GNPC caught in a web of financial malpractices

Days after the release of Auditor General’s report on public sector financial management, the Ghana National Petroleum Corporation’s (GNPC) is caught in a web of accusation of financial malpractice for signing some international transactions without parliamentary consent.

As GNPC tries to defend itself for such a transaction, the Director-General of the Internal Audit Agency has disagreed with the Corporation’s defense that, the requirement to seek parliamentary approval for some five international transactions, referred to in the 2020 Auditor-General’s report, does not apply to the Corporation.

The Auditor-General indicted the GNPC for signing and awarding five international business contracts to five foreign suppliers using the single-source method in four of those transactions and in one instance using restricted tendering method without seeking the necessary parliamentary approval.

In a rejoinder to the audit report, GNPC stated that it is a distinct legal entity and did not breach any laws in the matter in question. It insisted that it does not require parliamentary approval before engaging in international transactions. But the IAA boss insisted that the Auditor-General was right in raising red flags over GNPC’s international transactions.

“It is clear that the GNPC is a state institution, and they are acting on behalf of government and the state. And the Public Financial Management Regulations (PFMR) and the Public Financial Management Act is clear”, Dr. Eric Oduro Osae said in an interview last week.

“It is not for nothing that regulations 192 to 206 of the PFMR provide for state-owned enterprises and public corporations, so I think they fall within the ambit of the PFMR Act and the Auditor-General has a duty and the mandate to audit that institution as well.”

The findings relating to the Ghana National Petroleum Corporation are captured in the report of the Auditor-General on the public accounts of Ghana’s public boards, corporations and other statutory institutions for the period ended 31 December 2020.

According to paragraph 686 of the report, contrary to provisions in Article 181(5) of the 1992 Constitution, the Auditor-General noted that from the sampled records reviewed, the GNPC signed and awarded five (5) international business contracts to five foreign suppliers or contractors using Single-Source method in four of those transactions and in one instance used the Restricted Tendering method without seeking for the necessary Parliamentary approvals.

The five contracts totaled US$34,165,235.15, and £464,963.13. Some of the transactions cover the procurement of a contractor to acquire and process 2D Seismic Data over the Voltarian Basin for GNPC in 2015 for about $33.9 million, the Development of a Brand Architecture for GNPC and Explorco in 2015 for about £417,000 amongst others.

According to the Auditor-General’s report, the sourcing of such contracts via single source and restricted tendering without parliamentary approval denies the lawmakers the opportunity to make inputs towards such transactions, which could plunge GNPC into paying for higher contract sums and possible judgment debts.

The Auditor-General thus recommended that management of GNPC should be sanctioned in accordance with Section 92 of the Public Procurement Act 2003, (Act 663) as amended for breaching the Public Procurement Law.

But in a rejoinder from the GNPC to the report, Article 181 (5) of the 1992 Constitution pertaining to Parliamentary approvals for international business transactions strictly relates to “Government” business and not generally to statutory corporations set up for commercial purposes.

The rejoinder stated that the GNPC Act (PNDCL 64) establishes the GNPC as a distinct legal entity and, as such, it is not legally considered to be part of Government.

According to the GNPC, the requirement to seek parliamentary approval for the five transactions referred to in the report does not apply to them, and they therefore request that the Auditor-General corrects his findings and conclusions as soon as possible.

The GNPC finally urged the Auditor-General and his staff to cultivate extreme diligence in their duties to avoid embarrassing themselves and the state entities they audit.

By Adnan Adams Mohammed