Mass Action Committee (MAC) has noted with great deal of disquiet, the outcome of the Technical Committee’s work in respect of the Service Agreement and the execution thereof between REVSOL/SUBAH INFOSOLUTIONS LTD and the Revenue Agencies Governing Board (RAGB) acting on behalf of the Ministry of Finance and Economic Planning on 5th May 2010.
It will be recalled that, there was public outcry about the propriety of the contract and the loss of huge sums of money to SUBAH INFOSOLUTIONS. In response, the Minister of Finance in 2013 set the Technical Committee up to investigate the claims made against SUBAH in the execution of their contract. It is important to underscore the fact that, these investigations were expected to ascertain whether Government of Ghana was getting value for money in its dealings with SUBAH.
It is against this backdrop that, the committee’s report leaves us with no option but conclude that it did a deliberately poor job with the intent to exonerate REVSOL/SUBAH INFOSOLUTIONS and thus give them the official blessing to comfortably enjoy their loot.
THE SERVICE AGREEMENT
A careful study of how SUBAH’s services were procured shows that, this whole transaction was carried out in bad faith. And as a consequence, Ghanaians were short changed. Contrary to the expectation that the Revenue Agencies Governing Board, would request proposals from prospective companies with expertise in Revenue Assurance Monitoring through competitive bidding, it was they (SUBAH) in a typical GYEEDA fashion who presented a proposal to the RAGB and the Ministry of Finance in 2009 for the provision of this service.
Whereupon, the RAGB accepted the proposal and on 4th January, 2010 wrote to MOFEP for approval and authorization. Strangely however, the Minister in approving the proposal indicated in his letter dated 3rd Feb 2010, that the service be sole-sourced as per section 40(1) e of the procurement Act.
What is intriguing and mind boggling is the fact that, the kind of service SUBAH was expected to offer hardly fits into this particular provision. The provision in question relates to conditions under which single-sourcing is permissible and reads “where the procurement entity seeks to enter into a contract with the supplier or contractor for research, experiment, study or development except where the contract includes the production of goods in quantities to establish commercial viability or recover research and development costs”.
Several attempts by the Mass Action Committee to find our heads around how the service in question could possibly pass the test of this provision have been unsuccessful.
By limiting the procurement of this all important service to just SUBAH, Ghana lost the benefit of alternative offers with the twin prospects of better cost and higher expertise.
What is even more ludicrous and heart breaking is that, some portions of the Service Agreement itself especially Article 5 which relates to fees. RAGB is required to pay SUBAH 13.5% of incremental revenue accrued from Communications Service VAT/NHIL and Communication Service Tax. Beyond the fact that 13.5% is unreasonable, it is calculated on additional tax revenue beyond the average monthly collection – which is the ratio of aggregate CST and VAT declared and accounted for by Service Providers since the inception of the CST in 2008 to the month before the commencement of SUBAH’s work and the number of months thereof.
What this means is that, whether the increase in tax revenue is the result of SUBAH’s work or not, it is entitled to take 13.5% in so far as the increase goes beyond the “current average monthly collection” threshold. To this extent, the Service Agreement as it was so fashioned, positioned SUBAH in the best stead to potentially reap where it certainly did not sow. Only a contract with the intention to defraud can contain these incensing terms.
What is even more worrying is the fact that, Where no incremental revenue accrues in a particular month, the Agreement mandates RAGB to still pay “almighty SUBAH” 1% of the average monthly collection. In effect, whether SUBAH works or sleeps, it is still entitled as per the Agreement to share our taxes with us.
It is instructive to mention that, in most cases where private entities are contracted to provide Revenue Assurance Monitoring, they are paid percentages on the differentials between tax deposits and true tax uncovered through the work of the contractor. So that, where incremental tax revenue is not the function of the contracted entity’s efforts, it fails to profit from it. In the case of RAGB and SUBAH, it is more of a legally binding invitation from the former to the latter to share our communication tax revenues for pretending to be doing something when indeed it is doing NOTHING!
To make matters even worse, this Agreement has a life span of five years which gives SUBAH enough time to exploit this porous Agreement to amass as much loot as they possibly can.
POOR EXECUTION OF CONTRACT AND RECEIPT OF FREE MONEY FOR DOING NOTHING
The mandate of SUBAH is found in Article 4 of the Agreement. It is to among other things report on total revenues generated in a month, details of all calls of a particular number, tax differential reports, subscriber base of operators and total minutes at given periods. The essence is to reduce tariff and traffic fraud which lead to tax revenue loss by government.
To do this, SUBAH was required to independently monitor traffic volume and pricing of mobile and fixed telephony by connecting monitoring devices to the physical network nodes of service providers. Unfortunately, SUBAH did not do this. Rather it depended on CDRs presented by Service Providers to NCA for their work. And claim they analyzed the CDRs to ascertain whether the telecos were under declaring taxes or not-a situation according to them led to increases in tax revenue for the Ghana Revenue Authority.
We find this joke unacceptable as it did not give GRA any assurance that the telecos were fully declaring taxes due the state. Data on the CDRs presented by the telecos were their discretion and so they could under declare without SUBAH knowing because it had no means of verification and thus the purpose of the Agreement with SUBAH would be defeated. The claim by SUBAH that they used Revenue Assurance Software to analyze the CDRs is unsustainable as the software is only good to the degree that it is limited to the CDRs.
In point of fact, the Performance Evaluation Report on Local Call Monitoring September 2013, indicated that SUBAH monitoring operations were limited to only obtaining CDRs provided by operators which were subject to manipulation. Hence, there was no “complete visibility of operators’ actual revenues”.
Despite this non-performance, GRA went ahead to recommend payment of huge sums of money as fees to SUBAH. A major justification for these payments was that, there has been a surge in incremental revenues over the period since SUBAH began its work in 2010. This by all accounts is untrue. The increase in CST and the Communication Service VAT/NHIL is largely because of the increase in the subscriber base of mobile and fixed telephony. SUBAH’s work as clearly explained, has neither reduced revenue loss from tariff fraud nor has it reduced traffic volume manipulation.
Some of these outrageous payments could be as much as 12,558,019.00 within four months (May-August, 2012 for example and approval was given on 20th May 2013 by the Finance Minister).
THE TECHNICAL COMMITTEE’S REPORT
It is our view that, the committee’s report is an attempt to whitewash the SUBAH deal and give it legitimacy and by extension the monies they have undeservedly taken. The bit about whether the RAGB had the mandate to enter into a contract with SUBAH or not is for us is not much of a problem. Indeed, what is of utmost concern to Ghanaians is whether we had value for money in respect of SUBAH’s operations. From what has been mentioned above, we did not!
And so, we find it reprehensible that a committee set up and financed with our money will produce such results as to make it possible for 74m GHS of taxes to be leaked into a private pocket. As for the so called negotiated 1% reduction in SUBAH’s “earnings” as compensation for their inability to connect their devices to the nodes of the operators and monitor traffic and prices is the worst joke. The main thrust of SUBAH’s mandate is to be able to report accurate data on traffic volume and so on for the purpose of having accuracy and visibility of actual tax revenue deposits by the telecos.
Therefore, failure to do this which the committee itself admits, SUBAH does not deserve even a penny. And should have been made to refund every pesewa taken from our communication taxes.
To this end, we are calling on the President and Government to do the following:
• Reject the committee’s report
• Reorder full investigations into the whole RAGB and SUBAH deal
• Suspend the Chairman of the RAGB
• terminate the Service Agreement between SUBAH and the RAGB
Beyond these immediate measures, we are also entreating the Ghana Revenue Authority to consider the possibility of setting up a specialized unit solely dedicated to the monitoring of communication tax revenue. This unit should be given all the technical support and capacity to be able to carry out proper revenue assurance exercises.
Alternatively, where the GRA still feels it is cost-efficient to outsource this service, it must be done on the basis of competitive bidding
We wish to state emphatically that, a major part of our economic challenges is low tax revenue receipts. This recognition has led Government to introduce all kinds of new taxes and increased the rates of existing ones. Therefore every effort must be made to safeguard the little that accrues and prevent some individuals from deliberately siphoning it into private pockets. This effort is our collective responsibility and Mass Action Committee will go every length to ensure that.
In this regard, we are giving Government a one month ultimatum to do what we have mentioned above. Failure to do this will leave us with no option but exploit every available legitimate means to protect our taxes which we pay for the most part through our noses.
God Bless Ghana