Monday, 17 June

SMEL chameleoned as SML after PPA's multiple rejection of sole-sourced contract - KPMG report

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SML building

Strategic Mobilisation Ghana Limited (SML), previously known as Strategic Mobilisation Enhancement Limited (SMEL), changed its name following repeated refusals by the Public Procurement Authority (PPA) to approve a single-source contract in 2017. This information is detailed in the comprehensive KPMG report released by President Akufo-Addo on Tuesday, 21 May 2024.

President Akufo-Addo commissioned KPMG to audit the contracts between SML, the Ministry of Finance, and the Ghana Revenue Authority (GRA) after an investigation by The Fourth Estate exposed multiple irregularities.

SML had claimed its services were addressing issues such as under-declaration, dilution, and diversion of petroleum products, which were causing revenue losses in the downstream petroleum sector. 

However, when The Fourth Estate presented evidence that these services were already being provided by other companies and the National Petroleum Authority (NPA), SML's Managing Director, Christian Tetteh Sottie, admitted on camera that the company was not performing these functions. Subsequently, SML removed the misleading claims from its website.

Despite these admissions, Finance Minister Ken Ofori-Atta initiated a process in 2023 to expand SML’s contracts to include the gold and oil sectors, increasing the contract value to over $100 million annually. 

Following The Fourth Estate’s investigation, President Akufo-Addo suspended the contracts and tasked KPMG with conducting an audit.

The full KPMG report revealed more concerning details about SML's operations and contracts with the Ministry of Finance and the GRA. 

According to the report, SMEL was incorporated on February 14, 2017. Between June 16 and September 14, 2017, the GRA unsuccessfully attempted three times to get PPA’s approval to single-source SMEL for transaction audit services. On November 22, 2017, SMEL changed its name to SML.

The PPA denied approval because the company lacked the necessary "capacity or prior experience" to deliver the services. Despite this, the GRA proceeded to award contracts to SML without PPA approval. 

On June 1, 2018, SML was appointed as a subcontractor to West Blue Ghana Ltd to provide transaction audit services for seven months, ending December 31, 2018.

After West Blue’s contract expired, the GRA extended SML's transaction audit services agreement on January 1, 2019, without PPA approval, renewing it monthly. 

The GRA entered into six service agreements with SML using the single-source method without PPA approval, including:

Transaction Audit Services on June 1, 2018

Contract Extension on January 1, 2019

External Price Verification Services on April 1, 2019

Consolidation Services Agreement (Transaction Audit & External Verification Services) on October 3, 2019

Measurement Audit of Downstream Petroleum Products on October 3, 2019

Addendum to Measurement for Downstream Petroleum Products Agreement on July 29, 2020

The KPMG report concluded that the GRA executed these contracts with SML in violation of Act 663, the Public Procurement Act, as amended.

Source: Classfmonline.com