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Subah now in talks with telcos following GRA’s request

The Ghana Revenue Authority (GRA) for the first time formally wrote a letter dated October 28, 2013 to all telecom operators in the country asking them to allow Subah Infosolutions Limited to fix auditing equipment on their respective networks to check domestic call flows for revenue assurance.

This comes after what was recently exposed as illegal payments of about GHC75million GRA made to Subah for no work done since 2010 when GRA supposedly contracted Subah to do a physical audit of the billing systems of the telcos.

ADOMBUSINESS is reliably informed that following GRA's first and only formal request to telcos, Subah has made contact with each of the telcos and held a series of closed-door meetings on modalities for doing the physical audit of their billing systems.

Highly placed sources have also told ADOMBUSINESS Subah has so far reached some agreement with Airtel for the installation of equipment, but they are yet to concretize things with the other telcos. 

An official of Airtel said in a text message “we are compliant with the directive.”

It would be recalled that GRA only made the formal request to the telcos after two years of paying Subah for allegedly doing nothing for the state. In that letter, GRA urged the telcos to cooperate with Subah in accordance with Communication Service Tax (CST) Amendment Act (2013) Act 864 or face sanctions.

The Letter, signed by Commissioner-General of GRA, George Blankson noted that the law enjoins telcos to grant the Ministers of Finance and of Communications ‘physical access to their physical network nodes’ particularly at the equivalent points where their billing systems are connected.

“In this regard we wish to request that you grant Messers Subah Infosolutuion, a firm contracted by the Ghana Revenue Authority to monitor Communication Service Tax revenue on its behalf, access to your physical network nodes to connect its monitoring equipment in accordance with the provisions of Act 864,” the letter said.

It then reminded the telcos of the legal requirement on them to grant access to the appointee of the Ministers of Finance and of Communication (Subah) or be fined 5% of their annual revenue for failure to grant access within 30 days of receiving the letter, and risk losing their licenses if it persists for more than 90 days.

The first 30-day deadline fell on November 27, 2013, and reliable sources confirmed all the telcos have been fully cooperative but Subah is yet to fix any equipment yet.

Confusion between Subah and GVG

Some social commentators and government spokespersons had ignorantly suggested that GRA had earlier requested the telcos to allow Subah to fix auditing equipment on telcos’ networks but the telcos refused to allow that and sought a court injunction against that. But there is no evidence, to date, of any such correspondence from the GRA or a refusal from telcos to allow a physical audit of their billing system.

The fact is the GRA’s first ever letter to telcos on this matter was the current one dated October 28, 2013, ADOMBUSINESS can confirm.

What the telcos had, in the past, expressed concerns about was attempts by the National Communication Authority (NCA) to let Haitian-based Global Voice Group (GVG), to fix real time verification equipment on the international gateway systems of the telcos to monitor incoming international traffic. That had nothing to do with domestic calls and definitely nothing to do with Subah.

Besides, it was not the telcos who went to court to seek injunction against GVG; it was some ordinary Ghanaian citizens who felt the GVG equipment will eavesdrop on their calls and also affect call quality. In fact those consumers sued GVG, NCA and the telcos. The telcos were respondents, not applicants in that case.

Many unanswered questions

GRA has however paid Subah almost GHC75million even though Subah has not done any physical audit on telcos. Subah was contracted in 2010 and were paid under the guise of VAT refund. It is however still not clear what exactly Subah paid VAT on before it was refunded to them.

Meanwhile, as per the contract GRA signed with Subah in 2010, Subah is supposed to earn 13.5% of the incremental revenue they would discover in their physical audit of telcos. In other words, 13.5% of total amount they find that the telcos may have failed to declare.

But as the evidence showed, Subah has not done any physical audit of the telcos billing systems yet, so questions still remain as to what they were paid the GHC75million for.

Secondly, GHC75million is 13.5% of GHC555million. So the question also remains whether Subah discovered that the telcos under-declared a total of GHC555million between 2010 and 2012, out of which Subah was paid GHC75million.

Meanwhile, in Dr. Kwabena Dufuor’s Budget for 2012, he said government was expecting GHC432million from the entire CST. So the question also remains as to whether Subah discovered incremental revenue over and above what the government budgeted for.

Again, which telcos were found to have under-declared so much money (GHC555million) and what happened to them – were they exposed – did they pay penalties for their crimes – was anyone prosecuted for evading tax as required by law?

And what exactly did GRA and Ministry of Finance contract Subah to do between 2010 and 2012, because the CST Amendment Act, Act 864 became effective only in 2013, so Subah could not have been doing physical audit of the billing systems of telcos prior to that.

The fact is in 2010, the number of mobile phone subscribers in Ghana was 17.4million and by September 2012 the number had increased to 27.5million, which is a jump of over 10million. That alone, according to industry analysts, would have definitely led to some significant increase in industry revenue and for that matter the CST even without any audit by Subah.

Moreover, as a result of the stiff competition in the market, each of the telcos organized several promotions that drove airtime consumption and that could have also shot up the CST accruing from that usage, without the involvement of Subah.

NCA cited

In his initial response to the issues raised about money illegally paid to Subah, the D-G of GRA mentioned that NCA did due diligence on Subah and approved of the company before the GRA finally contracted Subah.

The NCA has since been challenged to come clean on their relationship with Subah and whether indeed they recommended Subah to GRA and what exactly they recommended Subah for, and on what grounds.

But the NCA has remained absolutely silent on the matter, in spite of persistent queries from journalists; arguably because the GRA has not provided any documental proof of NCA’s involvement in the matter and their approval of Subah to the GRA and for what.

Meanwhile, Subah was part of the Ghana delegation to the recent ITU Telecom World in Bangkok, Thailand. Other members of the delegation were NCA, GIFEC (Ghana Investment Fund for Electronic Communication), RLG Communications and Omatek. It was led by the Ministry of Communications (MOC).

GII calls President to act

President John Mahama has hinted that he would commission a review of the Subah contract. But the Ghana Integrity Initiative (GII) is calling on the President to take a stronger action on the matter. GII noted, among many things, that rather than working as supposed auditors of telcos’ network, Subah had rather become a financial institution giving out loans to state organizations without the proper license from the Central Bank.

Subah’s account statement, according to GII also showed they gave out hundreds of thousands of Ghana cedis in gifts in a matter of days, without declaring who the beneficiaries were. In one case, they gave out over GHC140,000 as gifts to two persons on December 20, 2012 alone.

ADOMBUSINESS has made contact with Subah to speak to the issues raised, which touches on their integrity. They have agreed to speak to the issues but for now they said “we are busy with several things right now and when we get a bit less busy we will speak with you.”

Subah Infosolutions is a member of the Jospong Group of Companies, which is also full-body deep in the recent GYEEDA issues. Subah first came into the public limelight when they recently signed an MOU with the Ghana Technology University College (GTUC) for an incubator program. The first batch of students was supposed to have started next months, but till date they have not yet activated that program.

Credit: AdomNews/Sammy Nii  Narku

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