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Regulatory Battle NCA, GRA in turf war over Subah, ICH, telcos

The latest directives and rebuttals appear to be the last straws pulled by the two organizations, following which the next action could be a legal battle.

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Ghana's telecom industry regulator, National Communications Authority (NCA) and the state revenue agency, Ghana Revenue Authority (GRA) are engaged in a fierce turf war over who has the right to monitor the revenue flow of telecom operators in the country.

The battle may have started years ago, but in the last few months, the two institutions have been flying directives and counter-directives to telcos and the company appointed by the GRA to monitor revenue from the telecom operators on behalf of the state, Subah Infosolutions Ghana Limited.

The latest directives and rebuttals appear to be the last straws pulled by the two organizations, following which the next action could be a legal battle.

NCA orders Subah

NCA, in a letter dated October 30, 2015, signed by the Director-General, William Tevie, ordered Subah to "cease operations in the telecoms sector by Thursday, November 12, 2015" or face legal sanctions.

The NCA said it had looked at the contract GRA awarded Subah to do real time monitoring of international traffic for revenue assurance and realized Subah needed a license from the NCA but it has no license.

The letter said "In the absence of a license from the Authority (NCA), Subah cannot continue to operate in the telecommunications industry as it is illegal to do so."

"Consequently, you are by this letter, advised to take immediate steps in any event no later than Thursday, 12th November 2015 to cease operations in the telecommunications sector failing which the Authority shall not hesitate to apply the prescribed sanctions under its enabling statutes," the letter warned.

The letter, headlined "OPERATING WITHOUT LICENCE FROM THE NATIONAL COMMUNICATIONS AUTHORITY" was copied to the Finance Minister, Communications Minister, Commissioner of GRA and all telecom operators in the country.

NCA introduces Afriwave

Meanwhile, in another letter dated November 4, 2015, signed by the Deputy Director-General of the NCA, Albert Enninful, the NCA formerly introduced Afriwave Telecoms Ghana Limited to the telecom operators as the licensed entity to carry out real time monitoring of international traffic.

The letter, headlined "LICENSE FOR INTERNATIONAL MONITORING OF TRAFFIC" copied to all telcos in the country, urged telcos to "kindly note that Afriwave Telecom Ghana Limited has been licensed by the NCA pursuant to its regulatory mandate to carry out international monitoring of traffic and you are by this letter directed to permit them to have their probes attached to your respective systems."

"It is our expectation that all operators in the industry will extend the necessary support and cooperation to Afriwave Telecom Ghana Limited to enable them carry out their obligations," the letter added.

GRA fires back

But in a rather sharp rebuttal, the GRA wrote a letter dated November 5, 2015 to the telcos, congratulating them for their cooperation with Subah so far, and asked them to continue to do so in accordance with their obligation under the Communication Service Tax (Amendment) Act, 2013, Act 864.

The letter, signed by the Commissioner of GRA said in the same way a company assigned by GRA to audit hospitals for revenue purposes does not need a license from the Ghana Medical and Dental Council (GMDC), Subah does not need a license from NCA just because NCA is the regulator of the telecom industry.

GRA therefore warned the telcos to remember that if they failed to allow Subah to work they risk being fined five per cent of their revenue based on the last audit.

Moreover, the Deputy Minister of Finance, Cassel Ato Forson, had, in early October 2015 also written to the telcos asking them to ignore any NCA directives and continue to cooperate with Subah because Subah's work was under the direct purview of the ministry through GRA.

Attorney-General's advice

Meanwhile, way back on September 25, 2015, the Attorney-General, Marietta Brew Appiah-Oppong had given the green light for the Subah contract to be terminated, following a request for termination by the NCA in another letter dated August 26, 2015 addressed to the Commissioner of GRA and copied to the AG. So NCA acted on the advice of the AG.

The AG also noted that the Subah contract she approved was not the same one being implemented now, which suggests that changes were made to it after the AG's approval.

The AG has therefore written to GRA pointing out the differences in the approved and implemented contracts and the implications.

Termination liabilities

The AG for instance noted that the termination clause inserted in the contract places financial liabilities on GRA, and the state for that matter, if the contract is terminated now.

Highly-placed sources, who have seen the contract say GRA agreed to pay for all of Subah's systems and the remaining period of the contract upon termination prior to completion, something which experts say was disingenuous on the part of GRA, the contract awardee.

It would be recalled that GRA had initially doled out GHC74million to Subah between 2010 and 2012 allegedly for no work done; and now it has signed a contract with Subah under conditions that place financial liabilities on the state upon termination.

Background

Subah was contracted in 2010 to do real time monitoring of telcos billing systems for revenue assurance on behalf of the GRA. The company was required to connect to the telcos billing systems and do their work; and they were to be paid 13.5% of any incremental revenue they discovered in that work.

But news broke in 2013 that between 2010 and 2012 Subah was paid over GHC74million even though it has not connected to the telcos and not done any real time monitoring. There was no evidence of any incremental revenue discovered by Subah to warrant any payments.

Subah however connected to telcos in May 2014 and its contract was due to expire in May 2015. But prior to the expiry date, GRA renewed the contract on April 11, 2015 for another one year, renewable for five more years.

This was after Subah and others had lost a bid to operate an interconnect clearinghouse (ICH) to Afriwave, and the Minister of Communications had asked for the Subah contract, not to be renewed because the ICH was going to do Subah's work at no cost to the state.

But the parties in the ICH were sued before they could start operations. So a joint committee composed by NCA, GRA and the Ministries of Finance, Communications and the Attorney General had recommended that Subah should be allowed to hold the fort, under an interim arrangement, until the court determines the case against the ICH.

But GRA extended the contract for Subah without recourse to NCA and the Ministry of Communications, on the grounds that revenue assurance under the CST Law is in the purview of the GRA on behalf of the Ministries of Finance and of Communications so it had nothing to do with NCA.

However, though the NCA was not party to the Subah contract renewal, the contract enjoined them to pay Subah for auditing delayed call data records (CDRs) of international traffic and for assisting in the fight against SIMBOX fraud on behalf of the NCA.

Information reaching Adom News indicates that since their contract was renewed and now, Subah has helped to save Ghana over $71million (GHC262.7million) in about 22 SIMBOX fraud busts in seven months.

But the NCA insists Subah's operation is an illegality and has raised several questions about Subah's work in private letters to the company, prior to this final one asking Subah to cease operations all together.

Questions

The NCA says Subah's operations is illegal but experts are asking which exact law Subah is breaking?

Adom News gathered that the issue of licensing for the work Subah does, was what led to the creation of the ICH license in the first place, which Subah bid for and lost. So if Subah did not think they needed a license for their work, why did they bid for the ICH license?

Thirdly, there are variant opinions on whether international traffic monitoring, which is under the purview of the NCA, is part of the case in court. The NCA thinks it is not so ICH can go ahead with it, but some industry players insist it is, so ICH cannot do that work until the court determines its fate.

By law, the revenue flow from international traffic goes directly to NCA and they report directly to Ministry of Finance. But there is a tax component from there. So would both ICH and Subah be monitoring international traffic on behalf of the two state institutions?

The two institutions set out to create a common platform, the ICH, for the real time monitoring of both domestic and international revenue flow in the telecom industry. Where did the collaboration go wrong?

If indeed GRA adjusted the contract after it had been approved by the AG and put in an unfavorable termination clause that places a financial burden on the state upon termination, then whose interest is GRA seeking?

Meanwhile, NCA has given Subah up to Thursday, November 12, 2015, but GRA has asked Subah and the telcos to ignore the NCA. So it remains to be seen what will happen on that day.

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