Alleged Diversion of Funds: FG Orders Audit of Military Payroll

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Ndubuisi Francis in Abuja
The Minister of Finance, Mrs. Kemi Adeosun, has directed an investigation into the armed forces payroll, including that of the Air Force, Navy and the Army by the Continuous Audit Team of the federal government.

The directive followed revelations arising from the ongoing trial of the former Chief of Defence Staff, Air Marshal Alex Badeh, at the Federal High Court, Abuja, that the sum of N558.2 million was allegedly diverted monthly from the Nigeria Air Force account, into private pockets.

The minister has therefore charged the Continuous Audit Team, which is saddled with the responsibility of scrutinising the payrolls of the three services, to ensure that all possible loopholes that could lead to leakages are blocked.

The Director of Special Projects in the Ministry of Finance, Mr. Mohammed Kyari Dikwa, will head the Continuous Audit Team and report the findings for appropriate action by the federal government

The exercise will be conducted pending the biometric capturing and migration of the payroll of the three services to the IPPIS, in line with the policy of the federal government to clean up the payroll of all public sector employees.

The minister stated that the measure had become necessary as part of the change mantra of the Muhammadu Buhari administration, which include the restoration of the culture of transparency, accountability and control in the management of public funds, a statement issued by the Director (Information) in the finance ministry, Salisu Na’inna Dambatta, said.
The Continuous Audit Process was one of the initiatives of the minister approved by President Muhammadu Buhari as part of the on-going reforms in the public finance management system of the federal government.

Meanwhile, the federal government has expressed its resolve to ensure that the nation’s tax system reflects the commercial activity levels in Nigeria, saying it is committed to the process of mobilising revenue from the non-oil sector.

In a keynote address at the opening ceremony of the 18th annual tax conference of the Chartered Institute of Taxation of Nigeria (CITN) in Abuja, the Minister of Finance, Adeosun, who represented President Buhari, stressed the need for a robust tax system, which she described as a pre-requisite for any economy that is serious in its commitment to growth and development.

“I carefully read the communiqué arising from the tax conference held last year and I acknowledge the remarkable insight of the diagnosis that ‘Nigeria is experiencing growth without development. I think that the CITN set out clearly the fiscal priorities needed to underpin our economic agenda in a concise manner. Tax collection must grow in line with growth in the economy but this has not been the recent case in Nigeria and that is our challenge,” she said.

Harping on the current administration’s resolve to mobilise revenue from the non-oil sector, the minister noted that the prevailing tax system must reflect the nature of the nation’s commercial activity levels, adding that oil is just 13 per cent of the nation’s GDP.

She, however regretted that it represents a disproportionate share of the tax revenue in the country, promising that government would develop a framework that will mobilise revenue from the non-oil sector.
Adeosun explained that the nation’s tax system must be dynamic in order to respond to an ever-evolving commercial landscape and to increasingly technology-driven business models.

She stated that the Federal Government, as part of the drive to increase non-oil revenue, has set an aggressive target for increasing tax collection. This, according to her, is a reflection of the fact that the current level of compliance is low and in some cases, the effective tax rate paid by those that are compliant is lower than expected. She added that the commendable administrative efforts of FIRS would be complemented by an overhaul of the tax code and tax laws.

She disclosed that the federal government planned to engage with relevant members of the National Assembly to ensure that required revisions, amendments and new laws can be passed expediently to keep pace with the rapid change in business practices.

The minister admitted that: “An overhaul of our tax code is long overdue as is the redrafting of our tax laws to reflect current business practices and new trends. We must respond to the growing phenomenon of base shifting and other practices that allow companies to evade their fiscal and legal responsibilities.

“We will critically examine our GDP to align taxes with economic activity in our bid to block all leakages. For example, the multi-billion naira losses being identified in our solid minerals sector by illegal and undocumented miners will be addressed with increased formalisation and review of the governing laws. Indeed, we are committed to the continuous improvement of our tax system as part of a dynamic framework. We will use tax administration and technology to widen compliance and encourage more individuals and companies into the tax net,” adding that the federal government is already investing in technology to boost the efficiency of our collections.

According to her, some of the recent initiatives being implemented in the Ministry of Finance mean that it is now virtually impossible to obtain a payment from the Federal government without being fully taxed compliant.

Promising that tax revenues will be judiciously utilised going further, the Mrs. Adeosun stated that tax payment is part of the social contract between Government and people and that the most effective measure to enhance compliance is the knowledge that tax revenues are being utilised effectively for the development of the people. The Minister explained that the Federal Government is already implementing public financial management reforms to strengthen financial controls and ensure greater accountability, while the government is also making progress to ensure value for money in every naira spent in its efforts to reduce overhead and increase the efficiency of government expenditure.

She expressed the commitment of the current administration to address the current infrastructure deficit, which is critical to enable economic development. She stated that the 2016 Budget marks a strategic shift given the fact that the Federal Government is determined to direct 30 per cent of expenditure towards capital investment, explaining that the mobilisation of government revenue, including tax revenues, is therefore paramount to meet the significant investment required.

The minister reaffirmed her conviction that the Nigerian economy will recover, saying with the support of economic players, including tax practitioners, the Nigerian economy would emerge stronger and more resilient as a result of our recent challenges. She challenged the CITN to engage in economic patriotism in a way to make their skills achieve the best outcome for Nigerians. “Specifically I implore you to, in the spirit of change, ensure that your advice to clients is professional, legal and ethical, and in the best interest of Nigeria. I urge you to avoid practices that are to the financial detriment of Nigeria and the greater good, and to avoid colluding with parties that are engaged in such detrimental practices.”

Adeosun explained that growing the economy at a rate that will address the employment needs of our huge population requires a fundamental change in how government collects its revenues and spends.The Minister said Government is committed to making sure that every naira counts. “We have strengthened our controls and made significant progress in enhancing the effectiveness of our financial expenditure in bringing development to Nigeria.”

“The commercial opportunities in Nigeria, despite our current challenges, are compelling and I am happy to report that we are now witnessing an increasing level of interest from long term investors who are keen to participate in the Nigerian upside as this government begins to position Nigeria to attain its true potential. It is particularly gratifying that the majority of these enquires relate to the non-oil sector. However, as encouraged as I am about these developments, I am concerned about the ability of our tax system to adequately develop and deploy effective measures to ensure that government revenue is mobilized in line with these developments.”