Revelations At PAC Meeting - Two Embezzle ¢5.5BN
There were startling revelations at the public sitting of the Public Accounts Committee of Parliament yesterday when it was made known that some accountants at the Ministry of Transportation had embezzled funds running into billions of cedis.
It also came to light at the hearing that withholding tax of contractors which should have been remitted to the Internal Revenue Service (IRS) in 2003 had to be honoured only this year after persistent reminders to the ministry to do so.
The 2005 Auditor-General's Report cited by the PAC Chairman, Mr Samuel Sallas Mensah, said between January 2002 and August 2005, Messrs Nicholas Sakyi and A.E. Kaati of the Kumasi and Sekondi offices, respectively, of the Department of Urban Roads embezzled withholding tax deductions totalling ¢5.5 billion.
It explained that between January 2002 and August 2005, 51 cheques written in favour of the IRS for the payment of withholding tax deductions amounting to ¢4.3 billion were altered by the accountant, Mr Sakyi, to read either I.R. Samuel and Sons Limited, J.R. Samuel and Sons Limited or I.R. Service Limited and the amount subsequently cashed and misappropriated by him.
“Our verification of the bank statements confirmed that the cheques were cashed in the name of the above companies,” the report indicated, adding that the developments were the result of the falsification of records and forgery of the signature of the regional engineer by the accountant.
“The ineffective internal control and supervision over the work of the accountant by the regional engineer also contributed to the defalcation.
The accountant and his deputy have since been apprehended by the security agencies for further investigations and recovery of the amount,” it said.
In the case of Mr Kaati, the AG's Report said an investigation conducted by the Takoradi Regional Audit into the operations of the Department of Urban Roads, Sekondi, revealed that ¢1.2 billion out of the total withholding tax of ¢1.6 billion had been diverted into private accounts between January 2002 and December 2005.
The report further explained that Mr Kaati, Principal Accountant and later Chief Accountant of the department and co-signatory of the department's Bank of Ghana account, raised 90 payment vouchers supported by cheques in respect of withholding taxes amounting to ¢1.6 billion for payment to the IRS.
It added that the balance of ¢1.2 billion was fraudulently diverted by the Chief Accountant and his accomplices into their private accounts or cashed over the counter at the Bank of Ghana, Takoradi.
“The other accomplices of the chief accountant, namely, Messrs Glover Forson of the IRS, Takoradi, E.D. Seidu, a Junior Tax Officer Grade II of the IRS, Takoradi, and Mahama Sulemana, Junior Accounts Officer, Department of Urban Roads, Sekondi, together with Mr Kaati, are on police inquiry bail pending further investigations by the police,” the report said.
It said the illegal diversion of funds was made possible through forgery and falsification of payment vouchers, receipts and cheques by the culprits, with a clear intent to defraud the state of tax revenue.
In addition, the report said, if the contractors had regularly demanded their tax credit certificates from the accountant, the diversion of the taxes would have been forestalled.
It said the committee recommended that the amount of ¢1.2 billion be recovered from the culprits identified and thereafter they should be prosecuted before the law courts to serve as a deterrent to others.
“We also recommended that the Metropolitan Roads Engineer should intensify his supervision over the accounting staff of the department to ensure that TCC's are issued to each individual contractor and other service providers,” the report said.
The report further recommended that the metropolitan engineer should ensure that the names of the payees were not abbreviated on cheques to prevent insertions and other forms of forgery after the cheques had been signed.
When the chairman demanded a tangible explanation from the Minister of State, Mr Godfrey Bayon Tangu, and the various departmental heads on their failure to remit the IRS of withholding tax of contractors, the officials fidgeted for more than five minutes in an attempt to find an answer to the question but, unfortunately, they could not find one.
Eventually, the chairman of the committee had intervene to declare that that since it was clear that no answer would be forthcoming, the meeting should move on.
The PAC, on its third day of sitting, uncovered lots of discrepancies in the activities of the ministry, including delays in the execution of projects, unremmitted withholding of tax, unapproved contract variations and unpaid mobilisation advances.
The rest were non-recovery of mobilisation advances, embezzlement of withholding tax deductions and the misappropriation of money.
The PAC Chairman pointed out that the management of the ministry had also failed to provide the committee with any reasonable explanation for its failure to honour such a statutory obligation.
Mr Mensah further asked the management to explain the ministry's failure to comply with the tax law, but to the utter dismay of the committee members , the officials made frenzied efforts through consultations to answer the query but could not do so.
Story by Kweku Tsen& Kofi Yeboah