Nduom Causes $446,000 Financial Loss To State

More startling revelations involving top-ranking public officials are dropping out of the government directed forensic audit into the debt-ridden Tema Oil Refinery (TOR).

A Network Herald investigation into the yet to be released audit has uncovered financial loss amounting to $449,166.56 caused by Minister for Energy Kwesi Nduom’s Deloitte & Touch? Management Consulting that also implicates the former Chief Executive of the refinery.

The discrepancy that led to the over 446 thousand ("Million" in original report) dollar loss, was observed in the acquisition of software to make the refinery Y2K compliant. That was in the wake of the Y2K scare that engulfed the world on the eve of the 21st Century. The report also implicates members of the TOR Implementation Committee for the losses as a result of their failure to hold Deloitte & Touch? to schedule. Accordingly, the forensic report has recommended to the government of Ghana to proceed with a criminal action against Mr. Parker, Deloitte & Touch? and members of the TOR Implementation Committee, for causing financial loss to TRO and the state.

In the search for Y2K compliant software tailored to suit the peculiarities of the petrochemical industry, TOR acquired the J.D. Edwards Accounting software marketed in Ghana by Deloitte & Touch? in 1998. A Software License Services and Maintenance Agreement was signed in respect of the software on April 4 1998 between TOR and J.D. Edwards World Solution Company of the US through a subsidiary JD Edwards, UK. The report says Mr. Parker represented TOR whilst Mr. N. Pullan, a director, represented the vendors.

The total cost of the software license together with the consultancy services which were pad in foreign currency amounted to $1,138,567. However, there was no correspondence in relation to prior price negotiations whilst no reference whatsoever was made to the board for the approval of this transaction. By an implementation agreement dated January 7, 1999, TOR contracted Deloitte & Touch? Ghana, to provide contracted consultancy services in relation to JD Edwards.

The contract award that was to run for 12 months ended January 2000. It included among other things, training for staff of TOR. The contract value for consultancy services was $400,000. Complimentary services could be offered at specified hourly rates; the agreement was for a one-year period effective February 1, 1999 and was supposed to end February 1, 2000. According to the forensic report, at the tail end of the contract period, issues arose as to TOR’s readiness to use the system including staff preparedness to confidently operate the system.

Consequently, Deloitte & Touch? made two consecutive formal requests for contract extensions for a total of 11 months, ending 31 December 2000, at a further cost of $449,166.56. “TOR’s management approved these requests under protest,” the report states. The estimated cost of implementation under the contract was $400,000 with $45,000 of this earmarked for training. In schedule A to the contract, training was supposed to have taken place from 1 January 1999 through September 1999. However, in December 2000, TOR’s management abruptly terminated the contract even though the implementation was known by TOR’s management to be incomplete.

The audit report states that, “the materials management section have identified a number of deficiencies, which could be attributed to either lack of adequate user skill or software implementation and configuration, or both. TOR’s current management have embarked on a programme to train TOR staff abroad because according to them, the training offered to staff by the consultants was inadequate.

For instance, two senior staff went to the UK in August 2001 for training in specific aspects of the software module. The report in effect wonders whether the financial cost of $449,166.56 arising from the 11-month extension of contract period was justified since TOR continues to spend on overseas staff training on aspects of the very same software.

It is relevant to observe that TOR entered the software acquisition contract without any competitive bidding whilst no reference was made to the board of directors before entering into the contract with Deloitte & Touch?.