The Verdict By Olusegun Adeniyi. Email, olusegun.adeniyi@thisdaylive.com
The Senate Committee on Public Accounts last week revealed how the Federal Government under President Olusegun Obasanjo; his successor, the late President Umaru Musa Yar’Adua and current President Goodluck Jonathan grossly abused public funds from some Special Funds Accounts to the tune of over a trillion Naira. Certain that there was more to the story beyond the headlines, I had to work my contacts in the Senate to secure a copy of the report. Aside reportorial curiousity, my interest also stemmed from the fact that I served under one of the three presidents who incidentally is no longer in a position to defend himself.
Having read the 17-page executive summary as well as the 179-page full report, including the verbatim transcript of the public hearing conducted by the committee, I can say very quickly that the issue is not that of stealing of public funds but impunity (which I dare say is a very serious offence, especially in financial matters) while more than 95 percent of the infractions documented in the report happened under President Obasanjo between 2002 and May 29, 2007. Even when these special accounts were established for specific interventions and attracted statutory financial accruals--each running into hundreds of billions of Naira within the period in question, they were administered almost as slush funds.
Chaired by Ahmad Lawan, one of the longest serving lawmakers in our country today, (having spent two terms as a House of Representatives member between 1999 and 2007 before he was elected to the Senate where he is currently serving his second term), the Public Accounts Committee is one of the most productive committees in the Senate and it has done extensive work on the management of the Federation Accounts. It is therefore no surprise that its report, which is very detailed, would raise some dust.
However, the critical issue is that of transparency and accountability in the management of public funds in our country and from the report, it is easy to see how certain individuals sometimes act as though they are above the law. The weakness of the National Assembly is also very glaring if almost $10 billion could be spent outside the appropriation process, and in a most cynical manner that conforms with neither the extant laws nor the purposes for which these monies were earmarked. Even when the lawmakers ordinarily hold the power of the purse, we have unwittingly created a system where about a billion dollars could be spent annually by the president almost as he wished without clear guidelines.
Of the three special accounts looked into, the first is the 3 percent “Development of Natural Resources Account” which belongs to the Federal Government and was established to fund the development of alternative mineral resources to oil and gas. Essentially, it was to develop the solid minerals sector and within a period of ten and half years, (from January 2002 to June 2012), the sum of N873,400,023,790.19 had accrued to the account out of which N701,489,494,960.61 had been spent by official record, leaving a shortfall of about N162 billion.
The second account is the 1.46 percent “Derivation and Ecology Account” which also belongs to the Federal Government and was established to intervene on general ecological problems in the country. The National Emergency Management Agency (NEMA) and state governments are the intended beneficiaries. Within the same period of ten and half years, (from January 2002 to June 2012), a total of N389,983,433,066.07 had accrued into the account out of which payments of N329,866,978,298.92) had been made. That also leaves a shortfall of slightly more than N60 billion.
The third account is the 0.72 “Stabilization Funds Account” which belongs to the three tiers of government (Federal, States and Local Government). Within the period under review, (from January 2002 to June 2012), N255,487,900,570.38 had accrued into the account with payments of N203,810,308,096.99 made, leaving a balance of over N52 billion.
It may be important at this point to trace the origin of these accounts and how they have evolved over the years. They derive from a modification order made by the Supreme Court on May 29, 2002, changing the revenue sharing formula among the three tiers of government. Before then, the arrangement was based on: Federal Government- 48.5 percent; State Governments—24 percent; the Local Government Councils-20 percent with a Special Fund—7.5 percent. These Special Funds were broken down into: Federal Capital Territory—1 percent; General Ecological Problems—2 percent; Derivation—1 percent; Stabilisation Account-0.5 percent and OMPADEC—3 percent.
With the Supreme Court modification, the Special Accounts were transferred to the Federal Government whose share from the Federation Account now jumped to 56 percent distributed as follows: Federal Government—48.5 percent; FCT---1 percent; Development of Natural Resources—3 percent; General Ecological Probems—2 percent; Derivation—2 percent and Stabilisation---0.5 percent. Following protests by the governors, in July 2002, President Obasanjo now signed an executive order which reduced the Federal Government shares from the Federation Account to 54.68 percent and that was how the Special Accounts emerged with the new subheads.
Following their investigations, the Senate committee came to the conclusions that several approvals from the Special Funds Accounts do not conform to the purposes for which the funds were established; there were no operational guidelines for the release of huge sums of money; the funds were being run as loan granting pools while several of the beneficiaries utilized their take for purposes not contemplated by the funds. The committee also found out that loans granted from the accounts (to the tune of over three hundred billion Naira) have not been repaid several years after they were collected and there are no regular reconciliation of accounts between the Accountant General of the Federation and the Central Bank.
However, before we go to the specific spending and the gross abuses associated with the three accounts investigated, here are two critical observations made by the Senate Committee: The sum of N1,518,871,357,426.64 was the accruals to the Special Funds Accounts as at June 30, 2012 while the sum of N1,235,166,781,347.52 represented the payments made; the sum of N580,019,682,738 was released as loans while N347,997,583,008.41 is yet to be recovered from the beneficiaries.
For the Development of Natural Resources Account, the reported abuses are as follows:
·N612,276,016.65 payment of JVC contribution deducted from Akwa Ibom State grant between March and May, 2002.
·N1,300,000,000 loan granted to derivation Escrow Account on July 24, 2003.
·N50,000,000,000 loan granted to finance deficit in year 2004 Budget.
·N3,745,505,000 loan granted to Federal Ministry of Foreign Affairs for the purchase of a Chancery in Tokyo on November 25, 2004 and December 30, 2004.
·N864,725,036 loan granted to National Health Insurance Scheme for ID Cards Production on April 18, 2005
·N452,218,449.70 loan granted to FGN as payment to ADB for purchase of shares on September 9, 2005
·N2,000,000,000 loan granted for payment to Gitto Construzioni General Limited on September 19, 2005.
·N5,700,000,000 loan granted to Ministry of Power and Steel as payment of disengagement benefit of Steel Workers on November 15, 2005.
·N14,988,625,000.02 loan granted to Federal Ministry of Water Resources for Gurara Water Project- second payment on December 21, 2005.
·N10,114,945,832 loan for payment of October-December 205 Arrears of Monetized fringe Benefit in all Federal Government Parastatals on February 9, 2006.
·N11,000,000,000 loan to Federal Airport Authority of Nigeria (FAAN) infrastructure intervention Fund Account to address infrastructure problems in the Aviation Sector on November 27, 2006.
·N20,000,000,000 loan to Federal Ministry of Works against 2007 Appropriation for the dualisation of Abuja-Lokoja Road and dualisation of Kano-Maiduguri road on December 28, 2006.
·N15,000,000,000 loan to Federal Ministry of Works against 2007 Appropriation for the dualisation of East-west Roads on January 18, 2007.
·N100,000,000,000 released for financing of 2nd Quarter Capital on May 15, 2007.
·N70,000,000,000 released to the Consolidated Revenue Fund (CFR) as loan to accelerate capital budget releases on September 1, 2010.
NOTE: Except for the last one released by President Jonathan, all the other abuses highlighted took place under Obasanjo. So as far as this account is concerned, Yar’Adua had nothing to do with any of the abuses detailed.
For the Derivation and Ecology Account, the following were the abuses highlighted by the Public Accounts Committee:
·N200,000,000 loan to the Presidential Research and Communication Unit on November 9, 2002.
·N500,000,000 loan to Edo State Government on November 17, 2002
·N800,000,000 released for resurfacing of runway in Aminu Kano International Airport, Kano-through SGF Ecological Fund Account on January 24, 2003
·N10,000,000 released for carrying out the building of Abattoir in Bida, Niger State—through SGF Ecological Fund Account on March 4, 2003.
·N500,000,000 loan to Edo State Government on March 25, 2003
·N150,000,000 released to Nigerian Railway Corporation for the Iju-Ijoko Rail Dualization Project—through SGF Ecological Fund Account on March 4, 2003.
·N200,000,000 released to Federal Ministry of Works for upgrading of Lagos-Ibadan Expressway and Lagos-Shagamu section to 6 lanes carriageway on December 22, 2004.
·N550,000,000 released to the Federal Ministry of Works for construction of four new bridges along Argungu-Bwi Road and completion of Sokoto River Bridge at Argungu in Kebbi State in May 10, 2005.
·N7,468,800,000 loan to Nigerian Air Force through the Ministry of Defence’s Capital Account for some projects.
·N1,982,834,723.63 released to the Federal Ministry of Works for the construction of new bridge at Idundun, Cross River State on June 21, 2006.
·N146,000,000 released to Nigeria Nuclear Regulatory Authority on November 10, 2006
·N1,000,000,000 released to Ogun State Government for the construction of Badagry-Igboho road (Atan-Isaga section) on April 27, 2007.
·N750,000,000 released for Development of Abuja Downtown Mall on January 4, 2007.
·N6,000,000,000 released to FCDA for provision of engineering infrastructure to Kubwa/Karshi Satellite towns on provision of engineering infrastructure on March 23, 2007; August 13, 2007; May 8, 2005 and December 12, 2007.
·N10,942,237,791.06 release to the Consolidated Revenue Fund for funding of the 2009 appropriation act.
NOTE: Except for the last one released by Yar’Adua and one of the four approvals in the N6 billion Kubwa/Karshi engineering, all the other abuses highlighted under this Account took place under Obasanjo. So as far as this account is concerned, Jonathan had nothing to do with any of the reported abuses.
For the Stabilization Account, the following were the abuses highlighted by the Public Accounts Committee:
·N16,262,401,332.50 loan granted to Directorate of Pilgrims Affairs on November 5, 2003.
·N10,845,000 payment to Tranvari Services Ltd for Nigerian Laws on Public Finance on January 12, 2004.
·N1,420,213,338.58 released to the Nigerian Customs Service as cost of revenue collection on July 7, 2005.
·N10,000,000,000 loan to Consolidated Revenue Fund Account on December 30, 2005.
·Loan granted to Ghana and Sao Tome and Principe on September 22, 2004 and May 7, 2007.
·N142,600,000 released to Gong Publishing Company as loan of debt owed Local Government Councils on September 26, 2005.
·Various loans totaling N309,208,000.30 granted to the Inspector General of Police for purchase of vehicles for the UN Peace Keeping Operations in Haiti in 2006.
·N2,800,000,000 loan granted to pay Federal Government of Nigeria 50 percent contribution to the phase of the Pioneer Car Finance Scheme for the Public Servants in Paramilitary Agencies on May 22, 2007.
·N87,721,961,531 released to the Independent National Electoral Commission (INEC) to commence the conduct of fresh voters registration exercise on September 1, 2010, September 15, 2010 and October 13, 2010.
·N34,949,423,870.52 loan to Akwa Ibom and Delta States during implementation of 10 percent derivation indices to oil producing states on March 11, 2010.
·N5,000,000,000 released to the Federal Ministry of Aviation, National Identity Management Commission and National Judicial Council as approved by the Coordinating Minister for Economy on September 15, 2011.
NOTE: Except for the last three approvals by Jonathan, all the other abuses highlighted under this Account took place under Obasanjo. So as far as this account is concerned, Yar’Adua had nothing to do with any of the reported abuses.
But there are critical issues in the report which deserve attention. One, the idea of granting indiscriminate loans to ministries in lieu of budget is subject to serious abuse and is antithetical to the promotion of transparency and accountability in the public arena. For instance, if a Minister collects an interest-free loan of N10 billion, nothing stops him/her from putting it in an interest-yielding account in a commercial bank such that if after some months the money is returned, the person would have made huge returns. The same applies to Governors, especially those close to the president who were usually given either grants or loans without any objective criteria. Besides, all these monies may not even appear in the books of their states. There is also the issue of duplication in that funds are sometimes released for projects already captured in the budget with money duly appropriated.
To understand the lack of transparency in the management of the accounts, one may need to read the transcript of the exchanges between the Senate Committee members and Directors from the office of the Auditor General of the Federation; Central Bank of Nigeria; office of the Accountant General of the Federation and the Permanent Secretary, Federal Finance Ministry. For instance, when the committee sought explanation for the discrepancy of N44 billion in the accounts provided by these officials for the period between 2006 and 2011 in the management of the Natural Resources Account, the Permanent Secretary, Ministry of Finance could only say: “The truth of the matter is that if it is expected to balance QED, it would be a miracle because there are sometimes that the CBN could bring in some…”
This had prompted Senator Lawan to interject: “And you know miracles happen; do you believe in them?”
To this, the Permanent Secretary replied: “Not in financial terms”. But Senator Lawan would not allow it to pass: “N44 billion should just disappear?”
At this point, the Director representing the Accountant General of the Federation intervened: “With due respect Sir, if you look at the CBN figure for 2007, it is N55,676,713,947.37. The Ministry of Finance figure is N59,660,203,250.85. It is only that year that has a difference…”
As the argument went back and forth, Senator Olubunmi Adetunmbi made his intervention: “Mr Chairman, we accept that there is need for additional information but the point must be made that between the account holder, the book keeper and the banker, they do not speak from the same page, and that in itself is not good enough for public finance management and for confidence building of the public.”
But the most serious aspect of funds disbursement was the selective grant of “loans” that were probably not meant to be repaid and without any collateral. For instance, in granting funds to states, it was almost as if it depended on the whims of the president, prompting the senators to query the rationale for many of the disbursements. To this the Permanent Secretary who incidentally happened to be a Muslim waxed Biblical: “It is a fund that if you did not ask, nobody would give. Knock and the doors shall be opened; seek and ye shall find...”
Given the way the three accounts were mismanaged with hundreds of millions dashed out just by a stroke of the president’s green pen and for all manner of things, the lack of accountability in our system is very evident. It is, however, noteworthy that Senate President David Mark admitted the failings of the National Assembly and I hope they will pass a legislation that will spell out guidelines and regulations for the disbursement of funds in the Special Funds Accounts so that there could be transparency in their managements and equity, especially with regards to disbursements to states.
In his closing remark at the public hearing on October 2, 2012, Senator Abdul Ningi, former House of Representatives Majority Leader, said inter alia: “...as a person who has been here before 2002 and having been in various committees, I would like to say that it makes me very sad because some of the sub-heads have actually been captured by various ministries budgets from 2003 till date. If you look at 2007 FCT appropriation in particular and compare it with what is here, you will see release to FCDA for the provision of Engineering infrastructure to Kubwa/Karshi satellite town. That is funded separately from it and now you see another Karshi-Kubwa; and they say that is third and final payment which they put at N2 billion. It has been funded by the budget….If an appropriation has been made for some of these sub-heads and you come here and see a duplication of the same sub-head that you can recall being funded, it is really funny.
“Somebody, somewhere is trying to take the people for granted….you just sit down and do a paper work and you will be given N10 billion. Who actually authorized these payments and to whom? It is very important that some of these things be corrected. Some of the headings are very outrageous and I will want to insist to the committee chairman that we call all the officers who initiated the approval, of course including President Obasanjo; he is a human being, he was a public officer, nothing stops us from calling him. He can now come and tell us the mandate, the authority that he used to churn out these figures; or is it from his whims and caprices that he just gave out N10 billion? You gave money to Edo and Bauchi; what about Taraba and Ekiti—because their governors are not your friends? That is very unhealthy and you could see that these things have continued because there is foundation for it. But it is not normal. No individual no matter how powerful should sit down and appropriate money by himself to anybody…”
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