In a control room in Tema in the Greater Accra Region, officials of Strategic Mobilisation Ghana Limited (SML) tried to convince The Fourth Estate of its wild claims that it had helped to save Ghana billions of cedis that would have been lost in the downstream petroleum sector but for its intervention.
The company also tried to justify why it receives up to GH₵24 million monthly payments from the government of Ghana in a questionable contract it signed with the Ministry of Finance and the Ghana Revenue Authority (GRA).
A year-long investigation by Evans Aziamor-Mensah, Adwoa Adobea-Owusu and Manasseh Azure Awuni of The Fourth Estate, however, revealed that the company, with the help of a section of Ghana’s media, had made false and unsubstantiated claims of its operations that have served as the basis for the payment it received. It appears the Ministry of Finance and the GRA were aware the claims were false, for some officials of the GRA said they had confronted the company about its claims of savings and volumes on two separate occasions.
A few hours after the reporters confronted the management of SML with the findings of the investigation and asked for a response, the major services it claimed to render to the government disappeared from the company’s website.
The investigation also uncovered that at a time players in the downstream petroleum sector were questioning the relevance of SML’s involvement, the Minister of Finance, Ken Ofori Atta, initiated a more outrageous deal that would entitle the company to over $100 million every year for the next 10 years.
In the first of this series, we focus on a 2019 contract the Government of Ghana signed with SML. The contract was signed at a time when superior and comprehensive measures had already been introduced by the government in 2018 to curtail losses in the downstream petroleum sector.
SML admits false claim of services it renders to the GRA
SML Ghana started what it calls “revenue assurance” services to the GRA in the downstream petroleum sector in June 2020. The downstream sector is responsible for the refining, distribution, and retail of oil and gas products. The Managing Director of the company, Christian Tetteh Sottie, said SML was an offshoot of a timber company he would not name.
Online records, however, link SML to Evans Timbers Limited. The CEO of SML, Evans Adusei, is also the CEO of Evans Timbers GH, a company that won a defamation case against The Informer newspaper in 2014. In that case, Justice Uuter Paul Dery, who was later dismissed by the Judicial Service of Ghana for bribery and corruption, ruled that the newspaper could not substantiate its claim that Evans Timbers GH used its political connections with Chief of Staff Kojo Mpiani to undertake dubious transactions.
Information The Fourth Estate obtained from the Office of the Registrar of Companies shows that Evans Adusei is the sole shareholder of SML. Also, Evans Adusei and his daughter, Esther Adusei, are the directors of the company. SML’s principal activities are “general trading and services, import and export of general goods and audit service activities.”
The Managing Director of SML, Christian Tetteh Sottie, was Ghana’s Controller and Accountant-General from 2005-2009 and is currently a board member of the Internal Audit Agency. He was once an Assistant Commissioner at the GRA.
In 2019, when the GRA entered into an agreement with SML Ghana, Mr. Sottie was the Technical Advisor to the Commissioner General of the GRA. Mr. Sottie left his job as the Technical Advisor to the GRA Commissioner General in the same year to manage SML Ghana in 2020 when the company started implementing its contract with the GRA.
The GRA has been the only customer of SML Ghana since its establishment, according to Mr. Sottie. This means at the time the company was handpicked for the contract through the single source procurement method, it had no prior experience in the services it claimed to have expertise.
A procurement expert and consultant, Kobina Ata-Bedu, says the contract raises questions about a possible breach of Ghana’s procurement laws. He questions the basis for which a company that had no prior experience in the services being procured was single sourced for the contract.
To justify its contract and why it has been paid hundreds of millions of cedis by the government of Ghana, SML falsely claimed that it was rendering a wide range of services that had stopped malfeasance in the downstream petroleum sector.
On its website, SML stated: “The SML Digitalisation of downstream petroleum product measurement has stem(sic) the tide of under-reporting, diversion and dilution of fuel products and general non-compliance in the petroleum industry sector.”
As part of this investigation, The Fourth Estate team spent months interrogating the systems put in place by the Government of Ghana through its sector agencies and third-party contractors to curtail the anomalies SML Ghana claimed to be tackling. The team had rare access to the National Command Centre of the National Petroleum Authority (NPA), where we interviewed officials of the NPA and private sector service providers.
Third-party companies working with the NPA were responsible for checking dilution, diversion, under-declaration and other anomalies in the sector. The Customs Division of the GRA also has officials at the depots and various entry points to ensure that all petroleum products that enter the country are properly accounted for. They do this with independent monitors who police the processes for the owners of petroleum products at various points of the product chain.
The Fourth Estate team also toured some fuel depots in the country and interviewed depot operators as well as oil marketing companies and officials of the GRA. The evidence gathered showed that SML’s claim that it was checking diversion, dilution and under-declaration was completely false.
Our investigation revealed that the introduction of the Enterprise Relational Database Management System (ERDMS) in 2018 had curtailed the continuous operations of oil marketing companies that owed the government in taxes and margins and did not pay within the stipulated time. This was confirmed by the GRA and NPA.
The NPA and GRA said the ERDMS had curtailed under-reporting and other anomalies in the downstream petroleum sector.
A company called Rock Africa was also engaged by the NPA to electronically monitor the tankers that load petroleum products at the depots. The electronic seals send signals to the NPA Command Centre if a truck discharges products outside the fuel station it is supposed to discharge.
This, according to the NPA, curtails the diversion of tax-free petroleum products that are declared as exports to landlocked West African countries but sold in Ghana.
Another company, Nationwide Technologies Limited, had been engaged to undertake fuel marking, which tackles the problem of dilution and the smuggling of petroleum products into the country.
Our investigation showed that the problems that occasioned revenue leakages in the sector were being tackled by different companies to the satisfaction of state authorities, but SML was not one of them. SML, regulatory authorities, and independent operators in the sector could not establish any of the problems SML was solving.
Mr. Sottie also admitted to The Fourth Estate that SML was not into checking underreporting or anomalies in the downstream sector.
“We don’t go into that,” he said when we asked whether SML had “ever detected or identified any issues of under declaration.”
Despite evidence to the contrary, SML made false claims on its website about resolving the problems “under-reporting, diversion and dilution of fuel products and general non-compliance in the petroleum industry sector.”
Officials of the Petroleum Division of the GRA expressed shock when The Fourth Estate team mentioned the listed services SML claimed to provide. SML was contracted to render the services to the GRA.
The GRA officials, led by the Head of Petroleum, Meshack Kwame Danso, were present when we visited SML to confront the company with our findings. Before we started our interview, the GRA officials said SML needed to clear the air on the stated service before we began our interview.
The Company’s Managing Director, Christian Sottie, said SML did not state anywhere that the company was providing services that checked under-declaration, dilution, and diversion of petroleum products. When we pointed out the claims to the management of SML from the company’s website, Mr. Sottie said the information was put on the website in error.
“Oh no, we are not involved in diversion. We are only at the depots. If the thing [petroleum product] is lifted, we don’t know if [it is diverted],” Mr. Sottie said.
He added: “It is GRA, Customs, that will determine where it goes, and they will follow up. We are not capable. We don’t have men outside.”
A few hours after our meeting, the claim of providing services that checked dilution, diversion and under-declaration disappeared from the website of SML.
The Executive Director of the Africa Centre for Energy Policy, Benjamin Boakye, told The Fourth Estate that players in the industry were surprised when the government awarded a contract to SML. He said solutions to most problems in the sector had already been provided and they wondered what SML was coming to do.
Mr. Boakye said the remaining problems in the sector were not at the depots, where SML was stationed to monitor. By problems, Mr Boakye was referring to the non-payment of taxes and margins by OMCs after the sale of products. Even at the depots, the GRA confirmed to The Fourth Estate that it was practically impossible to lose products—and by extension, revenue to the state—even if there were no electronic systems in place.
False Claim of Saving Ghana GH₵3 billion
The Fourth Estate also confronted the Managing Director of SML Ghana with the figures the company churned out as savings Ghana made in the downstream petroleum sector because of its operations.
First was the claim SML made in March 2021 that it had saved Ghana over GH₵1 billion in revenue because of its services.
The company started its operations in 2020. From the revenue figures we obtained from the GRA, the difference in the total revenue from the downstream petroleum sector between 2019 and 2020 was GH₵800 million.
So, if all the incremental revenue in the sector were attributed to the company’s operations, it would still fall short of the GH₵1 billion it claimed to have saved Ghana.
In February 2023, SML Ghana made a more audacious claim that became the banner headline in Ghana’s biggest newspaper, the state-owned Daily Graphic. The story also received wide coverage in major media outlets in Ghana. In its report to the media, the company claimed its operations had helped to save Ghana GH₵3 billion.
The Minister of Finance, Ken Ofori-Atta, was the first to mention billions of losses in the sector, which SML Ghana was going to save. When he commissioned the operations of SML in 2020, Mr. Ofori-Atta claimed that, by engaging SML, the government had eliminated the problems which existed prior to the entry of SML and “it was about two to three billion cedis of losses”.
“We are really excited about this change where we can now determine and get the exact revenues we want,” Ken Ofori-Atta said.
SML Ghana admitted it did not perform the services it listed on its website as curtailing irregularities in the sector and deleted them from its website after we confronted its management.
But even if the company was carrying out those services and all the incremental revenue within the period of its operations was credited to its efforts, the figure would have been GH₵2.4 billion cedis and not the GH₵3 billion it claimed to have saved.
When we put these facts to the managing director, he said he did not know about the GH₵3 billion savings.
“What I want is the agreement from here that the figures are not accurate and that we cannot say that your intervention saved GH₵3 billion,” The Fourth Estate’s Manasseh Azure Awuni insisted that Mr. Sottie should admit the false claim, which was still on the website of the company even while the interview was taking place.
“I have told you that [in terms of the] GH₵3 billion, I am not aware [of it] because when we were told about the publication, we even called the journalist … I think he [journalist] picked it out of context,” Mr. Sotie responded. “I can’t remember the GHS 3 billion. I remember the GHc 1 billion.”
MANASSEH: But the GH₵3 billion was from your outfit?
MR SOTTIE: Yes, you remember when you were talking, I was still speaking about GH₵1 billion. Because, after one year, that was the statement I put out.
MANASSEH: So, who put the GH₵3 billion out?
[The IT Systems Engineer of SML Ghana, Prince Sarpong, interrupts the interview and whispers into Mr. Sottie’s ears].
MR SARPONG: It was a mistake because if you look at other publications, it was just a consultation between GRA and SML. I did the presentation, and I was giving them the expected revenue. Our system can generate expected revenue, so what we did was not even the accurate figure because only GRA can give accurate figures. So, that is a caption by journalists.
MANASSEH: The problem here is that if the journalist made a mistake, it is also on your website this morning even as we speak [in July 2023]. This has been there since February [2023]. So, if a journalist makes a mistake and reports something I did not say, and I put that same thing on my website, then it means an endorsement.
MR SOTTIE: As for me, I don’t know about any website matters.
https://thefourthestategh.com/2023/12/18/the-ghc-3-billion-lie-government-pays-hundreds-of-millions-to-company-in-a-shady-deal/
