GoG, GRA faces potential liabilities from SML contract termination – KPMG report

KPMG’s audit report has highlighted the potential financial repercussions for the Ghana Revenue Authority (GRA) and the Government of Ghana (GoG) stemming from the termination of the revenue mobilization contract with Strategic Mobilisation Ghana Ltd (SML).

The report stipulates that should the contract be terminated, GoG and GRA would remain liable for payments for services already rendered by SML, with no entitlement to a refund of any previously paid compensation, regardless of the termination’s cause.

The report underscores that unilateral termination without cause could compel GoG and GRA to compensate SML for the fair value of its investment in the contract, thus presenting a substantial financial risk.

To avoid financial risks, KPMG advocates for rigorous legal scrutiny of all government contracts. The audit firm suggests that contracts involving GoG should be reviewed by institutional legal experts and, where necessary, by the Attorney General.

This measure aims to ensure that contract terms are equitable, legally compliant, and do not expose the government to avoidable financial risks.

“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.

“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,” stated the report.

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 in revenue collection.

Source: Norvanreports