KPMG Report Reveals GH¢13.38 Million VAT Non-payment by SML

A recent KPMG report, commissioned by President Nana Addo Dankwa Akufo-Addo, has revealed significant discrepancies in the financial dealings between the Ghana Revenue Authority (GRA) and Strategic Mobilisation Ghana Limited (SML). The report highlights that SML did not pay Value Added Tax (VAT) amounting to GH¢13.38 million.

According to the report, for an eight-month period between September 1, 2020, and April 30, 2021, the GRA failed to deduct VAT and withholding tax on payments made to SML. This oversight resulted in a bulk payment to SML that excluded the necessary tax deductions, contrasting with the GRA's standard practice observed from June 1, 2020, to August 31, 2023.

The report also sheds light on the company's change of name. Initially incorporated as Strategic Mobilisation Enhancement Limited (SMEL) on February 14, 2017, the company changed its name to SML on November 22, 2017, following the Public Procurement Authority's (PPA) refusal to approve a single-source process for their contracts three times in 2017. The PPA had concerns about SMEL's capacity and lack of experience in curbing under-declaration and diversion of petroleum products, critical factors contributing to revenue losses in Ghana's downstream petroleum sector.

Despite the PPA's disapproval, the GRA proceeded to award contracts to SML without the necessary approvals. Notably, on June 1, 2018, SML was appointed as a sub-contractor to West Blue Ghana Limited, the then-service provider to GRA, to provide transaction audit services for seven months. Following the expiration of West Blue’s contract on December 31, 2018, GRA extended SML’s contract without PPA approval, renewing it monthly.

In response to these findings, President Akufo-Addo suspended the contracts and tasked KPMG to conduct a comprehensive audit. The Finance Committee of Parliament has since recommended the suspension of all payments under the government’s contract with SML from 2024, pending a parliamentary probe.

The GRA, however, maintains that it followed the correct procedures in procuring SML's services, aimed at enhancing revenue assurance in various sectors, including the downstream petroleum sector, upstream petroleum production, and the minerals and metals resources value chain.

This revelation has sparked calls for stricter adherence to procurement laws and more rigorous oversight to prevent future financial discrepancies.

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