PWYP-GHANA POSITION ON THE FINDINGS OF GHANA’S FIRST EITI AUDIT REPORT
On Monday, 19 of March 2007, the Civil Society Coalition on EITI i.e. PWYP-Ghana organized a technical roundtable to generate and consolidate a civil society response to the First EITI aggregated report.
The meeting reached the conclusion, after intense discussions, that the
report in its current form and shape is a far cry from the objectives we set
ourselves as a country, in respect of the EITI i.e. to improve upon the development
outcomes from payments made to governments by the extractive industries by
reducing the potential for corruption and large scale embezzlement of these
payments. The First
The blame for the inadequacy of the report in addressing our common aspiration was put largely on the aggregator’s Terms of Reference (TOR) rather than with the aggregator. The TOR as it stands, according to the meeting, does not require the aggregator to investigate the basis and the correctness of the computations. As a result, the appropriateness of the revenues received as mineral royalty, dividends and tax on profit could not be determined. The aggregator did not also analyze the tax deductions claimed by the companies for the purpose of identifying any improper claims.
The aggregator did not check if the declarations of quantities of minerals declared are in conformity with the declarations made to the Mineral Commission and refining certificates.
The TOR does not also require the aggregator to perform the audit of operating costs in order to assess if the deductions claimed were actually incurred and correspond to legitimate operational expenses, as these affect the taxable profit of the companies.
It does not require the aggregator to review feasibility reports of Mining Companies in order to compare the projected production with the actual production.
The meeting raised concern that the aggregator did not have access to the contract documents, which to a large extent provides the basis of what companies pay i.e. tax exemptions, and other incentives.
The meeting also expressed the view that it does not make for thorough transparency if amounts accruing to the Mineral Development Fund (MDF) and its utilization are kept from public scrutiny.
The meeting demanded that the IRS be made to explain why they have not pursued tax defaulters, as revealed in the report, and why they have not investigated the continuous payment of 3% royalty even in the face of rising gold prices. Clarification required: Does the 3% – 6% royalty rates affect all mining companies or only those who came in after the law had been passed?
Attention was drawn to the grave error of applying 2006 mining legislation to draw conclusions on a report on activities of Jan – June 2004.
The meeting agreed that the difficulties encountered by the aggregator, particularly with regard to access to information call for the expedited legislation of the EITI initiative, along with the complimentary legislations such as Freedom of Information ACT.
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