the information.

    On January 3, President Nana Akufo-Addo appointed KPMG to audit a contract between the Ghana Revenue Authority (GRA) and Strategic Mobilisation Company Limited.

    The RTI request to KPMG followed concerns raised by some Civil Society Organisations such as IMANI Africa, the Africa Centre for Energy Policy and Occupy Ghana that there could be a possible conflict of interest situation involving KPMG because the audit firm has existing contracts with the GRA.

  • SML sues The Fourth Estate, Manasseh Azure Awuni, demands GHS 10 million damages

    SML sues The Fourth Estate, Manasseh Azure Awuni, demands GHS 10 million damages

    Strategic Mobilisation Ghana Limited (SML) has sued The Fourth Estate and its founding Editor-In-Chief, Manasseh Azure Awuni, for what it claims to be “defamatory and reckless” reports about its contracts with the Ghana Revenue Authority.

    This follows the release of an investigative report by The Fourth Estate, which exposed how SML, an offshoot of a timber company, had made false claims about potential revenue losses it had helped the state to avoid.

    The report also raised questions about the circumstances surrounding the signing of the contract and its rationale as the services SML was contracted to provide were already being performed by other state agencies.

    The investigative report prompted President Nana Akufo-Addo to suspend the contract and appoint KPMG to audit the agreement.

    In its statement of claim, SML says the publication has caused irreparable damage to its reputation.

    It is demanding one million Ghana cedis in general damages for defamation and nine million cedis in exemplary damages.

    Writ – SML v The Fourth Estate by Evans Aziamor-Mensah on Scribd

    The company is also pleading with the High Court for an apology from The Fourth Estate and a perpetual injunction to restrain The Fourth Estate and Manasseh Azure Awuni from “publishing any further defamatory material” about it.

    “Consistent reportage and peddling of falsehood by the defendants against the plaintiff has evoked feelings of hatred and outrage towards the plaintiff in the eyes of the public and right-thinking members of the society worldwide,” SML says.

    “The defendant’s false reportage on [the] contract with the Ghana Revenue Authority has also resulted in public reactions and backlash, which has further hurt, marred and damaged the reputation of [SML] in the eyes of Ghanaians, causing distrust and a lack of confidence in the [company’s] operations in the petroleum sector.”

     

  • Next NDC gov’t will not accept any SML agreement – John Mahama

    Next NDC gov’t will not accept any SML agreement – John Mahama

    The flagbearer of the National Democratic Congress (NDC), John Dramani Mahama, has condemned the revenue assurance contract between the Ghana Revenue Authority (GRA) and Strategic Mobilisation Limited (SML) Ghana.

    He says, if he is elected to form the next government of Ghana, he will ensure that SML is held accountable for all the monies it has received under the contract.

    “An NDC government under me (John Mahama) will not recognise or accept this SML agreement,” he said in a speech in Koforidua at the start of a tour of the Eastern Region.

    “Parliament is investigating it. The president has hurriedly gone to get KPMG to come and audit it. Whatever audit they do, I say we won’t accept or respect any agreement with SML. And for the money that they have taken already, we will hold them to account for that money,” he added.

    Mr Mahama said with so many corruption allegations cropping up in the country, Ghanaians have become numb to allegations of corruption under the Akufo-Addo government.

    “You cannot fleece a country like this,” he said. “One would have thought that the corruption cases were enough but it’s even made Ghanaians numb. Even in the twilight when you are exiting office, you are still coming up with schemes to steal Ghanaians’ money.”

    His comments follow the release of an investigative report by The Fourth Estate on the contract between GRA and SML.

    The report revealed that SML Ghana won the sole-sourced contract though it had no prior experience in revenue assurance. The company had no evidence to back its claim that it had saved the nation from potential revenue losses amounting to GHS3 billion cedis.

    Since the release of the expose’, several actors in the extractive industry have condemned the contract agreement with the Executive Director of Africa Centre for Energy Policy describing it as “needless”.

    The GRA has been the only customer of SML Ghana since its establishment and SML’s Managing Director, Mr Christian Tetteh Sottie, who was the technical advisor to the Commissioner-General of the GRA, left that position in 2020 to manage SML Ghana when the company started implementing the contract with the GRA.

    The Fourth Estate’s investigations also detailed the circumstances surrounding the signing of an expanded consolidated contract worth nearly USD100 million a year for revenue assurance in the upstream petroleum and gold mining sectors.

    Meanwhile, the audit firm, KPMG, is expected to present its audit report on the SML contract to President Nana Akufo-Addo on February 23, 2024.

  • GRA pleads with Akufo-Addo to allow SML system to run as contract review continues

    GRA pleads with Akufo-Addo to allow SML system to run as contract review continues

    The Ghana Revenue Authority (GRA) has asked President Nana Akufo-Addo to allow the revenue assurance system Strategic Mobilisation Limited (SML) Ghana has installed at the various petroleum depots to continue running. This follows a presidential directive for the contract to be suspended with audit firm, KPMG appointed to review it.

    The GRA says dismantling the SML system will lead to severe revenue losses.

    “We can confirm that the suspension to all intents and purposes will lead to revenue losses following the suspension. There has been a huge gap in the control system and also the update of the oil marketing companies’ accounts,” a letter, signed by the Commissioner-General, Rev. Dr Ammishaddai Owusu-Amoah and addressed to the president, said.

    This concern by the GRA is in sharp contrast to its admission to The Fourth Estate that SML’s data is not used for tax purposes.

    “SML has expressed concerns about operation ramifications and disruptions that would arise from the intended suspension of operations,” the GRA letter said.

    The GRA, however, said while the SML system will continue to be in operation, it will not make any payment for the services SML will render to the state while the contract remains suspended.

    “The system will continue to record data real time until your further directive after the conclusion of the investigation.

    “We, however, want to assure you that the contract remains suspended and no payment would be made on the contract until your directive,” the GRA said.

    Managing Director of SML Ghana, Christian Sottie

    SML is confident that the KPMG audit would clear it of any wrongdoing and clear all doubts surrounding its operations.

    KPMG was supposed to have presented its investigative report on the SML/GRA contract last week. But sources have told the The Fourth Estate that the firm has requested for more time to enable it conclude its review.

    Reacting to the GRA’s insistence on keeping the SML system, Vice President of Imani Africa, Bright Simons, said it is a clear indication that there has not been any suspension of SML activities and no audit by KPMG.

    “This latest development strongly reinforces our concerns and misgivings. It is clear that SML has such an outsized influence that they are dictating to both the GRA and the Presidency as to how the process should be conducted,” Mr Simons said in a statement to The Fourth Estate.

    “It is clear that over the two-week period they did not suspend execution of the contract as directed. And it is clear that the highest office of the land has been disabled from directing policy in this matter. Three weeks after a supposed order from the Presidency as to how things should be done, nothing has been done. No audit report. No suspension. No remedial actions,” he said.

    Mr Simons said the issue is further sullying the legacy of the president and could also have a negative impact on the reputation of KPMG.

    “We do not want to suggest that this is a lame duck presidency, but the President really needs to reflect on the situation and consider the effect on [Nana Akufo-Addo’s] legacy, which is under assault on all fronts. KPMG should also reflect and recognise the reputational consequences of its involvement,” Mr Simons said.

    Meanwhile, the Office of the Special Prosecutor last week announced its preliminary investigations into the revenue assurance contract between the GRA and SML.

     

    Background

    The Fourth Estate’s investigative report in December 2023 revealed that SML Ghana won the sole-sourced contract though it had no prior experience in revenue assurance. It also revealed that the company had no evidence to back its claim that it had saved the nation from potential revenue losses amounting to GHS3 billion cedis.

    The Managing Director of SML, Christian Tetteh Sottie, claimed he did not know about the GHS3 billion figure when The Fourth Estate confronted him with evidence. He said the media, including the state-owned  Daily Graphic, had taken a presentation SML made to the GRA board out of context and reported the wrong information. The same information, however, was published on the company’s website.

    Mr Sottie left his job as the Technical Advisor to the GRA Commissioner-General in the same year to manage SML Ghana in 2020 when the company started implementing its contract with the GRA.

    The Fourth Estate investigations also detailed the circumstances surrounding the signing of an expanded consolidated contract worth nearly USD100 million a year for revenue assurance in the upstream petroleum and gold mining sectors.

    The investigations showed that in 2019 when the GRA agreed with SML Ghana, Mr Sottie was the Technical Advisor to the Commissioner-General of the GRA.

    The GRA has been the only customer of SML Ghana since its establishment.

    Meanwhile, state agencies that are tasked to regulate the activities in the petroleum and mining sectors have denied knowledge of the contract which the Minister of Finance, Ken Ofori-Atta, ordered the GRA to sign with SML Ghana.

     

     

  • GHS3 Billion lie: OSP commences investigation into SML contract

    GHS3 Billion lie: OSP commences investigation into SML contract

    The Office of the Special Prosecutor (OSP) has initiated preliminary investigations into the revenue assurance contract between the Ghana Revenue Authority (GRA) and Strategic Mobilisation Limited (SML).

    The OSP said its investigation is based on a petition it received from three journalists with The Fourth Estate.

    “The complaint alleged possible corruption, including breaches of the Public Procurement Act, in respect of the contractual arrangements,” it stated in a half year report published on January 18, 2024.

    The half year report of the OSP covers all investigations and prosecutions for the period between July 1, 2023, and December 31, 2023.

    The announcement by the OSP comes in the same week that tax audit firm, KPMG, which was appointed by President Nana Akufo-Addo to investigate the contract, is expected to submit its report.

    The Fourth Estate’s investigative report in December 2023 revealed that SML Ghana won the sole-sourced contract though it had no prior experience in revenue assurance. It also found that the company had no evidence to back its claim that it had saved the nation from potential revenue losses amounting to GHS3billion cedis.

    The Managing Director of SML, Christian Tetteh Sottie, claimed he did not know about the GHS3 billion figure when The Fourth Estate confronted him with evidence. He said the media, including the state-owned  Daily Graphic, had taken a presentation SML made to the GRA board out of context and reported the wrong information. The same information, however, was published on the company’s website.

    The investigations also detailed the circumstances surrounding the signing of an expanded consolidated contract worth nearly USD100 million a year for revenue assurance in the upstream petroleum and gold mining sectors.

    The investigations showed that in 2019 when the GRA entered into the agreement with SML Ghana, Mr Sottie was the Technical Advisor to the Commissioner-General of the GRA.

    Mr Sottie left his job as the Technical Advisor to the GRA Commissioner-General in the same year to manage SML Ghana in 2020 when the company started implementing its contract with the GRA.

    The GRA has been the only customer of SML Ghana since its establishment.

    Meanwhile, state agencies that are tasked to regulate the activities in the petroleum and mining sectors have denied knowledge of the contract which the Minister of Finance, Ken Ofori-Atta, ordered the GRA to sign with SML Ghana.

    The Minerals Commission, the sole regulator of the mining industry in Ghana, in response to a Right to Information (RTI) request by The Fourth Estate said it did not play any role in the award of the revenue assurance contract between SML and the GRA.

    The Petroleum Commission, in a response to The Fourth Estate enquiries also denied any knowledge of a contract with SML to monitor petroleum revenue in the upstream sector.

    The Ministry of Finance, which directed the GRA to sign the contract, has said that it does not have any information on revenue losses in the mining, petroleum downstream, and upstream sectors.

    “We do not have direct information on purported reports from agencies in the petroleum and mining sectors about losses in the downstream, upstream and mining sectors,” the ministry said in a written response to an RTI request from The Fourth Estate.

    You may also read

    https://thefourthestategh.com/2023/12/18/osp-receives-petition-to-investigate-finance-ministry-gra-and-sml/

     

  • We did not play any role in the award of ‘shady’ SML contract – Minerals Commission

    We did not play any role in the award of ‘shady’ SML contract – Minerals Commission

    The Minerals Commission has said that it did not play any role in the award of a revenue assurance contract between Strategic Mobilisation Limited (SML) Ghana and the Ghana Revenue Authority (GRA). The contract is meant to monitor the extraction and export of mineral resources in Ghana.

    The Minerals Commission, the sole regulator of the mining industry in Ghana, in response to a Right to Information (RTI) request by The Fourth Estate on January 15, 2024, also said it had never reported any act of “deliberate or accidental calculation as far as gold revenue is concerned” but it undertakes “regular or special audits from time to time as per its mandate to deal with such issues and we do collaborate with other government or public institutions to do that.”

    Minister of Finance, Ken Ofori Atta

    However, a Ministry of Finance letter sighted by The Fourth Estate stated, “Honourable Minister [Ken Ofori-Atta] has determined that there is the need to monitor the production and shipment of oil and gold out of the country.”

    “To this end, he will like to expand the Revenue Assurance work being performed by SML to include upstream oil drilling by the production companies and the gold mining companies,” the letter, dated June 22, 2023, stated.

    In the expanded contract signed in October 2023 between GRA and SML, the company will be paid 0.75% of the total value of gold that is produced and monitored in the country. Ghana is currently the largest producer of gold in Africa.

    Using the 2022 production figures to estimate SML’s earnings, the company’s 0.75% share of 3.7 million ounces at a global price of US$1,800 per ounce (as contained in the Finance Minister’s 2024 budget statement) will amount to an estimated US$50 million per year from the gold sector alone.

    A mining expert, who spoke to The Fourth Estate on condition of anonymity, described the engagement of SML to monitor gold production as a “typical create, loot, and share” scheme to plunder the resources of the state.

    The source said SML has no role in the mining sector and won’t perform any function that is not already in place to monitor and assure revenue for the government.

    “To put it simply, what we do here is that we crash rocks in search of gold. After crashing, we take the rocks that have gold particles to what we call the Gold Room to extract the gold,” the source explained.

    “In the gold room of every mining company, we have officials of the GRA to protect the government’s interest and calculate taxes on whatever we produce,” the source continued.

    The source further explained that aside from the GRA officials, the Gold Room also has officials from the Precious Minerals Marketing Company (PMMC), the state institution certified to grade, assay, value, and process precious minerals.

    “The PMMC is the government’s assayer, so they take samples of the gold we produce to their labs in Accra to test and report on the percentage of actual gold in the bars,” the source said.

    The source further pointed out that the mining companies in Ghana refine their gold outside the country and reports from the gold refineries abroad are returned to Ghana for reconciliation with the PMMC report.

    The source explained that the gold that leaves the mines is airlifted by helicopters with security protection to the Kotoka International Airport in Accra for onward export: “Between the mines and the airport, anything could happen, so we have Customs officials in every helicopter that lifts the gold from the mines to Kotoka, where they hand it over to their superiors for the paperwork and export.

    “So, what is SML coming to do? Are they coming to do the work of PMMC or GRA?”

    The Minerals Commission is the second state regulatory institution to deny any role in the SML/GRA contract. On December 4, 2023, the Petroleum Commission in a response to The Fourth Estate also denied any knowledge of a contract with SML to monitor petroleum revenue in the upstream sector.

    Ghana currently produces between 160,000 and 170,000 barrels of oil per day. The Pecan Field project is expected to add 80,000 barrels per day in a year, a Deputy Minister of Energy, Andrew Mercer, told the Reuters news agency. SML’s share of US$ 0.75 per barrel a day means that the company will make at least US$120,000 barrels per day from the 160,000 barrels per day.

    This is part of the findings of an investigation by The Fourth Estate into the circumstances surrounding the signing of an expanded consolidated contract worth nearly US$100 million a year for revenue assurance in the upstream petroleum and gold mining sectors.

    The investigation also revealed that although SML Ghana failed to explain how it saved the state GHS 3 billion through its revenue assurance contract in the petroleum downstream sector, the company is paid GHS 24 million every month (2 million US dollars).

    Managing Director of SML Ghana, Christian Sottie

    The Managing Director of SML, Christian Tetteh Sottie, claimed he did not know about the GHS3 billion figure when The Fourth Estate confronted him with counter-evidence. He said the media, including the state-owned Daily Graphic, had taken a presentation SML made to the GRA board out of context and reported the wrong information. He said SML had called the journalists to draw their attention to the supposed error.

    The company had also claimed that its services had stopped “under-reporting, diversion and dilution of fuel products and general non-compliance in the petroleum industry sector.”

    When The Fourth Estate confronted the company with evidence that it did not perform any of those services, SML admitted its claims were false and deleted them from its website.

    Meanwhile, tax audit firm, KPMG, which President Nana Akufo-Addo appointed to investigate the SML contract, is expected to submit its report this week.

    You may also read:

    https://thefourthestategh.com/2023/12/18/the-gh%e2%82%b5-3-billion-lie-government-pays-hundreds-of-millions-to-company-in-a-shady-deal/

    https://thefourthestategh.com/2023/12/18/10-year-questionable-contract-by-finance-minister-gives-sml-over-100-million-annually-despite-false-claims/

     

     

  • The GHS3 billion lie: Ministry of Finance says it has no information on revenue losses in petroleum sector

    The GHS3 billion lie: Ministry of Finance says it has no information on revenue losses in petroleum sector

    The Ministry of Finance, which directed the Ghana Revenue Authority (GRA) to sign revenue assurance contracts with Strategic Mobilisation Limited (SML) Ghana, has said that it does not have any information on revenue losses in the mining, petroleum downstream, and upstream sectors.

    “We do not have direct information on purported reports from agencies in the petroleum and mining sectors about losses in the downstream, upstream and mining sectors,” the ministry said in a written response to a right to information request from The Fourth Estate.

    The request was filed as part of The Fourth Estate’s investigation into the rationale and circumstances surrounding the execution of the so-called revenue assurance contracts between GRA and SML Ghana.

    In response, the Ministry of Finance said: “The engagement with all service providers in the revenue sector, including SML, is informed and underpinned by Government policies in approved budgets since 2018. Indeed, in August 2021, Government launched the Revenue Assurance, Compliance and Enforcement (RACE) which, amongst others, is focused on identifying and eliminating revenue leakages while reinforcing the culture of compliance, especially in the areas such as petroleum bunkering, gold and minerals exports, port operations, transit goods, warehousing and free zones operations.”

    The Fourth Estate’s investigations revealed that SML Ghana could be earning huge sums of money for work that was already being undertaken by several state institutions, including the GRA and the National Petroleum Authority(NPA).

    Civil society groups, IMANI Africa and the Africa Centre for Energy Policy have also pointed out that if the government had considered available data from both GRA and NPA they would have realized that there was no need to contract SML Ghana. Furthermore, SML’s work has not led to any significant increase in revenue to justify its fees and charges which run into about USD24 million per year.

    Meanwhile, the Petroleum Commission, which regulates the petroleum upstream sector, told The Fourth Estate during the investigation that it does not have any information on revenue leakages in the sector.

    The Commission also said it does not have any knowledge of a new contract the Ministry of Finance and the GRA signed with SML Ghana to monitor revenue leakages in the petroleum upstream sector.

    The Minerals Commission, which regulates the mining sector, is yet to respond to our information request, which was submitted in November 2023.

    Meanwhile, the GRA, which signed the contract with SML Ghana is yet to respond to our RTI requests submitted in July and November 2023.

    The Ministry of Finance has also failed to provide information on how much they have paid SML Ghana under the revenue assurance contract since 2019 and referred The Fourth Estate to the GRA.

    Background

     The Fourth Estate’s investigation of how the GRA and the Ministry of Finance signed the revenue assurance contract with SML, an offshoot of a timber company in Ghana sparked a national debate and caused President Nana Akufo-Addo to order the suspension of the contract and the appointment of tax audit firm, KPMG, to investigate the scandal.

    The investigation revealed that the downstream petroleum sector contract gives SML up to GHS24 million (USD2 million) a month.

    The investigation also revealed that SML has been awarded an expanded consolidated contract worth nearly US$100 million a year for revenue assurance that will now include the upstream petroleum and gold mining sectors.

    Managing Director of SML Ghana, Christian Sottie

    The Fourth Estate investigations further found that SML had made false claims that it was checking under-reporting, diversion and dilution in the country’s downstream petroleum sector. When The Fourth Estate team pointed the false claims to the company, the Managing Director, Christian Tetteh Sottie, admitted the company was not providing those services.

    “Oh no, we are not involved in diversion. We are only at the depots. If the thing [petroleum product] is lifted, we don’t know if [it is diverted],” Mr. Sottie said.

    CSOs have found inconsistencies in the Ghana Revenue Authority’s (GRA) claims that the work of SML Ghana since 2019 has led to a significant increase in the volume of petroleum products

    In a related development, two leading Civil Society Organisations (CSOs) in the Natural resource sector, the Africa Centre for Energy Policy (ACEP) and IMANI Africa, have found inconsistencies in the Ghana Revenue Authority’s (GRA) claims that the work of SML Ghana since 2019 has led to a significant increase in the volume of petroleum products.

    “We consider as disingenuous the refusal to acknowledge that growth rates in consumption in the periods before SML’s intervention outstripped the growth rate being attributed to SML,” the two organisations said in a joint statement on Thursday, January 4, 2024.

    The GRA had stated that its revenue assurance contract with SML would rake in over USD100 million annually, citing a 33% improvement in the downstream petroleum sector over the past two years.

    “The work of SML over the period has led to the significant increase in the figures reported in the downstream petroleum sector, from an average of 350 million litres per month in 2018 and 2019, to 450 million litres per month from 2020/2021. This represents over a thirty-three per cent (33%) increase in volume reporting and an average of an extra 100 million litres per month at a levy rate of GHS1.44p,” The GRA said on December 20, 2023, in response to the Fourth Estate’s investigation. “The extra revenue variance gained for the two years will exceed GHS3 billion. This performance is attributable mainly to the introduction of ICUMS and SML systems.”

  • The GHS3 billion lie: Ministry of Finance rejects The Fourth Estate’s request for SML contracts

    The GHS3 billion lie: Ministry of Finance rejects The Fourth Estate’s request for SML contracts

    The Ministry of Finance has turned down a right to information request by The Fourth Estate for copies of contracts between the Ghana Revenue Authority (GRA) and Strategic Mobilisation  Limited (SML).

    According to the ministry, the contracts are exempt under the Right to Information (RTI) Act.

    “We are unable to grant access to a copy of the Upstream Petroleum Audit Contract signed in 2023 between this Ministry, Ghana Revenue Authority and the Service provider,” the ministry said in a letter to The Fourth Estate. “Our position is consistent with section 11 subsections (1)(b) and (c) of the RTI Act.”

    Section 11, subsections (1)(b) and (c) of the RTI Act states: “Information which would reveal a trade secret, research, scientific, technical, commercial, financial or labour related information supplied in confidence is exempt from disclosure if the disclosure of the information can reasonably be expected to:

    “(b) Adversely affect negotiations with a third party.

    “(c) Result in undue loss or gain to a person, a group, financial institution or any other body.”

    The Fourth Estate submitted the RTI request on November 17, 2023, to the Ministry of Finance requesting information regarding the contracts between the government of Ghana and SML as part of an investigation into revenue assurance contracts.

    Below are the specific pieces of information The Fourth Estate requested for:

    1. A copy of the Transaction Audit Contract signed on January 1, 2019.
    2. The Downstream Petroleum Audit Contracts signed on April 1, 2019 and October 3, 2019.
    3. A copy of the Upstream Petroleum Audit Contract signed in 2023.
    4. A copy of the contract for the SML NOVA-Mineral Resources Auditing and Security.
    5. A copy of the consolidated contract if the first four service agreements above have been consolidated by the parties.
    6. The monthly breakdown of the amount of money paid to SML Ghana for its services from 2019 up to October 2023.
    7. Reports from the agencies in the petroleum and mining sectors about losses in the downstream and upstream petroleum and mining sectors, if any.
    8. Any advice the Ministry of Finance and GRA received before entering into the contracts with SML and
    9. The considerations which informed the single source procurement decision for both the downstream and upstream revenue assurance contracts with SML Ghana.

    The Information Officer failed to decide on the request within 14 days as required by law.

    On December 28, 2023, The Fourth Estate sent an internal appeal to the Minister of Finance, Ken Ofori-Atta, in line with the RTI Act 989 section 31.

    On Wednesday, January 10, 2024, the Ministry of Finance responded and said it does not have any direct information on losses in the petroleum or mining sector despite the claim that SML was contracted by the Ministry to conduct a monitoring and evaluation in these sectors to curb revenue losses in the sectors.

    “We do not have direct information on purported Reports from Agencies in the Petroleum and Mining sectors about losses in the downstream, upstream and mining sectors,” the ministry’s letter said. “You may contact the institutions in the afore-mentioned sectors for any such reports.”

    Background

    The Fourth Estate‘s investigation revealed how the GRA and the Ministry of Finance signed a deal with SML, an offshoot of a timber company in Ghana that gives the company up to GHS24 million a month.

    The investigation also revealed that SML has been awarded an expanded consolidated contract worth nearly US$100 million a year for revenue assurance that will now include the upstream petroleum and gold mining sectors.

    Our findings also showed that SML had made false claims that it was checking under-reporting, diversion and dilution in the country’s downstream petroleum sector. When The Fourth Estate team pointed the false claims out to the company, Managing Director, Christian Tetteh Sottie, admitted the company was not providing those services.

    “Oh no, we are not involved in diversion. We are only at the depots. If the thing [petroleum product] is lifted, we don’t know if [it is diverted],” Mr Sottie said.

  • The GHS3 billion lie:  The Fourth Estate requests information on KPMG contracts with government of Ghana

    The GHS3 billion lie:  The Fourth Estate requests information on KPMG contracts with government of Ghana

    The Fourth Estate has filed a Right to Information (RTI) request for copies of all contracts between auditing firm, KPMG and the government of Ghana in the last 10 years.

    Last week, President Nana Akufo-Addo announced the appointment of KPMG to audit a contract between the Ghana Revenue Authority (GRA) and Strategic Mobilisation Company Limited. The contract has been described as unnecessary and a mere duplication of the work of several government agencies, whose only objective appears to be lining the pockets of private business people.

    The RTI request to KPMG by The Fourth Estate follows concerns raised by some civil society organisations (CSOs) that there could be a possible conflict of interest situation involving KPMG because the audit firm already has existing contracts with the GRA.

    According to the CSOs, including IMANI Africa, the Africa Centre for Energy Policy and Occupy Ghana, KPMG is also the only advisor to the government on its pandemic relief package for small businesses and the recruitment of technical and other staff to boost delivery capacity to the GRA.

    They further point out that KPMG is a manager of the ESLA tax vehicle on behalf of the government of Ghana and the firm is also a technical advisor to the GRA in some of the very areas (audit, accounting, assurance/compliance and consulting) that it is being asked to investigate.

    The appointment of KPMG to review the contract between SML and GRA was in response to The Fourth Estate‘s investigation which revealed that the contract between GRA and SML, an offshoot of a timber company, will earn SML about GHS24 million per month, for work which appears to be already in the mandate of several state agencies in the downstream petroleum sector.

    The investigation also revealed that SML has been awarded an expanded consolidated contract worth nearly US$100 million a year for revenue assurance in the upstream petroleum and gold mining sectors.

    In addition to the concerns raised by the CSOs over KPMG’s appointment, a former Auditor-General, Daniel Domelevo, has said that the Office of the Special Prosecutor should rather have been mandated to investigate the SML/GRA contract.

    “I think that as much as we are worried about corruption, we must also be worried about the waste of public resources. We have institutions given this mandate to protect the public purse. We should use them instead of engaging KPMG,” Mr Domelevo said in an interview on Joy FM.

    The Fourth Estate’s RTI request for contracts between KPMG and the government of Ghana was filed on Friday, January 5, 2024, seeking the following:

    1. The list of all services KPMG has rendered to the Ghana Revenue Authority and their corresponding fees from 2013 to 2023.
    2. Copies of the contracts signed in (1) above.
    3. The list of all services KPMG has rendered to the Ministry of Finance and their corresponding fees from 2013 to 2023.
    4. Copies of the contracts in (3) above.
    5. The list of all services KPMG has rendered to other government agencies and their corresponding fees between 2013 and 2024.

    Meanwhile, SML has said it is confident that the appointment of KPMG to audit its activities will confirm its integrity and the value of the service it renders to the GRA.

    SML also said the audit will help clear all doubts surrounding its operations.

    “We remain resolute in upholding the highest business standards and welcome the scrutiny that this audit would bring. We are confident that the findings will confirm the integrity of the collaboration with GRA and the Ministry of Finance and provide ample evidence of the value we provide citizens,” SML said in a press statement.