Global Finance By Odilim Basil Enwegbara. Email & Tel: firstname.lastname@example.org, 0703 8501 486
Financial vandalism is as serious a crime as homicide
Until recently, public outcries that government agencies have been mismanaging the revenues they generated have been received as fallacious. And because most past legislative investigations into these allegations have ended up compromised, those carrying on this act seem to believe to have mastered how to circumvent the law. So, when the House of Representatives November last year directed its Finance Committee to thoroughly investigate federal revenue generating agencies, understandably, it was never taken seriously.
And that the agencies went fully unprepared only demonstrated a mindset for business as usual. By the time they discovered they were setup; that rather than business as usual, it was more of lynching, most of them were already humiliated by these no-nonsense committee members. Caught up in these ferocious interrogation tactics, most began to beg to be allowed to return the next day. Particularly battered and disoriented the Nigerian Communications Commission and Federal Inland Revenue Service were virtually on their knees, begging the Chairman for a second chance given such irreconcilable discrepancies in their accounting records. But, while granting their requests, the Committee Chairman, thundered, ‘‘Yes, it is possible for you to return tomorrow, but you should also be assured that as clear as the facts already before us could demonstrate, there is not much to be expected differently tomorrow.’’
Unbelievable that this was happening in my country, I couldn’t suppress my excitement. But, then, a voice behind whispered, “Why not hold your premature excitement to see what the final report of this awe-commanding hearing would look like.’’ Getting the message, I simply controlled my enthusiasm. Now that the report is out, and containing all that was discussed at the investigation; in other words, that lawmakers were never bluffing, I decided to write about my experience at the hearing. Besides using this piece to commend their boldness and patriotism, I also want to use this opportunity to try to give some pieces of advice to our President regarding the outcome of this investigation and why punishing those indicted should be done without any time wasted.
But why were these agencies accused of violating Sections 22 and 23 of the 2007 Fiscal Responsibility Act? It’s because Section 22 (1) states that ‘‘…each Corporation shall establish a General Reserve Fund and shall allocate thereto at the end of each financial year, one-fifth of its operating surplus for the year.’’ It is also because Section 22 (2) states that ‘‘The balance of the operating surplus shall be paid into the Consolidate Revenue Fund of the Federal Government not later than one month following the statutory deadline for publishing each corporation’s accounts.’’ While Section 23 (1) states that ‘‘The Corporation’s surplus shall be classified as a Federal Treasury Revenue,’’ Section 23 (3) makes it clear that ‘‘Each Corporation shall, not later than three months after the end of its financial year, cause to be prepared and published its audited financial reports in accordance with such rules as may be prescribed from time to time.’’
Therefore that these agencies generated N3.06 trillion in 2009, but only remitted N46.8 billion to government coffers; that they generated N3.07 trillion in 2010 but remitted only N54.1 trillion; and that they generated N3.17 trillion in 2011 and just paid a meager N73.8 billion, made the committee very angry. But more displeasing to them was the case of the NNPC and its subsidiaries, having internally generated N6.132 trillion between 2009 and 2011, failed to remit any money. Also was case of Nigerian Communications Commission, discovered to have two different audited accounts — one with lower figures sent to the Fiscal Responsibility Commission and another with higher figures sent to the Auditor General’s office.
Also serious was the accounting discrepancies in FIRS presentation; its audited account showed N5.6million as well as N323 million in 2009. Declaring two separate audited accounts — one higher for the Auditor General’s office and another lower for the Fiscal Responsibility Commission. As unbelievable as it sounds, this was a common practice among agencies. The reason for indulging in this grave practice was to ensure they never remit any money to government. In other words, because FRA allows them to remit their revenues based on operating surplus framework, pushing their operating costs very high, they could have no surplus to remit to government.
Listening to the presentation by the Chairman of Fiscal Responsibility Commission, it was abundantly clear that these agencies were fraudulent in their effort not to remit the required funds to government. Also they were committing financial murder by falsifying their accounts. Exposing how these managers of our public funds into personal jackpots, the House Committee on Finance should be commended for the excellent job done.
But why should internally generated revenues that are owned 100 per cent by the federal government have to be treated as if they belonged to these agencies? In other words, how could employees of government who yearly consume over 70 per cent of government’s annual budget, be so insensitive to the fragile state of their country’s economy to be indulging in such revenue diversion? Given their statutory responsibility toward remitting the generated revenue to support government’s efforts in reducing the country’s recurrent deficit, shouldn’t such actions amount to economic sabotage? Isn’t this bizarre?
Understandably in their efforts to cover up their fraudulent activities, these agencies have engaged in systemic public disinformation, including the use of blackmail against anyone trying to expose them. Who else should have been targeted by their prepaid media, than their arch-enemies — our lawmakers.
The obvious questions have become; if most modern economies are almost wholly dependent on their internally generated revenues, why should the little money we are generating internally be diverted by those who should have saved it in the interest of all? How do we expect our own country to transit from an economy dependent mostly on externally generated revenues to a developed economy — one almost wholly dependent on internally generated revenues?
In this sense, how long should we allow people who are privileged to serve their nation, turn out only to be helping themselves with what should be used for the common good? Shouldn’t there come a time in a nation’s life when it puts a stop to teenage behavior? If there is any better time to bring this to an end, it should be now.
But before we talk about how those culpable should be punished, those leakages in the 2007 Fiscal Responsibility Act, which these managers have exploited, should quickly be sealed through an amendment of the Act. For this reason, there is no better place to start this sealing than by modifying those sections of the Act that direct agencies to remit generated revenues on the basis of operating surplus framework.
When modified, it should mandate all the revenue generating agencies, without exception, to remit all their revenues, since all their operating costs should henceforth be subjected to the National Assembly appropriations.
For this same reason, the amended Fiscal Responsibility Act should also mandate every revenue generating federal agency to open a ‘‘Consolidated Revenue Fund Account,’’ an account no one should have a drawing right to. Also, let the amended FRA provide some serious punishments for those involved in fraudulent manipulation of public revenue generating accounts and/or for diverting remittable public revenues, to include dismissal and ban from public office, also well as a minimum jail term of five years. With these draconian measures, there is no way these pretentious technocrats shouldn’t be nearing the end of their road.
Because the House investigations have revealed the unheard-of, widespread financial recklessness, especially because those running the affairs of Fiscal Responsibility Commission weren’t fully prepared to carry out their enforcement responsibilities, the Fiscal Responsibility Commission too should be overhauled, including the possible sack of the entire commissioners. Doing this will not only put the commission in a better position to investigate infractions. It will also allow prompt reporting of these cases to the Attorney-General for prosecutions. The amendment of the Act establishing the commission should reemphasize its public enlightenment and education role, especially with regard to the public as the most credible watchdog in ensuring increased monitoring of our fiscally disciplined government.
Mr. President, because what is happening here is bigger than our eyes could see, it calls for the need to establish an independent inspection agency to monitor the ongoing economic vandalism. Mr. President, the judges (the House members) have spoken, they have delivered their judgment, so the ball is now in your court. Since all is now in your hands, the decision to ensure that the managers of federal agencies indicted are further investigated is now in your hands. And it is in your hands that EFCC invites managers of these agencies for questioning. Nigerians are now watching. They are watching whether you will fully exercise the executive power they handed you as their president. They’re watching whether, you will order the full investigation of these accounting frauds. Shouldn’t this be an opportunity to bring in some reputable accounting firms to fully reexamine the books of these 60 agencies? We should do so remembering what happened to managers of US giants like Enron and WorldCom who were caught in accounting fraud.
Mr. President if you agree with Marcus Cicero that “The greatest incitement to crime is the hope to escape punishment,’’ then, shouldn’t you also agree that it’s time to punish those who have diverted our scarce national resources? You should do so as a warning to all Nigerians that they should expect the highest punishment, should they ever divert public funds.
You should know Mr. President that if you allow these alleged robbers get away with their loot, you are indirectly telling millions of impoverished and unemployed Nigerians that since the law does not punish unscrupulous Nigerians; they too go out there and help themselves.
This is the right opportunity to reconfirm to the world that your administration is truly fighting corruption at all levels.
Enwegbara is an MIT educated specialist in money and financial matters