Subsidy Probe Report: ‘Why Audit Firms Were Sacked’

25 Apr 2012

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 Minister of Finance, Ngozi Okonjoo Iweala

By Kunle Aderinokun and Ndubuisi Francis 

The Federal Ministry of Finance last night declared that last weekend’s sack of two accounting and audit firms involved in the verification of fuel subsidy claims had no link with the report of the House of Representatives Ad hoc Committee on subsidy management, which unveiled its findings last week.

The Ministry of Finance had by the weekend terminated the contract of  the accounting and auditing firms of Akintola Williams Deloitte and Adekanola & Co, for alleged failure to exercise due care in the audit of fuel subsidy claims they performed on behalf of  the Federal Government in the management of the Petroleum Support Fund (PSF).

Akintola Williams Deloitte  said it acted professionally within its mandate and recovered N5.7 billion for the Federal Government from fuel marketers in the course of implementation of the contract, which the Federal Government awarded to it through the Budget Office of the Federation (BOF).

The firm said the BOF, an office in the Ministry of Finance, had mandated it “to participate in the process of receiving petroleum products into the country based on specific vessels allocated to the firm and ascertain the actual quantity of products imported amongst others,” which it did to the highest professional standards.

However, in an advertorial published on Monday, Adekanola & Co had claimed that the termination of its engagement by the ministry was ‘presumptuous, malicious and unfair’, adding that the ministry had invoked the termination clause  of the  agreement vide a letter dated April 12, while the subsidy probe report was presented to the House of Representatives on April 18.

The firm said it was “presumptuous, malicious and unfair” for the ministry “to present to the press as if our disengagement had anything to do with unprofessional conduct or incompetence or a fallout of the subsidy probe.”

Reacting to Adekanola’s position last night via a short message service (SMS) to THISDAY, Senior Special Assistant on Media to the Minister of Finance and Coordinating Minister of the Economy, Mr. Paul Nwabuikwu, said: “It is important to state that the decision to disengage the firms was not based on the report of the House Ad hoc Committee.”

“As the statement announcing the decision made clear, the decision was a product of two month-long review of the subsidy management from the perspective of the ministry’s mandate and functions. An evaluation of the performance of the firms was part of this process.

“The Budget Office subsequently met with the firms in March to inform them that based on the evaluation, a decision had been taken to terminate their services. It is therefore clear that the disengagement of the firms could not have been malicious or presumptuous for the simple reason that it went through due process according to the terms of their contracts,” Nwabuikwu said.

The ministry had engaged the firms a couple of years ago to verify documentations and claims submitted by oil marketers and importers so as to ensure that only genuine claims were paid.

Coincidentally, the House of Representatives Ad Hoc Committee, which probed the management of the subsidy scheme had also blacklisted the firms in its final report, recommending a ban of three years for the companies for complicity and failure to do what they were hired to do.

The Chief Executive Officer of Akintola Williams Deloitte, Mr. Adeniyi Obe, told journalists yesterday  that the mandate was carried out with an “over recovery” of N5.7 billion on behalf of the Federal Government.

An over recovery in petroleum management parlance is a situation whereby prices of oil have dropped at the international market, which automatically brought down the landing cost of fuel and the consumers paid for fuel at a fixed pump price- the difference is refunded by marketers to the government through the Petroleum Products Pricing and Regulatory Authority (PPPRA).

Obe specifically noted that it appeared that there was a misunderstanding of its role as “a firm engaged to verify volumes of petroleum products imported and delivered into the country by independent oil marketing companies only, with that of petroleum products stock management when you compare the Ad-hoc Committee’s report with our mandate.”

He emphasised that: “The statement credited to the Committee that we were engaged to provide products statistics (supply and distribution) from jetties to depots and retail outlets is completely outside our mandate.”

The chief executive therefore urged the House of Representatives Ad Hoc Committee on Monitoring of Subsidy Regime,  to have a second look at the probe report because the firm discharged its duty with the highest professional standards.

According to him, “We affirm that we carried out our work within the mandate of our agreement with the Budget Office of the Federation and with the highest professional standards expected of any responsible professional services provider.”

While claiming that the firm had not received the official report that was issued by the Committee, Obe disclosed that, “We have submitted our representation to the Speaker of the House of Representatives, Hon. Aminu Tambuwal, based on the information contained in the report as found on various websites. We sincerely believe that the Committee will have a second look at the report.”

Tags: Nigeria, Featured, News, Subsidy Probe

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Comments (5)

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  • i think the executives of these two audit firms should be arrested and prosecuted for their role in swindling Nigeria and Nigerians over US$1 Billion in the name of subsidy. How on earth can they go to the press challenging the Hon Minister!s action for sacking them based on their criminal collaboration with the so call subsidy thieves .We salute the minister for her action.

    From: Ibrahim Kaita

    Posted: 3 years ago

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  • Well, well ,well, it still does not absolve the firms.In fact by they have a lot to answer for.They should be investigated.There is something shady about their disengagement.They must have been paid off , to muddy the waters.

    From: Emeka K Duru

    Posted: 3 years ago

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    Posted: 3 years ago

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  • It's a pitty when a dry tree falls down, it could knock-down some other branches along with it...Who knows if other good or worse companies may fall-out alongside before the end of fuel-sunsidy probe's era!!!

    From: Dozie

    Posted: 3 years ago

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  • For The Sake of Good Governance & To Reduce Cost of It.
    Which Chamber of National Assembly should Be Scrapped?

    Pls Vote and Send in ur Remarks!!!

    From: Ogechi

    Posted: 3 years ago

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