19 May 2014

Ghana: Telcos Rubbish Subah Report

The Telecom Chamber, an umbrella body for all the telecommunications companies operating in Ghana has rubbished the report authored by the 14 member committee set up by the Ministry of Finance to investigate what has become known as the Subah saga.

In a letter written by Mr. Kwaku Sakyi Addo, the Chief Executive of the Telecom Chamber to Mr. Seth Terkper, the Finance Minister and copied to the Flagstaff House reacting to the 'Subah investigated Subah' report, the telcos argued that the controversial ITC company was not known to them and that they could not have, therefore, prevented Subah from connecting their machines to their physical nodes.

Below is the full letter Mr. Sakyi Addo sent to the Minister:

Dear Sir, COMMITTEE REPORT ON THE SERVICE AGREEMENT BETWEEN GRA AND SUBAH INFOSOLUTIONS We have received a copy of the above report, details of which have been widely circulated to the media. Mobile Network Operators (Teleos) have had reservations about public statements issued in September 2013 by the Ghana Revenue Authority (GRA) about the failure of Telcos to comply with their legal obligations.

This was in the aftermath of media reports that Subah Infosolutions had been paid GhC74 million from 2010-2012 for services allegedly not rendered to GRA. We did not react because it was our expectation that the Committee set up by the Ministry of Finance would enable Teleos to clarify or correct certain facts that had been overlooked or misrepresented.

By this letter, we wish to bring to your kind attention the following observations and comments for review and subsequent action. 1. The 14-member Committee did not invite or speak to any Telco in its investigations. However, it had three representatives from Subah Infosolutions. 2. The Report, under "SCOPEOFSERVICE"(Section 4, paragraph 2) reads: "In the wake of the signing of the service agreement, Subah requested to physically connect its equipment to the physical nodes of the Teleos, but the request for physical access was denied by the Teleos, citing the risk of Subah listening in to the conversation and messages of their customers. Subah could not therefore have access to the physical network nodes of the Teleos." Comment:

a) According to Paragraph 1(BACKGROUND)of the Committee's Report, the Revenue Agencies Governing Board (RAGB) signed the contract with Subah Infosolutions on May 5, 2010. However, the law requiring Telcos to allow electronic monitoring, i.e. (CST (Amendment) Act, 2013 (Act 864), was passed in July 2013.

b) GRA did not introduce Subah to any telco until after Act 864 was passed. A copy of the introductory correspondence written by GRA to the Ghana Chamber of Telecommunications on October 28, 2013, and to all Telcos is attached for your information.

Telcos could therefore not have denied Subah access to their respective nodes prior to their introduction since they were not even aware of Subah's existence or the service it had been contracted to provide. Enquiries made with all the Telcos have also confirmed that none of them received a letter from Subah itself requesting for this interconnection. Subah's first letter to Telcos asking for a meeting was dated [October 28, 2013J following the introduction letter from the GRA referenced above.

3. The Report also reads (Section 4, paragraph 3) that: "... .Subah have been carrying out only the monitoring relating to verification of the application of the correct CST rate to the volume oftraffic declared by the Telcos (i.e. whether the various calls are taxed at the appropriate rate). This is done by SUBAH obtaining the CDRs on the volume of traffic supplied by the Telcos to NCA containing the details of the traffic volumes they declare.

Comment: The Call Data Records (CDRs) which Telcos submit to NCA are for International In-bound Traffic on which there is no CST charged as the calls originate from outside Ghana. Therefore Subah Infosolutions could not possibly have verified CST by analyzing CDR held by the NCA. Telcos do not send CDRs to th GRA, for which domestic traffic on the CST is levied. Telcos are audited on site by the GRA itself.

4. Paragraph 8 of the Executive Summary reads: "The Committee believes that the increase in access lines cannot be contributed (sic) to the efforts of SUBAH. The value of access lines amounted to 21% increase in revenue between June 2010 and October 2013. The threshold was therefore increased by 21%. In other words, 21% of the incremental revenue is being deducted before the remainder is apportioned between SUBAH and Government.

Comment: If Subah Infosolutions did not contribute to the increase in access lines between June 2010 and October 2013, as admitted by the Committee, and it did not electronically audit Telcos or analyze CDRsfor the reasons explained above, we fail to fathom the basis for apportioning revenue between the Government and Subah.

In spite of these reservations, Telcos have co-operated with GRA and its agents, Subah Infosolutions, since November 2013 to ensure compliance with the law. Each Telco is currently at an advanced stage of completion, following technical and legal due diligence.

We hope that this information helps to provide the fundamental information for further decision-making. On behalf of our members, please accept/Sir, the assurances of my highest esteem.

Kwaku Sakyi-Addo Chief Executive Officer

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