The Ghana Revenue Authority (GRA) has terminated the transaction Audit and External Verification Service Contract (AEVS) with Strategic Mobilisation Ghana Limited (SML).

This comes on the back of a recent directive given by President Akufo-Addo as part of recommendations by audit firm, KPMG.

In a letter cited by Asaaseradio.com titled “Compliance with Presidential Directives on Recommendations in KPMG Report on the Transactions Between GRA and SML,” dated Friday, 3 May 2024, management said the Upstream Petroleum and Minerals Revenue Audit portions of the contract has also been suspended pending further review of the contract details.

Again, GRA said it has decided to amend the measurement Audit for the Downstream Petroleum Products Contract by revising the fee structure to a fixed fee structure.

The Authority also says it will thoroughly review other provisions such as service delivery expectations, termination, and intellectual property rights.

“This is about the presidential directives dated 18 April 2024 on the recommendations of KPMG concerning the Contract for Consolidation of Revenue Assurance Services between the Government of Ghana acting per the Ministry of Finance, Ghana Revenue Authority (GRA) and Strategic Mobilisation Ghana Limited (SML).

“Following the directives of the President, GRA has undertaken a thorough review of the Consolidation of Services (Transaction Audit and External Verification Services) contract dated 3 October 2019, the Measurement Audit for Downstream Petroleum Products Contract dated 3 October 2019, and the Contract for Consolidation of Revenue Assurance Services (Upstream and Minerals Audit) contract dated 25 October 2023.

“Based on the review, the following actions are to be taken: First, The Transaction Audit and External Verification Services Contract will be terminated. Secondly, the Measurement Audit for Downstream Petroleum Products Contract will be amended.

“Specifically, the fee structure will be revised to a fixed fee structure. In addition, other provisions such as service delivery expectations, termination, and intellectual property rights will be subjected to a thorough review.

“Thirdly, the Upstream Petroleum and Minerals Revenue Audit portions of the Contract for Consolidation of Revenue Assurance Services cannot take effect until a comprehensive technical needs assessment, value-for-money assessment, and relevant stakeholder consultations have been achieved,” the GRA letter signed by its Commissioner General, Ms Julie Essiam, and addressed to the Managing Director of Strategic Mobilization Ghana Limited (SML) read.

Meanwhile, copies of the letter have been sent to the Vice President, Dr Mahamudu Bawumia, the Chief of Staff, Akosua Frema Osei Opare, Secretary to the President, Nana Bediatuo Asante, the Finance Minister, Mohammed Amin, the Director of Legal at the Ministry of Finance and the Deputy Commissioner in Charge of Legal Affairs at the GRA.

President on SML-GRA contract

President Akufo-Addo, in April, instructed the Ghana Revenue Authority (GRA) and the Ministry of Finance to renegotiate the revenue assurance contract with Strategic Mobilisation Limited (SML).

The President emphasised that the renegotiation should be closely monitored and evaluated periodically to ensure it meets expectations.

The decision to renegotiate the contract follows the President’s acceptance of recommendations made 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.

"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," a press statement released by the Communications Director at the Presidency, Eugene Arhin read.

Fourth Estate's GH¢3bn lie report

The Fourth Estate, in a December 2023 investigative report, implicated Strategic Mobilisation Ghana Limited (SML), the Ghana Revenue Authority (GRA), and the Ministry of Finance.

The report alleged that GRA granted SML a purported 10-year contract with an annual payment of $100 million, raising concerns about possible irregularities.

SML refuted the claim, asserting that it had a five-year contract instead.

The GRA, in a statement on December 20, 2023, maintained that the proper procurement procedures were followed.

On January 3, 2024, SML welcomed President Akufo-Addo's directive to suspend its ongoing revenue assurance operations and undergo an audit of its contract with the GRA and the Ministry of Finance.

President Akufo-Addo appointed KPMG, an audit, tax, and advisory services firm, to conduct the immediate audit.