In what was almost admitted as an antidote to allegations of acting in secrecy, and in contrivance to the law by the public, GNPC’s denial of having hidden assets in a tax haven offshore (Cayman Island) appears unsettled as the Africa Centre for Energy Policy (ACEP) maintains its stance on the issue in a fresh response cited by the Vaultz News.
Although GNPC’s responses provided some clarity into the debate, of which ACEP concurred, the leading think-tank maintained that the GNPC, Ministry of Finance and now Occidental (Oxy), to whom Jubilee Oil Holdings Ltd. (JOHL) is attributed, all erred in the processes involved in the purchase of the 7% interest in Oxy’s asset sale, thus, calling for remedial actions as well as sanctions to be meted out.
According to ACEP, while the Corporation clarified that it has not set up an offshore company, it did admit the existence of JOHL which it subsequently acquired from Oxy as part of the transaction. A move ACEP warned “GNPC did not have to acquire Jubilee Oil Holdings for the transfer of assets sitting in Ghana”.
For the avoidance of doubt, “the company that was being disposed of by Oxy was Anadarko WCTP Company which is a Ghana registered company contrary to GNPC’s claims that it was registered offshore,” ACEP stated. The interest in Anadarko WCTP Company was acquired by Kosmos Energy Holding Ghana Limited with all processes completed “in respect of Ghanaian laws and the jurisdiction where the assets domicile as reported to the Security and Exchange Commission (SEC) in the US”.
With regards to verifying the Beneficial Ownership of Jubilee Oil Holding , ACEP noted that “citizens of Ghana are handicapped” due to the fact that in tax havens such as Cayman Island, there are secrecy laws that facilitate anonymity of ownership. Secondly, Cayman Island is the most robust secrecy jurisdiction in the world. “Therefore, the claim that GNPC owns JOHL one hundred percent cannot be verified independently,” ACEP said.
Bad Precedent Set
That said, for the Corporation to admit that it intends to register JOHL as a local company means that it does not intend to bring the ownership of the asset into Ghana, ACEP indicated, noting that its findings sought to highlight “the bad precedent the Corporation has set”. ACEP reiterated the point that the assets in question should be controlled and managed in Ghana through GNPC or its appropriate subsidiary immediately and the Cayman Company closed.
Besides, GNPC admitted it acquired the interest and paid the full settlement of US$164,798,691.00 on 19th October 2021, 4 days after the ministerial approval for Jubilee Oil Holdings. Only a few days afterwards did Jubilee Oil Holding become part of the Joint Operating Agreement (JOA) on the two fields, ACEP said.
According to ACEP, this means that JOHL has been operating in Ghana for the past three months without fulfilling the requirements of Ghanaian laws. It cautioned that this “precedent must be remedied with sanctions. Otherwise, the entire industry becomes ungovernable with similar violations”.
Among the prior claims of ACEP, in the genesis of this matter was the fact that the Finance Ministry granted a loan for the acquisition of the 7% interest of Occidental assets in Jubilee and TEN fields which ACEP stated categorically as being the tax credit from the Oxy transaction. However, in GNPC’s response, “it decided not to comment on the source of the money,” raising red flags about the transaction.
The law is clear on how revenues from petroleum transactions are to be handled and “that using tax revenue by the ministry for a loan was irregular and contravenes the Petroleum Revenue Management Act (PRMA), Act 815 as amended,” ACEP noted.
By the dictates of the law, all petroleum revenues are paid into the Petroleum Holding Fund (PHF) and appropriated through the national budget for the purposes of supporting the budget, savings for smoothening the oil revenue component of the budget and savings for future generations.
Also, in recognition of the law, this was what the parties involved in this grave error should have acknowledged: “the PHF is the sole destination for all petroleum revenues to the state. The role of the Ghana Revenue Authority (GRA) ends at directing payments into the fund. Anadarko WCTP Company was mandated by the Act to directly pay into the PHF any tax revenue”.
The PRMA, Act 815, section 3 (2) states: “The petroleum revenue assessed as due in each month shall be paid by direct transfer into the Petroleum Holding Fund by the fifteenth day of the ensuing month by the entities obliged to make the payment.”
Processes Fail Transparency and Accountability Test
ACEP further clarified that nowhere in its prior release did it say “the Corporation has always not operated within the remit of the PRMA.
“ACEP’s position is that the use of petroleum tax revenue as loan to the Corporation violates the express dictates of the PRMA. The Corporation that markets Ghana’s crude oil knows that all petroleum revenues are due the Petroleum Holding Fund through direct transfer from the entities obliged to pay, as stated in Section 3 of the Act”.
Africa Centre for Energy Policy, ACEP
Noting these circumstances, ACEP indicated that the processes used to acquire interest in the Jubilee and TEN fields failed to pass transparency and accountability test and insisted the Ministry of Finance, GNPC and Oxy breached the PRMA for not ensuring that the tax revenue was paid into the PHF.
“The Ministry of Energy and the Petroleum Commission abused the industry practice for allowing JOHL to operate in Ghana for the past three months without satisfying the legal requirements for businesses to register in Ghana before participation in the industry”.
ACEP
Furthermore, the GNPC’s attempt to hide local assets in tax havens dishonours the important tenets of transparency and accountability implicitly or explicitly enshrined in governance systems within the sector, this also undermines the regional efforts upheld by the African Union, and the Economic Commission for Africa, civil society, and independent researchers on combating secrecy, base erosion and profit shifting, ACEP noted.
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