SML Touts Ethical Standards Amidst Audit Scrutiny … Stands Strong Against Allegations

INTRODUCTION On January 2nd, 2024, the Presidency appointed KPMG, an Audit, Tax, and Advisory Services firm, to conduct an immediate audit of the FULL RISK-REWARD PARTNERSHIP AGREEMENT between the Ghana Revenue Authority (GRA) and Strategic Mobilization Ghana Ltd (SML). The original agreement targeted revenue leakages in the downstream petroleum sector.

SML further observes that a comprehensive needs assessment in those sectors was previously conducted, which supports KPMG's findings that revenue assurance audit services are needed in that sector.NEEDS ASSESSMENT CRITERIASML disagree with the findings that a need assessment was not done before SML commenced operations.

The Transaction Audit contract includes provisions for monitoring and evaluation services as well as a value-for-money assessment, both of which were diligently adhered to by the GRA and SML.SML observes that KPMG makes similar findings regarding External Price Verification Services.

SML services provide extra oversight when it comes to classification and valuation.   SML PERFORMANCE ASSESSMENTSML notes that KPMG confirmed that due to the implementation of the downstream petroleum audit agreement, there were qualitative benefits, including “a 24/7 electronic real-time monitoring of the outflow and partial monitoring of inflows of petroleum products at depots where SML had installed flowmeters”. KPMG also confirmed that other important benefits from the SML technology, including a deterrent for under-declarations and several levels of reconciliation and validation, prevented revenue losses to GRA.REALIZED PETROLEUM VOLUMES AND THE TAX REVENUE SML disagrees with KPMG's findings regarding the realised petroleum volumes and the tax revenue realised as a result of the compliance tools that led to increased volumes.

During the audit, KPMG used NPAs / ESLA Volumes to evaluate the performance of the downstream petroleum to determine GRA tax revenue.SML strongly contended in writing to KPMG during its audit that NPAs / ESLA’s Volumes are Lifting or Trading Volumes but not GRA Taxable Volumes.

SML further contended that NPAs / ESLA Volumes cannot be used for performance computation. SML, together with the GRA, submitted to KPMG that the taxable volumes are properly evident in the Bank of Ghana's petroleum tax revenue receipts in its Petroleum Holding Accounts. SML supervision within the sector showed a drastic monthly average increase of 207,885,058 to 450,175,163 in taxable volumes for the periods January to December 2019 and May 2020 to April 2021, respectively.

This omission is highly misleading.THE KPMG’s REPORT EXONERATES SML AND CONFIRMS THE NEED FOR THE COMPANY’S PROVEN SERVICESDespite the misleading information propagated by Manasseh Azure Awuni and the Fourth Estate, it is important to note that the independent report from KPMG, while containing some disputed and inaccurate statements, unequivocally confirms the following: There’s no 10-year contract.100 million dollars was not paid to SML. There is no duplication of work with respect to the work of the National Petroleum Authority (NPA). The GRA awarded the 2023 consolidated contract to SML following due process.SML has a risk-reward performance-based contract, which SML fully finances without a “pesewa" of government’s money. CONCLUSIONTHE GHANA WE DESIRE IS IN OUR OWN HANDSSML is fully committed and confident in its efforts to ethically contribute to building a better Ghana for present and future generations while adhering to high ethical standards.