NIGERIA’S PUBLIC ACCOUNTS: The curse of mismanagement of funds

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By Jide Ajani

…How billions are spent without being accounted for
Last week would not be the first time that the Public Accounts Committee, PAC, of the Senate would unearth massive reckless spending on the part of the executive arm of government.  Since 2001, that committee of the Senate had always investigated and reported that huge sums of money were being frittered away.

The funds, in trillions, were recklessly mismanaged by the Olusegun Obasanjo, Umaru Musa Yar’Adua and the incumbent Goodluck Jonathan administrations.  This report chronicles the massive mismanagement of funds since 1999 as captured by the Senate and concludes that, on account of this, Nigeria’s moment of development may still be light years away.

As part of the plot, there had to be power outage. Therefore, the Senate Chambers that morning was thrown into darkness.  That was part of the strategy. It was June 18, 2002, a Tuesday, when the Senate attempted to do the right thing.

Its Public Accounts Committee, PAC, headed by Senator Idris Abubakar, had compiled a list of infractions by Matthew Okikiolakan Aremu Olusegun Obasanjo, then President and Commander-in-Chief.  These infractions bordered  on alleged mismanagement of state funds. The nation had hoped that the Senate would be ruthlessly decisive but that curious power outage that morning set the engagement back.

After a bout of shouting by the pro and anti- Obasanjo elements, the Senate went into an executive session to discuss the matter.   The planks of the discussions were the results of the intense scrutiny of Obasanjo’s budgetary performance as well as the whereabouts of funds representing proceeds from the sale of some government parastatals.

What the Idris Abubakar Committee found was shocking. From budgetary underperformance to extra-budgetary expenditures along with cash disappearances from the treasury, running into  hundreds of billions, it was the report of the PAC that indeed set the tone for the attempted impeachment of Obasanjo as President and Commander-in-Chief in 2002.wasteed-cartoon

Fast forward to April, 30, 2013, another Tuesday, some 11 years after. Senator Ahmed Lawan of the All Nigeria Peoples Party, ANPP, is the chairman of the PAC of this Senate and when he presented the report of his committee’s work, senators were left with mouth wide open.

FINDINGS OF AHMED LAWAN’S COMMITTEE
Some Special Funds Accounts, comprising Development of Natural Resources Account; Derivation and Ecology Account; and Stabilization Account, are maintained by the Federal Government of Nigeria. Lawan, in his submission, said his committee discovered that recklessness had been the name of the game since 2002 (to 2012).

The misappropriation, misapplication and reckless spending were done by the governments of Obasanjo, the late Umaru Musa Yar’Adua and incumbent Goodluck Jonathan.

The committee discovered that releases from the Accounts were made for purposes not related in any way particular to what the accounts were designed to achieve.

A breakdown of the report shows N710,489,494,960.6, N149,881,359,210 and N191,780,136,241 as amounts reportedly misused by the three administrations in the Derivation and Ecology Account;  Development of Natural Resources Account  and Stabilization Account respectively.

Within the period under review, the committee found out that the sum of one trillion, five hundred and eighteen billion, eight hundred and seventy one million, three hundred and fifty seven thousand, four hundred and twenty six naira, sixty four kobo (N1, 518, 871, 357, 426) represented accrual to the special funds accounts.

The sum of one trillion, two hundred and thirty five billion, one hundred and sixty six million, seven hundred and eighty one thousand, three hundred and forty seven naira, fifty two kobo (N1, 235, 166, 781, 347. 52) was the total payment from the accounts.

Also, five hundred and eighty billion, nineteen million, six hundred and eighty two thousand, seven hundred and thirty eight naira (N580, 019, 682, 738) was released as loan; and three hundred and forty seven billion, nine hundred and ninety seven million, five hundred and eighty three thousand, and eight naira and forty one kobo (N347, 997, 583, 008.41) yet to be recovered from various beneficiaries.

IN THE BEGINNING
Perhaps, the collapse of the facilities of the National Electric Power Authority, NEPA, in March 2000, created the impetus for the first scrutiny of the release and movement of funds from the treasury.  Mind you, the collapse led to nationwide blackout for two days.

Going through some records of the Senate, last week, Sunday Vanguard discovered that Abubakar’s PAC launched an investigation into how a supplementary Appropriation  Act in 1999, which provided NEPA with N2.3billion, was spent.

The PAC, at that time, believed that the Ministry of Power, having received  the funds, did not act appropriately. The Power Minister at that time was Chief Bola Ige.

Abubakar’s  Committee found out that “on November 2, 1999, N2,335,191,380.00 was credited by Central  Bank of Nigeria ,CBN, into the account of the Ministry of Power and Steel, account number 233203-08867-4 at UBA, Abuja”, and that “on November 11, 1999, the funds were transferred to a call-deposit account at Afribank at six percent interest per annum. The funds were left there till April 1, 2000, whereupon it was paid over to NEPA through cheque No 00001 of Afribank dated March 22, 2000, for N2,334,651,380.50.

The average interest rate at that time for six months was at least 13% but what the ministry claimed it got was just about five per cent.  The committee found out that the ministry lost about N100,000,000:00 in the process.  But that was just a tip of the iceberg.

It was after the inquest into how the Power and Steel Ministry operated that Abubakar’s PAC was mandated to carry out a wider investigation into Obasanjo’s observance of the Appropriation Act, 2002. But,  because everything revolves round politics, some senators decided to use the committee’s activities as a form of vendetta against Obasanjo.

Therefore, a report submitted by PAC alleged that Obasanjo did not follow the Appropriation  Act procedures as required by law.

It said, for instance, that capital expenditure estimate for 2002 was N360,755,193,057 and recurrent expenditure estimate was N227,781,141,433 whereas N239,450,900,000 was released as capital expenditure and N350,078,000,000 was released for recurrent expenditure.

It also noted that only about 60 percent of the budget was released as capital expenditure for 2001, while 25 percent of the budget allocation was released for recurrent spending for 2002. The committee observed that though N486,705,107,107  was approved by the National Assembly as capital expenditure, only N128,416,341,000 had been released and without the required cash backing.jonathan-obj-yar

That was not all.  Abubakar’s  Committee also wanted to know the whereabouts of the N15,344,000,000, realised as deposit for the sale of NITEL; N250,000,000,000  from the sale of crude oil; N144,000,000,000 proceeds on the sales of Global System of Mobile Communications, GSM, licences, which were alleged not to have been reflected in the Federation Account as well as N107 billion borrowed from “Ways and Means,” to fund the recurrent bill by 50 percent.

It further charged that Obasanjo granted $10 million to the government of Niger Republic without appropriation and without legislatures’ approval; that he breached the constitution by granting an interest-free-loan of N1.456 billion to the Ghana police in April, 2002, without National Assembly endorsement. The committee became aghast when it discovered this, wondering that Obasanjo could do that when Nigeria was still grappling from nationwide strikes by Nigeria Police for non-payment of their entitlements.

A response from the office of the Senior Special Assistant to the President on Media Matters said that the Abubakar Committee report was riddled with unsubstantiated allegations. The statement said “the Presidency did not overspend its recurrent budget but, in fact, showed an unspent balance of N80.669 million for the year 2002.

Contrary to the allegation of over-expenditure of N31 billion, the Appropriation Act 2000, as amended, approved a recurrent expenditure of N19.256 billion, while overall expenditure amounted to N19.175 billion,” among others.

MISMANAGING ABACHA LOOT
Upon scrutiny, Abubakar’s PAC discovered that there were irregularities regarding the loot recovered from General Sani Abacha’s family.

The committee claimed that  the money recovered was not paid into the treasury; that the funds were kept in some dedicated accounts – except for the Naira content.

Of about $774 million in the dollar account  at that time, $500 million was invested in Bank of International Settlement, Basle. Of the 102 million Pounds in the Pound Sterling Account, £100 million was invested in HSBC.

The committee discovered that the recovered funds accounts were handled by the CBN, acting under the dictates of the Accountant-General of the Federation.

The accounts are in three categories: The Dollar Account is designated FGN “F” US$ account, domiciled with bank of International Settlement Basle; the Great Britain Pound Account designated GPB ‘F’ account, with Bank of International Settlement Basle; and the Naira account with the CBN.

One of the startling discoveries made by the committee showed that, as at September 31, 2000, a total sum of $774, 623,340.05 had been paid into the Dollar Account.

The committee also confirmed that several expenditures had been made with the recovered funds at different times.  For instance, $47,907,404.56 was paid to the Federal Ministry of Education on June 8, 1999.  Another N4.5 billion (representing the sum converted into Naira) was credited directly into the National Primary Education Commission account N0. 3871837898 at Union Bank Nigeria plc and distributed to the states and the FCT.

According to the findings, $27.6 million was also paid into the Federation Account as approved by the president on July 9, 1999. This was also converted to Naira and paid to the states and local governments. The committee found that governments of other African countries also benefited from the recovered Abacha loot. That was where the money for the government of Niger Republic emanated – $10 million on the directive of Obasanjo, the instruction which was conveyed by the Finance Minister on October 22, 1999, and promptly paid by the Accountant-General of the Federation.

By the same token, $1 million of the recovered loot  was discovered to have been paid to the Special Services Unit of the Presidency on June 30, 2000 – details for the expenditure were not given to the committee.

Then there was a Pound Sterling Account. On this, Abubakar’s Committee found that £97,858,833.25 was paid into the account. It had generated an interest of £5,066,317.99 as at September 31, 2000.  The sum of £100,000,000.00 was deposited by the Central Bank in an interest yielding account with NHBC in London. The fund available in the account, the committee report insists, was £102,925,201.24.

These were the days Nigeria’s finances were in the millions of dollars. Today, the funds are in their billions of dollars and, with it, mega-billion wastes and mis-management.

THE CURSE
Whereas the Nolan Committee of the British Parliament, in 1995, stated that the “main principles of public life are selflessness, integrity, objectivity, accountability, openness, honesty and leadership”, the leadership in Nigeria has twisted the concept.

Some senators, who spoke to Sunday Vanguard, pointed out that most of the misapplication of the funds were directed at the re-election of Obasanjo in 2003; the failed Third Term Agenda of the same leader; the 2007 election of Yar’Adua; and the 2011 election of President Jonathan.Indeed, the Lawan Committee may hit a stone wall.

Just like the PACs before it, Sunday Vanguard was made to understand that “nothing meaningful may come out of this report.

“Can you imagine, for instance”, an embittered senator told Sunday Vanguard, “that this is not the first time that the Senate would be treated to this absurd way of wasting money; yet, no one has ever been brought to book?

“When the Senate Leader said the report is an indictment on the Senate for not doing its job well, he forgot that the reckless extra-budgetary expenditure that went into subsidy in 2011 was never authorized by the National Assembly yet President Jonathan went ahead to approve monies beyond the N200billion allocated.  The subsidy money ballooned to over one trillion naira.  What did the Senate do to the executive or those who engaged in that extra-budgetary act?”.

Part of the problem, according to discoveries made by Sunday Vanguard, is that there are no laid down procedures for the release of funds from these Special  Accounts.

“The President and his Finance Minister treat the Special  Accounts as Contingency Funds, another form of security vote from where expenditures are made without recourse to the National Assembly”, a senator said

Nigerians await how the Senate would handle the massive reckless spending of Nigeria’s funds by the three administrations.

Senators react

We should have followed the funds – Senate President David Mark, PDP, Benue South
The problem of the funds is that, aside lack of guidelines, we have also, through committees responsible, not taken pains to oversight how the funds are utilized. That is truly an indictment of the National Assembly; it is a wake-up call on us to do our work properly.

If we have been following the funds since 2002, the issue would have been addressed earlier. It is right to look at these ones to see how the disbursements relate to areas they were disbursed. In all, we share in the blame on these disbursements.

We urge the committees to go back and look at those ones that were not misapplied and find out those who have paid back the loans and those that have not paid back. Also those who have taken loans from it should be asked to pay back.

Funds operation grossly abused – Senator Ahmed Lawan, ANPP, Yobe North
The operation of the Natural Resources Account is grossly abused because several releases under this account were not related to the intendment of the account.

Members of upper (red) chamber

Members of upper (red) chamber

Out of a total of N329, 329, 745, 916 granted as loan, N200, 585, 790, 991. 64 is still outstanding under the Natural Resources Account; under the Derivation and Ecology Account, a total of N61, 000, 000, 000.00 was granted as loan leaving an outstanding of N30, 000, 000, 000.00.

Several approvals made from the Special Funds Accounts do not conform to the purposes for which the funds were established; and there were no operational guidelines for the administration, regulations, approvals and procedures for the release of money from such funds. Also noted that loans granted from the accounts have not been paid back several years after such loans were granted.

There are no guidelines for disbursements. But during the public hearing, the committee asked the permanent secretary, Ministry of Finance, how he would define Special Funds  Accounts. And he said that is a discretionary account; and what that means is that they can do whatever they want with it.

But, again, there are documents of the Ministry of Finance indicating clearly the purpose for each of these three accounts and the beneficiaries, so it is not a discretionary account but there are no guidelines. As the Senate Majority Leader stated, we are also at fault. We should have legislation and we should spell out guidelines.

EFCC should wade in – Deputy Senate President Ike Ekweremadu, PDP, Enugu West
In an event where the monies have not been recovered, the Senate should invite the EFCC and ICPC to wade into the matter, as failure to do so would be interpreted by the public as the National Assembly abdicating its responsibilities.

Section 8(82) of the constitution says no money shall be withdrawn from the Consolidated Revenue Fund of the federation except to meet expenditure.

In this situation, we have seen where monies meant for Ecological Fund are being used to develop airports, to build malls and then to build abattoirs. That is the crux of the matter. Most of them, according to the report of the committee, indeed all of them, have not been recovered.

I would like to ask this committee whether they made contact with the beneficiaries of these loans just to hear their own side to be sure that these monies were not repaid. Because if they were repaid, it becomes another kettle of fish what became of the monies.

This committee will need to do further work to ensure that they hear from the other side of the divide or this matter be referred to the EFCC or ICPC to do further investigation. Because for us to sit here and watch such amount of money go down the drain, it means that we are abdicating our  responsibilities.

We run opaque public finances – Senate Leader, Victor Ndoma –Egba, PDP, Cross River Central

All the misapplications of funds carried out by the executive in the Special  Funds Accounts since 2002 are clear attestations to an opaque public finances in Nigeria where, for now, transparency and accountability are rules not adhered to, in anyway, by the executive arm of government.

We have failed. How come we allowed such huge sums to be spent without guidelines? Perhaps, we need to invite our former colleagues who headed committees that were supposed to oversight the accounts.

My conclusion is that our public finances are opaque, our money misapplied; it did not start today and it has endured because the National Assembly is indifferent and complicit. This is one occasion I will agree that we have failed in our responsibility.

Findings must not be swept under carpert – Deputy Majority Leader, Senator Abdul Ningi, PDP, Bauchi Central who doubles as Deputy Chairman of the Committee on Public Accounts.
This is sheer executive recklessness and the National Assembly indifferent to it. It is a combination of their own personal issues, those who collect the loans and those who are given. We, as Nigerian citizens and lawmakers, this is about our own collective intelligence.

We must not, under any guise, sweep under the carpet these findings. Going forward, this chamber must have to add a committee to make sure that the loans, which were collected, are refunded, and, where there is a breach, such persons must be brought to book by being prosecuted.

This impunity is ongoing; it has not stopped, because, even in 2011, we could see the impunity by the coordinating minister. That means the trend continues.

There was inadequate oversight – Senator Smart Adeyemi, PDP, Kogi West
This is rascality of the executive. We should invite our colleagues who chaired the relevant committees on why they didn’t do adequate oversight.

Govt has abused public trust – Senator Olubunmi Adetunmbi, ACN, Ekiti North
The document was enough for Jonathan to take up the challenge and probe Obasanjo. The issue is an abuse of public trust, nobody is above the law. It may not necessarily be an issue of fraud, but an abuse of process as governance requires process.

The government has abused the trust the public has for it. Nobody should be above the law or below the law. The truth is that these funds have been earmarked for specific purposes and we were told what they have been put into use. When budget is debated without magnifying lenses put on the revenue side, there is a problem. A report of this nature provides the platform for inter-presidential engagement.

Funds must be further probed – Senator Abubakar Sadiq Yar’Adua, CPC, Katsina Central
Let the problem be sent to the ICPC and EFCC for investigation because we have to even look at the utilization of the funds. The Kastina State airport was constructed by Colonel Madaki and only four point five meters runway was constructed. So what is said to have been spent is false and the sixteen billion that was sent to the directorate on pilgrims misapplied.

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