Ghanaian firm, Smarttys Management and Production Limited, has been caught up in yet another case of an alleged contract overpricing in the execution of a national electrification project.
In the latest episode, the company, which has come under intense pressure for overpricing the branding of some 116 Metro Mass Transit Buses, is at the centre of a $92m National Electrification Project found to have been overpriced by some nine million dollars.
In spite of evidence that the contract has been overpriced, Parliament approved the deal at a sitting today [Monday], despite strong objections from Minority MPs who argued about the lack of proper due diligence.
The project involves the extension of electricity to some 556 communities in Volta, Eastern and Northern Regions of Ghana.
Smarttys is not the firm contracted to execute the project. However, the company is on record as the Ghanaian representative of the China Hunan Construction Engineering Group, the firm that has been contracted by the Mahama government to carry out the electrification project.
Initial Value for Money audit by Crown Agents said the contract had been overpriced by more than 20 million dollars.
A further assessment by the same agency found that the deal has been overpriced by some 9 million dollars and called for the contract scope to be widened proportionately.
NPP MP for Manhyia South, Mathew Opoku Prempeh was one of the MPs who raised strong objections to the deal shortly before a vote that gave parliamentary blessing to the contract.
“Mr. Speaker, I haven’t said anybody has stolen money so please don’t add that in the Hansard. All I am saying is that, if the government did any due diligence and found out that the local representative of this contract is the same contractor who has been found to overbill the government in similar contract, we would have advised ourselves. Mr. Speaker, even by the World Bank procurement laws, that company that has been found in one corner of the world abusing a World Bank process is banned from all World Bank projects for a number of years.
“How come the government negotiators, lawyers, economists and deputy Ministers all did not find out that there is a similarity between Smarttys in this contract and Smarttys in the rebranding. Smarttys overbilling here, Smarttys overbilling there, Smarttys overbilling everywhere….Mr. Speaker, we are talking about due diligence,” he said.
Majority side disagrees
Responding to concerns from the Minority side, Chairman of the Energy Committee, Alhaji Amadu Sorogho said it was unfair for the minority to create the impression that his committee did not ensure diligence.
“Mr. Speaker, I want to thank them [The Minority] but Mr. Speaker, there is one thing that I just want us to capture, and that has to do with the value for money. I don’t want us to leave here with the impression being created that we did not do well as far as value for money is concerned. Mr. Speaker, if you look at the list of attendees, they were nineteen in number in the first and second meeting. And out of the number, Ministry of Finance, the Ministry of Power and the contractors were represented by five people. And then there were the contractors’ reps and consultants which is not just one name.”
“There was Selassie Ibrahim and Gabriel Kuan as reps and consultants.
The contractors were there themselves; and then the Crown Agents represented by three strong people. And so with all these nineteen, how can you just isolate one and say because of that person’s presence, the contract was overpriced. Mr. Speaker I want to thank everyone to say that the committee did a very good job and I am happy to say that Crown Agents have also come out with value for money and the agreement which we arrived at was that $9m was the savings that we could do and we have done that and so I urge everybody to support the motion.”
Smarttys Bus re-branding
Late last year, an official investigation into a major bus branding scandal found that Ghanaian firm Smarttys overbilled the state by more than Ghc1.5 million in a Ghc3.6 million contract to re-brand 116 Metro Mass Transit buses.
Under intense public pressure, the Presidency ordered the company to cough up the excess funds it unjustly took from the state.
Officials say although some initial refund has been made, Smarttys still owes the state more than one million cedis. Smarttys is owned by Ghanaian actress and TV Host, Selassie Ibrahim.