Africa-Press – Gambia. <\/strong><\/span>Ask contractor to pay over D114M in taxes<\/b><\/p>\nA National Audit on the Banjul Road Rehabilitation project has queried the awarding of the contract to Gai Construction worth $35.7 (D1.8 billion) million without due process.<\/p>\n
According to the audit report, the Government through the Ministry of Works entered into a contract with Gai Construction on 11 May 2019 for the rehabilitation of roads, drainage and sewage systems in Banjul at a cost of $35.7 million.<\/p>\n
However, the auditors\u2019 report went on, there was no tendering process for awarding the contract, instead it was single-sourced and the single-sourcing was never published in the Gazette before the contract was signed as required by law.<\/p>\n
Though according to the GPPA Act 2014 section 20(5) \u201cthe President may by order published in the Gazette, exempt any procuring organization from requiring approval of the authority with respect to any procurement in whole or in part, and in such case the cabinet shall be responsible for given such approvals instead of the authority\u201d, the auditors argued that this one was only published on February 12, 2021, after the work had already begun. \u201cThis gazette was backdated to January 8, 2019, which is in violation of the above-mentioned regulation,\u201d the auditors added.<\/p>\n
Gov\u2019t reaction [in the audit report] Reacting to the auditors\u2019 queries, the ministry of works said: \u201cAll other due processes were complied with up to approval by cabinet and this is allowed by law. The legal advice was adhered to. The award of the contract was gazetted through Legal Notice N0.10 of 2021 \u2013 exemption from GPPA approval Order 2021 signed. Gazette N0. G.N N0.22\/2021 issued.\u201d<\/p>\n
Consultancy The auditors\u2019 report further claimed that the Ministry of Works and Studi International for Africa signed a contract for consultancy services on the 14 May 2019 amounting to $1,632,550 which is equivalent to D83, 260,050 for the supervision of an EPC contract for the rehabilitation of roads, drainage, and sewage systems in Banjul.<\/p>\n
However, the selection of Studi International for Africa to be the consultant of the project did not go through tendering process rather it was single sourced without obtaining the approval from GPPA.<\/p>\n
\u201cIn the absence of an open tendering process, value for money for these contracts are compromised and this increases the risk of fraud and other financial irregularities. There is a risk that contract was awarded to a favoured contractor based on personal relationship, thus defeating the dictates of the GPPA regulation,\u201d the report added.<\/p>\n
Reacting to the queries, the ministry of works said: \u201cStudi International for Africa was contracted through single sourcing and indeed obtained GPPA approval through (Ref:GPPA\/MOTWI\/TR\/1\/19(LS) DATED: 12\/122019).\u201d<\/p>\n
Pre-financing According to the auditors, the contractor offered to pre-finance the project through the letter of intent dated 3rd September 2018, addressed to the President.<\/p>\n
\u201cA credit facility agreement was signed which detailed out a payment schedule for six years but was later nullified through an addendum to the initial contract which makes provision for interim payment. We cannot ascertain the benefit of the pre-financing since 63% of the contract price has already been paid to the contractor, even though critical works are still not completed,\u201d the auditors said.<\/p>\n
But according to the Ministry of Works, the financial progress registered (63%) percent payment made was on certified progress of work. \u201cThe pre-finance arrangement still applies to the project and is being strictly adhered to. The addendum made changes to the payment schedule from time based to progress based, thereby eliminating the risk of over payment,\u201d the Ministry added.<\/p>\n
Project commenced before contract signature According to the report, a review of documentation and discussions with officials revealed that the Banjul roads rehabilitation contract was signed on 11 May 2019 and tabled at the National Assembly on 12th June 2019.<\/p>\n
\u201cThe project was scheduled to be completed by November 2021. However further review of the consultant\u2019s report and inspection of the updated program of work of the project reveals that actual work commenced on 18 March 2019, two months before the contract was signed and submitted to the National Assembly for discussion in June 2019,\u201d the auditors said.<\/p>\n
Reacting to the auditors\u2019 queries on this issue, the ministry of works said: \u201cGenerally, the contractor was mainly engaged in the clearing of solid waste and silt in the drainage system as the blockage caused by these materials was the root cause of the damages to the road pavements against the fast-approaching rain.\u201d<\/p>\n
However, the auditors insisted that starting the contract before it was signed implies that the contract was not binding during the start of the work, and therefore no legal remedies in case the project failed to meet the intended objectives or targets. The report highlighted that the Ministry of Justice had advised the Ministry of Works to ensure that the contractor provide performance security.<\/p>\n
\u201cHowever, up to the time of writing this report no amendment was done to include the Performance Security in the contract and nor was it provided by the contractor. In the absence of a Performance Security, it will be difficult for Government to exert pressure on the contractor to complete unfinished work as a result of unforeseen circumstances,\u201d the report noted.<\/p>\n
Reacting to this particular query by the auditors, the ministry of works said: \u201cIn the contract with GAI Enterprise, the requirement of a performance security and advance payment were amicably waived by the parties. Whilst the amount associated with Performance Security is 10% of the contract amount, the Advance payment is 20%.\u201d<\/p>\n
Further reacting to the ministry\u2019s explanation, the auditors argued: \u201cThe Ministry of Works failed to adhere to the legal advice from the Ministry of Justice with regards to the inclusion of Performance Security, for which they agreed will be included but was never. In fact, the interval of payment was interim instead of yearly and there were instances where certifications were done in less than six months period. Performance securities are crucial tools for ensuring a contractor\u2019s compliance with the terms and conditions of the contract. It should therefore be provided so that in the event of any unforeseen events, government will always have something to hold on to in order to minimize the damage or loss.\u201d.<\/p>\n
Tax According to the report, the contractor is exempted from paying taxes as per the addendum to the contract. \u201cHowever, when legal opinion was sought from the Ministry of Justice, they advised Ministry of Works to seek guidance from the Ministry of Finance and the GRA on the feasibility of these tax exemptions. The Ministry of Finance in their letter reference ADM245\/126\/01 (9) dated 14 October 2020 addressed to the Commissioner General GRA emphasized on the tax exemption clause in the contract addendum.<\/p>\n
\u201cIn their response, the Gambia Revenue Authority\u2019s letter referenced KB 165\/182\/01 (28) dated 20 October 2020 stated that an avenue for granting income tax exemption is through the approval of a Special Investment Certificate (SIC) under the Gambia Investment and Export Promotion. Furthermore, GRA in the same letter quoted above stated that considering the fact that the tax exemption article in the contract is at variance with both the IVAT Act (2020) and the GIEPA Act, they cannot allow such exemptions in the computation of the tax liabilities of the contractor.<\/p>\n
\u201cIt is therefore clear from the position of Commissioner General of GRA, the contractor is not exempted from paying tax, and as a result the contractor should honour his tax obligations under this contract. Consequently, the contractor is required to pay withholding tax amounting to D114,185,501.95 as per the payments made on the IPCs,\u201d the report added. Management explains<\/p>\n
However, reacting to the auditors\u2019 queries on the non-payment of taxes, the ministry of works said: \u201cThe contract was priced without tax and duties and signed as such. Payments are equally processed without withholding tax deductions. The project is duty & tax free. The Ministry of Finance reviewed and signed off the financial addendum of the contract. MoJ then advised that the contract without withholding tax be referred back to MoFEA for further guidance.\u201d<\/p>\n
But reacting to the ministry\u2019s clarification, the auditors argued: \u201cSince the contractor is not exempted from paying tax by the Commissioner General of GRA, he should therefore pay tax. We therefore recommend that the contractor should pay back taxes for payments made to him for which he was not deducted withholding tax and also to pay tax on his subsequent payments.\u201d<\/p>\n
The auditors also observed that the rehabilitation of the lifting station located at Brikama car park and the pumping station located at Box Bar Road in Banjul, which carried a total amount of $2,471,000 representing 6.9% as of the contract sum, are still pending and in a critical condition.<\/p>\n
Source: The Gambia | Standard News From The Gambia<\/b><\/p>\n
For More News And Analysis About Gambia<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"Omar Bah Africa-Press – Gambia. Ask contractor to pay over D114M in taxes A National Audit on the Banjul Road Rehabilitation project has queried the awarding of the contract to Gai Construction worth $35.7 (D1.8 billion) million without due process. According to the audit report, the Government through the Ministry of Works entered into a […]<\/p>\n","protected":false},"author":84,"featured_media":20195,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5,7,8],"tags":[2355,2361,3680,260,7872],"class_list":["post-20196","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","category-head-lines","category-homepage-english","tag-africa-press","tag-africa-press-gambia","tag-auditors","tag-gambia","tag-roads-contract"],"yoast_head":"\n
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