Ghana risks financial obligations if it terminates SML deal – KPMG report

Audit firm KPMG says the revenue mobilization transaction between the Ghana Revenue Authority (GRA) and Strategic Mobilisation Ghana Ltd (SML) can be terminated by either party.

However, the firm, in its full report on the contract, states that the termination could trigger financial implications for the Government of Ghana (GoG) and the GRA.

“Upon termination, GoG and GRA remain liable to settle SML for services already completed but not yet paid. GoG and GRA are not entitled to a refund of any compensation already paid to SML, regardless of the termination cause.”

“If GoG or GRA terminates without a cause, it becomes liable to pay SML an ROI equivalent to the fair value of SML’s investment in the contract,” it stated.

In a bid to prevent Ghana from incurring costs when contracts are terminated, KPMG recommended that government agencies should ensure all contracts involving the Government of Ghana are reviewed by institutional legal resources and, where necessary, the Attorney General, to confirm that the contract terms do not disadvantage the government.

“For contracts that include the GoG as a party, it is advised that the Attorney-General, who serves as the principal legal advisor to the government, reviews the contract to ensure the terms are compliant with all relevant laws and the interests of the government are protected and not exposed to any avoidable financial or reputational liabilities.”

Background

President Nana Addo Dankwa Akufo-Addo on Wednesday, May 22, released the full KPMG report concerning the contract between the Ghana Revenue Authority and Strategic Mobilisation Limited.

The release follows public calls for transparency and accountability regarding the contract’s details and execution.

The KPMG report, which was commissioned by President Akufo-Addo, to scrutinise the terms and implications of the agreement, provides an in-depth analysis of the partnership aimed at enhancing revenue collection in Ghana.

The contract with SML was intended to leverage advanced technological solutions to streamline tax collection processes, reduce leakages, and increase overall efficiency.

A statement by the Communications Director at the Presidency, Eugene Arhin, noted that on April 24, 2024, President Akufo-Addo received a request from the Media Foundation for West Africa (MFWA), under section 18 of the Right to Information Act, 2019 (Act 989) (RTI Act), for a copy of the KPMG report on the contracts and transactions between Ghana Revenue Authority (GRA) and Strategic Mobilisation Limited (SML).

“Bearing in mind the provisions of the RTI Act, particularly section 5 (1) (a) and (b) (i) of the Act, the President denied the request by MFWA since the KPMG report constitutes matters exempt under section 5 of the RTI Act.

“Section 5 (1) (a) and (b) (i) of the RTI Act states that “information is exempt from disclosure where the information is prepared for submission or has been submitted to the President or Vice President for consideration or contains matters the disclosure of which would reveal information concerning opinion, advice, deliberation, recommendation, minutes or consultation made or given to the President or Vice President and is likely to undermine the deliberative process on the part of the President or Vice President.”

“…However, the President, in the interest of full transparency in governance, openness, and honesty with the public, has decided to waive the privilege under section 5 of the RTI Act and has directed the publication of the KPMG report in full.”