President Nana Addo Dankwa Akufo-Addo has caused to be published in full the KPMG Audit Report on the revenue assurance contract between the Ghana Revenue Authority (GRA) and Strategic Mobilisation Limited (SML).
‘In the interest of full transparency in governance, openness and honesty with the public, the President has decided to waive the privilege under Section Five of the Right to Information (RTI) Act, and has directed the publication of the report in full.’
A statement issued by the Communications Directorate, Office of the President, said a copy of the report could be accessed from the website of the Presidency – www.presidency.gov.gh.
The President had earlier denied the request by the Media Foundation for West Africa (MFWA) to make a full disclosure of the Audit Report since it constituted matters exempt under Section Five of the RTI Act.
According to the law, information prepared for or submitted to the President or Vice President containing opinions, advice, deliberations, recommendations, minu
tes or consultations, is exempt from disclosure.
Disclosure of such information compromises the integrity of the deliberative process by revealing the thought process, considerations and influence on decision-making reserved for the highest offices of the land.
Justifying the President’s actions, the statement indicated that there had been a judicial pronouncement in a case involving the MFWA’s demand for the report, and that ‘a request which falls within the categories of information exempt under the RTI Act can be lawfully declined’.
‘Thus, the Office of the President was justified in turning down the request from the MFWA for a copy of the KPMG Audit Report,’ the statement emphasised.
Following public criticism, the President directed KPMG, an internationally acclaimed Audit, Tax and Advisory Services firm, to conduct an audit regarding the transactions, which the two entities entered into in 2020.
The contract was meant to enhance revenue assurance in the downstream petroleum sector, the upstream pet
roleum production and the minerals and metals resources value chain.
The auditors were tasked to conduct an audit to ascertain the rationale or needs assessment performed before the contract approval by GRA and assess how the arrangement aligns with specific needs.
They were also to assess the appropriateness of the contracting methodology.
The KPMG’s working mandate was to verify compliance with legal standards and industry best practices in the procurement process for the selection of SML and evaluate the degree of alignment between current activities and the stipulated contract scope, identifying any deviations.
Per its terms of reference, the audit firm was to evaluate the value or benefit that SML had so far offered to the GRA through the engagement.
The President tasked the auditors to review the financial arrangements, including pricing structures, payment terms and resolution of any financial compliance issues and submit a report on its findings, together with appropriate recommendations.
He, th
erefore, directed the Ministry of Finance and GRA to provide KPMG with whatever assistance it required for the conduct of the audit.
The President was provided with the final audit report on Wednesday, March 27, 2024, and had so far acted on it, giving some directives pursuant to the findings and recommendations presented by the KPMG.
The directives, among others, called for a review of the contract for downstream petroleum audit services, particularly the fee structure concerning the transactions between the GRA and SML.
Other provisions of the contract worth reviewing, according to the President, included clauses on intellectual property rights, termination, and service delivery expectations.
Per the directives, the SML’s performance in any renegotiated contracts should be monitored and evaluated periodically to ensure that it met expectations.
Additionally, any renegotiated contract should be compliant with section 33 of the Public Financial Management Act, according to the statement.
The President s
tated that the upstream petroleum audit and minerals audit services had not yet been commenced, and no payments had been made in respect of those services, therefore, they may be terminated.
The KPMG, per its investigations and findings, established that no technical needs assessment was done prior to the engagement of SML.
‘However, such an assessment was not legally required for engaging SML. After SML was engaged, a Chamber of Bulk Oil Distributors’ industry report, a 2021 Ernst and Young audit report commissioned by GRA and a report by the Revenue Assurance and Compliance Enforcement of the Ministry of Finance, all found that there might be underreporting, under-declaration and potential revenue leakages.
‘On three occasions (between June 2017 and September 2017), GRA sought approval from the Public Procurement Authority (‘PPA’) to use the single source procurement method to engage SML to provide transaction audit services. PPA did not grant approval.
‘Subsequently, GRA engaged SML as a subcontracto
r to West Blue, which was already providing services to GRA at the port.
‘SML eventually took over the services provided by West Blue when the latter’s contract came to an end on December 31, 2018. GRA then added external price verification to the services offered by SML and signed a downstream petroleum audit agreement with SML.
‘All these were done without PPA approval,’ the KPMG’s findings established.
According to the audit firm, following a change of leadership at GRA, the new leadership sought to regularise the contracts with SML and on August 27, 2020, the PPA ratified the procurement processes used to engage SML.
In 2023, the Ministry of Finance (MoF), GRA, and SML entered into a Revenue Assurance Services Contract (‘2023 Contract’).
The 2023 Contract extended the scope of SML’s services to include upstream petroleum and minerals audit.
The PPA’s approval was obtained for this contract, which is now the governing agreement for the services offered by SML to GRA.
Another issue raised by KPMG was
the absence of parliamentary approval for the contracts, given that they are multi-year contracts.
Source: Ghana News Agency