Mineral Commission runs away from stinking SML contract

The Minerals Commission has stated that it did not play any role in the award of the contract to Strategic Mobilisation Ghana Limited (SML) for revenue assurance services in the gold production sector.

The CEO of the Minerals Commission, Martin Kwaku Ayisi, responded to a Right to Information (RTI) request, stating that the Commission had no involvement in awarding the contract to SML.

Additionally, the response mentioned that the Minerals Commission has no reports of losses resulting from deliberate or accidental miscalculations in revenue within the mining sector.

The SML contract, awarded by the Ministry of Finance and the Ghana Revenue Authority (GRA), has been suspended by President Nana Addo Dankwa Akufo-Addo.

An international audit and accounting firm, KPMG, has been appointed to audit the contract, following revelations by investigative journalist Manasseh Azure Awuni about false claims made by SML regarding an earlier contract for revenue assurance in the downstream petroleum sector.

The SML contract entitled the company to over $100 million annually for a five-year period, with the possibility of renewal for another five years.

Despite admissions by GRA officials in the investigative documentary that they do not use SML’s figures to calculate taxes and revenue, GRA claimed that SML’s operation had resulted in a significant increase in volumes.

However, the Africa Centre for Energy Policy and IMANI Africa countered the GRA’s claim, stating that the available data on the Ministry of Finance’s website for statutory reporting under the Energy Sector Recovery Act (ESLA) and on the National Petroleum Authority’s (NPA) website did not support the GRA’s assertion of significant revenue increment.

“In the year SML commenced operations (2019/2020), GRA’s data indicates a 5% growth in refined petroleum product consumption relative to the previous year (19.38 million litres). In the same period, the NPA reports a 7% growth (24.71 million litres) in product consumption. In the subsequent year (2020/2021), both GRA and NPA data align, indicating an 11% and 10% growth in product consumption, respectively,” the statement by the CSOs indicated.

They added: “The actual growth between 2018/2019 and 2020/2021 was about 62.95 million from NPA data and 60.15 million from the GRA Data. In the 2021/2022 year, the total consumption of refined products in the country declined by 5% and 7% according to NPA and GRA respectively.”

SML had also stated on its website that its operations had stopped “under-reporting, diversion and dilution of fuel products and general non-compliance in the petroleum industry sector.”

When The Fourth Estate team pointed out that services preventing anomalies were performed by other companies contracted by the NPA, SML management admitted the claim was false and promptly deleted it from the company’s website on the same day. Despite this, in June 2023, the Ministry of Finance instructed the GRA to expand the scope of SML Ghana’s work.

A Ministry of Finance letter said the “Honourable Minister [Ken Ofori-Atta] has determined that there is the need to monitor the production and shipment of oil and gold out of the country.

“To this end, he will like to expand the Revenue Assurance work being performed by SML to include upstream oil drilling by the production companies and the gold mining companies,” the letter, dated June 22, 2023, said.

The award of contracts to SML has faced scrutiny from members of parliament, civil society groups, and anti-corruption campaigners. Questions have been raised about the basis for awarding contracts to SML, particularly as the upstream and gold mining sectors already had existing systems in place to protect the government’s interests.

The Minerals Commission, which was set up by an Act of Parliament as “the Government agency with the primary responsibility of developing and coordinating mineral sector policies and monitoring their implementation” says it was not involved in the contract with SML to monitor gold production in the country.

The Minerals Commission said it was not involved in the award of the contract and does not have reports of revenue losses in the gold mining sector.

“The Commission does undertake regular or special audits from time to time as per its mandate to deal with such issues and we do collaborate with other Government or public institutions to do that,” the CEO added in the RTI response.

The response from the Minerals Commission follows a similar response from the Petroleum Commission, the regulator of the upstream petroleum sector in Ghana.

The Petroleum Commission, in an earlier response to an RTI request, stated that it was unaware of the contract awarded to SML for monitoring oil production in the upstream petroleum sector. Similar to the Minerals Commission, the Petroleum Commission also indicated that it had no information or reports on losses in the sector, which was the purported reason for contracting SML.

The Ministry of Finance, which declined to provide a copy of the contract, stated in response to the RTI request that it did not have reports on revenue losses from agencies in the sectors where SML was contracted to monitor.

“We do not have direct information on purported reports from agencies in the petroleum and mining sectors about losses in the downstream, upstream and mining sectors,” the ministry said.