Unveiling Messy Deals in Public Finance

13 May 2012

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Minister of Finance, Ngozi Okonjo Iweala

In recent days, the Public Accounts Committee (PAC) of the House of Representatives has been conducting a post mortem on the accounts of ministries, departments and agencies of government. Onwuka Nzeshi, who has been following the exercise, reports

Apart from the general insecurity in the country today, one of several issues dominating public discourse is the way and manner people who are in positions of authority are mismanaging public funds, diverting such funds into private bank accounts  and converting them to personal use.

The ugly phenomenon comes under different terms and guises such as graft, corruption, misappropriation, embezzlement and other such high sounding euphemisms for stealing.
For a long time, Nigerians have lived under the erroneous impression that public property, including funds is nobody's property. Politicians who get elected or appointed into public offices regard the mandate to serve as an opportunity to loot their own share of the national cake. The practice has become so pervasive that nearly all ministries, departments and agencies (MDAs) have been linked to one allegation of misapplication of public fund or the other.

In recent days, the Public Accounts Committee (PAC) of the House of Representatives has been tackling a number of MDAs over some suspicious financial transactions that saw the Auditor-General of the Federation raising the red flag. The Public Accounts Committee of the House acting in line with the provisions of the constitution has been confronting the various MDAs with series of queries raised against them.

These queries were contained in the annual report of the Auditor-General of the Federation on the Accounts of the Federation of Nigeria for the year ended December 31, 2009. The auditor-general's report is submitted to the two chambers of the National Assembly for consideration and necessary action in  accordance with Section 85(2) and (5) of the 1999 Constitution.


The House Committee on Public Accounts took the battle first to the doorstep of the Federal Ministry of Agriculture and Rural Development which had 17 queries standing against it. Its officials were quizzed over the unlawful diversion of funds and sundry violations of the extant financial regulations.

The accountant-general had in its report indicted ministry over the procurement and non-usage of 400 tractors for a period of four years. The report also sought the assistance of the parliament in tracking three of these tractors that were reported missing. The audit report also indicted the ministry over the diversion of the N1.979 billion fertiliser fund to settle expenses relating to Azare and Gurara water schemes; the purchase of 53,325.55 metric tonnes of fertilisers worth over N531 million and the  shortfall in the fertiliser supplied to 13 states of the federation. It also queried the payment of  N12.863 million as overhead expenditure in November 2009 which was not properly documented.

Chairman, House Committee on Public Accounts, Hon. Solomon Adeola, who confronted officials of the Federal Ministry of Agriculture with these queries at a special session demanded explanations from the officials. Responding, permanent secretary of the ministry, Dr Ezekiel Oyemomi, explained that the 400 tractors were not actually purchased and left dormant but were stored in the ministry's facilities located in Abuja, Owerri, Enugu and Ibadan. On the three missing tractors, Oyemomi said that they had been recovered and returned to one of the storage facilities in Ibadan.

Apparently not satisfied with the explanation, the Public Accounts Committee demanded for documentary evidence or physical inspection of the tractors by the auditors within seven days.

Oyemomi, however, explained that the tractors would soon be put to use and deployed to designated farm projects in line with the transformation agenda of the present administration. He also said that though he was not in the ministry when most of the alleged violations were committed, he would investigate the transactions to ascertain the truth and make sure that all the necessary documentations were put in place in one week.
The Public Accounts Committee resolved to suspend further enquiries into these transactions pending the submission of all vital documents such as memos, bank statements indicating withdrawals and payment vouchers within seven days.


The PAC also beamed its searchlight on the Federal Ministry of Education and its parastatals. Some of these  parastatals whose activities have been brought under scrutiny include  the National Universities Commission (NUC), Tertiary Education Trust Fund (TetFund), Universal Basic Education Commission (UBEC), National Examination Council (NECO), National Commission for Colleges of Education (NCCE) and the National Teachers Institute (NTI), among others.

The committee noted it would conduct a comprehensive investigation into the activities of the ministry and these parastatals given some revelations in the auditor-general's report alleging breaches of financial regulations. The committee directed the Education Minister, Professor Rukkayat Rufai, to appear before it in 14 days to explain why the ministry had been tampering with the funds of the agencies and parastatals under it.
In the mean time, the committee gave the ministry a 30-day ultimatum to pay back the N531 million loan it illegally obtained from one of the parastatals between 2006 and 2007. Should the ministry fail to comply with the directive, the accountant-general will be directed to stop further disbursement of funds to it until the loan was fully repaid.
The auditor-general had accused Tetfund of granting a N50 million loan to the ministry in 2007 contrary to financial regulations and another disbursement of N481 million in two instalments for the payment of transfer allowances to teachers in federal government unity schools and technical colleges, among others.

The auditor-general’s report indicated that all the transactions were not properly documented and were in contravention of extant financial regulations.
Executive Secretary, TetFund, Mallam Mammud Yaqub, who was at the meeting with members of PAC to respond to the queries raised against the agency offered some explanations on the said loans. Yaqub said though he was not in office when the loans were taken, he had made spirited efforts to recover the loans but all the efforts failed.
The committee further frowned on a N25 million donation which Tetfund made to the Gateway Games hosted by Ogun State in 2006 and summoned the immediate past executive secretary of the agency to appear before it within 14 days to explain his action. The committee condemned these abuses of financial regulations and threatened to invite the Economic and Financial Crimes Commission (EFCC) to carry out further investigations into them.


In the case of the National Agency for Foods and Drugs Administration and Control (NAFDAC), PAC ordered a refund of N1.259 billion to the Consolidated Revenue Account of the Federation. The committee ordered that the amount must  be refunded to the public treasury within six months while  a committee has been set up  to conduct a comprehensive audit of the accounts of NAFDAC in the past six years.

  Adeola disclosed that the AGF's report indicted NAFDAC for allegedly withholding N1.259 billion generated by the agency from its operations. The total sum initially due to the public treasury from the operations of NAFDAC was N1.348 billion but the agency said that by its own method of accounting, the money due to the government was N90 million and it paid same. Director General of NAFDAC, Dr Paul Orhi, who appeared before the committee said the agency was not withholding any funds. Orhi said what might appear to be a shortfall in its remittances maybe due to the accounting method used by NAFDAC in computing its accounts. NAFDAC, he continued, had always used the accrual system of accounting as opposed to the cash basis system. He attributed the alleged missing funds to this difference in the accounting methods.

However, Orhi's denial infuriated the committee resulting in its order for a full scale audit of the operations of the agency. The House Committee resolved that a full status inquiry on the operations of NAFDAC would be conducted to ascertain the income and expenditure profile, as well as all contracts awarded or executed by the agency between 2006 and 2011.

The auditor-general's report had indicted NAFDAC for gross irregularities in the award of contracts. In one of the charges contained in the report, NAFDAC was said to have awarded a contract of N22.4 million for the provision of information communication technology infrastructure.

The contract was awarded to Galaxy Backbone, a federal government agency. The contract was fully paid for  even before the contractor mobilised to site. The report also alleged that a year later, NAFDAC awarded yet another contract of N17.7 million to Dimensions Data Services for the maintenance of the backbone infrastructure installed under the first contract.

The auditor-general's report also observed that NAFDAC had awarded another contract worth N13.257 million to Galaxy Backbone. However, both NAFDAC and Galaxy Backbone denied knowledge of the contract, even as the representative from the Office of the Auditor-General insisted that the contract did exist. Adeola subsequently warned that it would be counterproductive for NAFDAC if the files from the auditor-general's office confirmed that indeed the contract existed and payments were made as alleged in the report.

Science and Technology

The Ministry of Science and Technology also came under scrutiny. Apart from the queries it had from the auditor-general's report, its officials failed to honour the invitation of PAC and a yellow card was issued against it. The ministry has a backlog of queries dating back to 2004. PAC gave the ministry a seven-day ultimatum to respond to the queries in the auditor-general's report, failing which they will stand indicted on all the issues raised against them.

According to the report, the ministry committed an estimated N72.1 million towards its re-branding and repositioning strategy, an expenditure the report said, was questionable.

Matters Arising

In each of these sessions with the MDAs, most government officials exhibited a nonchalant attitude towards the use or abuse of government resources. It was observed that while they are usually amiable and cooperative during the defence of their annual budget proposals, they appeared rather unwilling to be accountable in the utilisation of public funds.

It is also pertinent that this is the first time in many years that the PAC of the House of Representatives would throw the veil open and consider the auditor-general's report in a semi-open session. In previous years, the activities of PAC were usually conducted in secrecy and shrouded in mystery.
Probably, this new spirit of openness could be one of the silent gains of the Freedom of Information Act, the legislation passed by the National Assembly and assented to by President Goodluck Jonathan last year, to make governance less opaque.

The Public Accounts Committee in the parliament is usually headed by a legislator elected on the platform of the opposition party. Hon. Solomon Olamilekun Adeola is a member of the Action Congress of Nigeria and represents Egbeda Federal Constituency of Lagos State.

In the coming weeks, PAC would be confronting more MDAs on matters arising from their management of public resources entrusted in their care. Hopefully, at some point, the physician might have to heal itself in the spirit of accountability and improved governance.

The fact remains that no arm, department or agency of government can escape the searchlight of the auditor-general. Indeed there are queries standing against the presidency, National Assembly Service Commission, Senate as well as the House of Representatives. It would be interesting to see how the PAC would tackle these bodies that house the most powerful and influential personalities in Nigeria.

It makes for a lot of drama when parliamentarians take on MDAs but it would take a lot of courage to bring the presidency to book. It would equally take a lot of gumption for the PAC to summon the clerk of the National Assembly to answer questions on the management of funds appropriated to the parliament.

Tags: Business, Nigeria, Featured, Public Finance

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