Manasseh’s Praise and Criticism of Akufo-Addo’s Action on the SML Scandal

Manasseh Azure Awuni [left] and President Akufo-Addo

I have read the statement from the Office of the President containing the actions taken by President Akufo-Addo on the KMPG Audit Report on the SML scandal—the multibillion contract between Strategic Mobilisation Ghana Limited (SML) and two state institutions, the Ministry of Finance and the Ghana Revenue Authority (GRA). President Akufo-Addo communicated his decisions after a KPMG audit.

The president had asked KPMG to conduct the audit after The Fourth Estate exposé by Adwoa Adobea-Owusu, Evans Aziamor-Mensah and me. The KPMG report, as communicated by the president, confirms the issues raised in our investigations and even reveals more damning anomalies, including laws that the contracting parties breached with impunity.

In this write-up, I point out where the president deserves praise, the false claims contained in the report (or his version of it) and what appears like a watered-down language to protect the big fishes in the scandal such as the President’s cousin and former finance minister, Ken Ofori-Atta, who is neck deep in the scandal.

First, I commend the President for taking an interest in the matter and ordering the audit.

I also commend the president for accepting KPMG’s recommendation to cancel the upstream petroleum audit and the mining sector audit services by SML.

The contractual fee to SML on the upstream and mining sector monitoring is worth about $90 million a year, based on the production figures in those sectors. Thankfully our investigation exposed the scandal before the contract started so Ghana has not lost a cent in this deal.

The president also accepted the recommendation to cancel “SML’s transaction audit and external price verification services.”

It is curious, however, that in accepting KPMG’s recommendation to cancel those services, the president repeated the words “they may be terminated”, which suggests that the Ministry of Finance has the option to keep the contracts, which the president’s letter said breached several state laws and were signed without any needs assessments.

One can only hope that the current finance minister would act more wisely than his predecessor and swiftly clear those shady deals as recommended by KPMG and the President.

When these cancellations are effected and reviews of the remaining component of the contract, in which the state claimed it got “partial benefits”, the government of Ghana would save close to $500 million for the next five years. The SML investigation may turn out to be the single most impactful piece of journalism in the history of Ghana, considering the amount of savings to the state.

BACKGROUND OF THE SML SCANDAL

The SML Scandal has been described by a veteran Ghanaian journalist, Kwasi Pratt, as the “mother of all scandals” in the scandal-ridden administration of President Akufo-Addo. SML, an offshoot of a timber company without any prior experience, was handpicked by the Ministry of Finance and the GRA to undertake revenue assurance services in the downstream petroleum, the upstream petroleum and the minerals production sectors of Ghana’s economy. The president’s statement says the state institutions were denied approval by the Public Procurement Authority, but they proceeded to sign the contracts.

The Ministry of Finance and GRA signed these contracts without consulting the sector ministries and agencies. They did not undertake any assessment to ascertain whether those services were needed in the first place.

SML, per the contracts, was plugged into some of the most reliable revenue streams of Ghana and was entitled to a percentage of revenue in every litre of petroleum products imported and consumed in Ghana (downstream), every barrel of oil produced in Ghana (upstream) and a percentage of revenue from every ounce of Gold produced in Ghana.

Per the production and consumption figures in the sectors, SML was entitled to more than $100 million per year from this contract. The contract was for an initial 5 years, subjected to renewal for another 5 years.

This means, in its first five years, this contract was worth more than $ 500 million. My experience from investigating such shady deals is that once the contract is allowed a foothold, it stays forever.

In 2006, the Kufuor government awarded an unconscionable contract to Zoomlion as an intermediary to manage the Youth in Sanitation Module of the National Youth Employment Programme. Zoomlion was entitled to 86% of the revenue meant for the men and women who battle filth in choked gutters and markets across the country.

That contract was for two years, subject to another two years renewal. The contract has been running for 18 years now without any hitch.

Zoomlion had no experience in waste management at the time and did not own a single waste management truck. Successive administrations have used the company’s “experience” as the justification for keeping this fraudulent contract. Similarly, the president claims SML’s experience is one of the reasons to keep its downstream contract even though at the time SML was handpicked to undertake the service, it had no experience in doing the work. The government of Ghana was and still is the company’s only customer.

THE PRESIDENT’S PROBLEMATIC COMMENTS AND ACTIONS ON THE KPMG REPORT

In the president’s “whitewashing” paper of the scandal, he made many false and deliberately misleading assertions, ostensibly to water down the scandal and misguide those who do not understand it. And it would be unfortunate if KPMG, indeed, made some of the comments cited in the president’s press release.

1. The president’s claim that SML’s downstream petroleum monitoring helped to curb underreporting and under-declaration is false. It’s a BIG LIE!
2. In our investigation, we asked SML if it was detecting or curbing under-reporting or under-declaration. The Managing Director of SML, Christian Tetteh Sottie, said on camera that SML was not providing any of those services. This is in our investigative documentary. We asked again whether, in all of its work, SML had ever detected any case of under-reporting or under-declaration. Mr. Sottie again said no and that SML was not engaged in those services.
3. The GRA’s Head of Petroleum told us that SML was not checking under-reporting, dilution and diversion of petroleum products as the company claimed on its website. We asked these questions because the National Petroleum Authority (NPA) had engaged multiple companies and deployed tracking technologies that curb under-reporting and under-declaration, dilution, diversion and other anomalies. SML was not and is not undertaking these services.
4. SML deleted the claims of checking under-reporting or under-declaration from its website after we confronted them. The Presidency can, therefore, not claim that SML is providing a service when both the SML and GRA—the contracting parties—say the company is providing no such service. KPMG should have watched that documentary as the starting point of its investigation and should not have used that to justify SML’s downstream contract, as contained in the president’s press release.
5. It is also FALSE that the 2.4 billion cedis the state got from the downstream petroleum sector over the period of SML’s operation is attributed to SML. The integrity of KPMG, a client of the Finance Ministry of the Ghana Revenue Authority, will be seriously called into question if it, indeed, linked the increment of consumption volumes and the resultant increase in taxes to the operations of SML. The company has admitted it is not performing any of the services that address the named revenue losses in the sector.
6. The GRA has also admitted that it does not use the volumes recorded by SML at the depots to calculate its taxes. The GRA uses the more accurate readings from metres at the loading gantries. These metres are calibrated by the Ghana Standards Authority every six months. Their readings go through the NPA’s Enterprise Relational Database Management System (ERDMS). The ERDMS is linked to the GRA’s Integrated Customs Management System (ICUMS), which the GRA relies on to calculate taxes for the downstream petroleum sector. We should be worried that the government pays hundreds of millions every year to SML to take readings but does not use the company’s figures.
7. The 2.4 billion cedis being fraudulently linked to SML by the government is the increment in the taxes the state collected from petroleum products consumed in Ghana. SML does not import petroleum products. SML has said it does not check under-reporting or under-declaration, dilution and diversion. The company has admitted all these on camera and there is no way any gains made from increased petroleum consumption in Ghana could be attributed to this company.
8. If KPMG made those claims in its report, then the auditors, like IMANI and ACEP, should have done a 10-year review to establish a pattern.
9. So how does one credit SML with the growth in the quantity of petroleum products Ghanaians consume and the resultant tax revenues? The dumbest intern to ever work at KPMG would not make this link and I hope the presidency took the KPMG out of context. The Africa Centre for Energy Policy (ACEP) and IMANI Africa have used the GRA’s own petroleum consumption and revenue figures to prove the lack of correlation. (Until we see the original KPMG Report, I will assume they did a good job but the government is attempting to, as usual, clear its agents.)

WHAT GHANAIANS SHOULD DEMAND

1. The President must as a matter of urgency release the KPMG Report. In 2013, the opposition New Patriotic Party, led by Akufo-Addo and many of his colleagues who are now cabinet ministers, harassed the Mahama administration to release the GYEEDA Report after my investigation into the youth employment scandal compelled the government to set up a committee. The GYEEDA Report showed that the situation was worse than what the president communicated. The president released the GYEEDA Report on the eve of the historic Supreme Court ruling on the election petition to bury it. It did not work. Akufo-Addo released his statement on the SML scandal the morning before the NDC outdoored its running mate. These tricks may seem brilliant to the communication advisors, but we must not take our eyes off the SML Scandal.
2. The SML Scandal IS NOT OVER! Mohammed Amin Adam does not want this scandal to define his tenure as finance minister and possibly ruin his political career, he must do what is right in the interest of Ghanaians and not act to please a greedy few. He is wise enough to know that a man does not run to the funeral of a friend who died by stumbling over a stone. He may not have godfathers and chiefs powerful enough to protect him from consequences when it matters most.
3. President John Mahama has indicated that the SML contracts will be completely canceled if he wins the next election. The flag bearer of the governing NPP, Dr. Mahamudu Bawumia, must also tell us his take on the SML scandal. He has served notice he will cancel some taxes and change the policies of the current regime so asking him to tell us what he thinks of this scandal won’t amount to asking for too much. We must know whether or not he supports it and whether he will keep these deals.
4. The KPMG report says Ghana has already paid SML over ONE BILLION CEDIS. Ghanaians deserve to know what we got in return for a contract that the presidency admits breached many laws in Ghana. So far the only tangible revenue fraudulently linked to SML’s operations is the 2.4 billion cedis from taxes on petroleum products we consumed. SML has no role in that, but even if the company’s services brought us 2.4 billion cedis, did we have to pay it more than 1 billion cedis?
5. We must demand a cancellation of the downstream petroleum contract to SML. Why is the presidency recommending a continuation of the downstream contract when the GRA and SML publicly said they do not check under-declaration or under-reporting? That is the only speculation in that report even though the report stated many times that there was no needs assessment before the contracts for the services were signed.
6. The administrative actions taken on the contract should not absolve those who breached multiple laws and signed this shady deal from criminal consequences. We must demand the prosecution of those who have caused us to lose money without any value. The report also shows that many laws have been broken in the SML contract. Those who broke them must face the law otherwise the impunity will continue and our misery as a people will suffer.
7. What has sent the former MASLOC CEO to jail is a tiny fraction of what we have wasted on SML.
8. The president’s recommendation shows that there was no justification of giving SML a fraction of every litre of petroleum product we consume. SML should be made to refund any payments it got in the past under the problematic arrangement. And we must demand that.

TO SUPPORTERS OF THE SML PROJECT

I congratulate Evans Aziamor-Mensah and Adwoa Adobea-Owusu, my two former colleagues at The Fourth Estate, with whom I investigated the SML Scandal. Clement Edward Kumsah, also of The Fourth Estate, deserves a special mention for his support during the year-long investigation.

The Africa Centre for Energy Policy, led by its Executive Director Benjamin Boakye, deserves special acknowledgment for their significant support that made the investigation successful. This is another testament that civil society and media collaborations are crucial in shaping our democracy and safeguarding our leaky national purse.

I have had similar collaborations in the past with the Ghana Integrity Initiative, Star Ghana Foundation and the Media Foundation for West Africa, which birthed The Fourth Estate. These collaborations have produced a significant impact and must be continued especially now that it is becoming increasingly difficult for traditional media to undertake accountability journalism.

Throughout the investigation, my team and I were denied figures, documents and contracts relating to the contracts. We, therefore, relied on bits and pieces of documents and information leaked by some anonymous sources in the government. I wish to salute those heroes of conscience for doing their patriotic duty despite the risks to their lives and livelihoods.

TO THE SCANDAL DEFENDERS

The recommended cancellation and review of the SML’s contract comes after some notable individuals and institutions have served as mouthpieces of SML and attacked the journalists who worked on the project. Aside from certain discredited elements in the media, some persons who appear to stand for the interest of the public shockingly took sides after visiting only SML and attacking the journalists who spoke to SML, the GRA, NPA, and other independent actors to get a comprehensive view of the situation.

Professor Ransford Gyampo, the President of the University Teachers Association of the University of Ghana, attacked our reputation in his pro-SML article and claimed that SML’s work was tackling the under-declaration of petroleum products by players in the industry. He said this after the company admitted on record in our story that it performed no such function and moved to delete the claims from its website.

The Chairman of Parliament’s Energy and Mines Committee, Samuel Atta Kyea, like Prof. Gyampo, also visited SML with some MPs and launched an onslaught on our work and reputation, calling it propaganda.

I wonder what they have to say about the recommended cancellation of the services and the review of the remaining one. I wonder what they have to say about the president’s revelation that PPA denied approvals, but they went ahead to sign the contracts; that there was no assessment to determine whether the government needed the services before SML was engaged; that these contracts needed parliamentary and ministerial approvals, but in some cases, not even the board of the GRA was informed about these costly contracts.

Journalists are not sacrosanct and may not get everything right sometimes, but when notable personalities in society close their eyes to glaring scandals and take sides with those causing Ghana to lose hundreds of millions of dollars, it doesn’t help build our country. They only leave one to imagine what drives their agenda.