Auditor General’s Report Queries NIPC, Agency Responds

Adedayo Akinwale in Abuja

The Office of the Auditor-General of the Federation has raised audit issues after the periodic checks on the Nigeria Investment Promotion Commission (NIPC).

The report directed the management of NIPC to send observations on the audit issues within 21 days in preparation for the final audit report.

The NIPC has however responded to the audit issues, on a point-by-point basis.

The NIPC’s 22-page response provided clarifications on all the issues raised in the report, with relevant supporting documents attached.

The Auditor General in the 41-page report covering the period between January 1, 2016 and December 31, 2019, a copy of which was obtained by THISDAY, queried the commission for setting aside the sum of N1.7 billion as operating surplus to establish a staff housing loan scheme and a post-service benefit scheme.

The audit report, which was communicated to the NIPC Executive Secretary, Yewande Sadiku, on April 28 by the Department of Revenue and Economic Sector at the Office of the Auditor-General, also queried the commission for spending the sum of N1 billion Internally Generated Revenue (IGR) without approval from the Federal Executive Council (FEC) as required by existing regulations.

The report pointed out that NIPC could not get authorisation from the Accountant-General as its purported to do, as only the FEC “can approve any expenditure that is capital in the nature of that magnitude”.

The audit report also revealed that the sum of N429 million was spent on international trips for staff between 2016 and 2018 without evidence of approval from the Head of Service as required by the 2015 circular.

It stated: “While the international trainings were funded by the commission, (there is) no single evidence (e.g. air tickets, training fees receipt, certificate of attendance etc.) to substantiate the trips.”

The report, therefore, recommended that the NIPC should provide evidence of attendance at the foreign events.

It said: “The management should as a matter of urgency provide this office with the approval or have every kobo spent on international trainings refunded to the sub-treasury of the federal government.”

The report recommended that the NIPC should recover the sum of N155.5 million awarded to unlisted companies and unlawfully spent on international trips for governing council members, among other unlawful expenses.

The report further directed the staff of the commission to refund the sum of N29.8 million, money got from the “willful disregard” of the estacode supplementation approval rates, and N12.3 million, proceeds of illegally monetised annual leave.

The report also asked the Executive Secretary to refund money spent on business instead of economy air tickets, duplicated estacodes, wages paid to auxiliary workers, irregular payment of foreign leave allowance, and an irregular contract award.

The report accused the NIPC of awarding contracts above the approved threshold, having irregularities in procurement processes, having duplicated expenditures running into hundreds of millions, paying a non-contracted travel agent, paying employees of other government agencies allowances they were not entitled to, paying for tax consultancy services despite having an accounts department with over 30 members, among others.

The audit report observed that the commission illegitimately approved a revised IGR budget for 2018 to the tune of N4 billion, the action according to the report, contravened an existing circular that requires annual budgets to go through the National Assembly.

The report said: “In its view, the commission is in the habit of circumventing the award process(es).”

Aside from the issues of mismanagement raised, the audit report noted a “high risk of material misstatement” as well as sub-standard and misleading reporting in the financial statement of 2016.

The report said for example, while N150.7 million was paid to staff members and others for foreign trips according to payment vouchers, only N43.3 million was recognised in the statement.

The audit report, therefore, accused the NIPC of a deliberate refusal to compute operating surplus for 2018 and 2019.

However, the report quoted NIPC Executive Secretary to have explained that it was due to the non-approval of financial statements for the years by the governing board, but the auditors insisted that there was no correlation there.

In its letter dated June 7, 2021, signed by Sadiku, (which was sighted by THISDAY) the NIPC responded to the audit issues and said it hopes that the clarifications provided would put all the issues raised in perspective. It also expressed its readiness for further engagements on the audit issues should there be any need.

On the award of contracts above the ES approval threshold, the agency said that the printing paid for by NIPC in 2018 were additional copies of the document, so they were subjected to the provisions of Section 42(1)(d) of the Public Procurement Act, which provides that “a procuring entity which has procured goods, equipment, technology or services from supplier or contractor, determines that: 
(i) additional supplies need to be procured from that supplier or contractor because of standardization,
(ii) there is need for compatibility with existing goods, equipment, technology or services, taking into account the effectiveness of the original procurement in meeting the need of the procurement entity.”

It also noted that Section 6(1) of the NIPC Act equates the position of the Executive Secretary of NIPC to a Permanent Secretary in the civil service of the Federation. The NIPC letter added that this interpretation was confirmed by the SGF in a letter dated 17 January 2017 and a Circular dated 14 January 2016 which specifies procurement thresholds and listed that of Permanent Secretaries as N5m for goods and N10m for works.

“The reprint of additional copies was less than N5m and therefore within the approval limit of the ES,” it stated.

On audit issue raised on international trips without Head of Service approval, the agency said “All NIPC international travels are undertaken in line with NIPC’s mandate and undertaken based on the approval of the Executive Secretary (for staff) and from the Honourable Minister and SGF (for the ES and Council members).“

It further state that “All expenditures relating to such travels are within the approval limits indicated in the approved Appropriation budgets or the IGR budget approved in accordance with the provisions of the NIPC Act. We will appreciate receiving a copy of the Circular referred to in your query.”

The agency attached evidence of attendance of travels undertaken by NIPC staff from January 2016 to December 2019 to its response.

On the allegation of irregular award of contract contrary to the Bureau of Public Procurement (BPP) requirement to the tune of N27,289,500.00, the commission said the submission of Stallion Nissan Motors Nigeria Limited, was considered the most responsive financial bid, having technically qualified and submitted the lowest bid.

It also revealed that the Tenders Board approved the award of the contract to Stallion Nissan Motors for N27,289,500.00.

In its response to the engagement and payment of wages to auxiliary workers which cost N24.7 million, the commission said it was the payment of allowances to a total of 19 ad hoc staff in NIPC’s five zonal offices in 2018 and 2019, adding that the staff perform cleaning, security and other menial jobs.

On the allegation of spending the sum of

N1,036,328,809.00 from expenditure from IGR, the commission said Section 15(1) of the NIPC Act, provides that “…an estimate of the expenditure and income of the Commission during the next succeeding year… shall be submitted through the Minister for approval by the President.”

It added, “Accordingly, NIPC’s budgets are sent to Mr President for approval through the Minister. “

In its response to allegation of duplicated estacode and overlapping DTA payment to the Executive Secretary to the tune of N82,632,896.00, the Commission explained that while it awaits the breakdown from the Auditor General, it said the two trips referred to in the text of the audit query amounts to N7.79 million.

It said, “The trips to Geneva and Brussels were neither duplicated nor overlapping. The ES attended and spoke at a High-level UNCTAD Conference on International Investment Agreement in Geneva on 8-9 September and a meeting of the International Rubber Study Group in Brussels from 12-14 September 2017.

“The stamped pages of the ES’ passport confirming departure from Nigeria on 07 September, return on 10 September and departure on 12 September with a return on 14 September.”

The commission stressed that the cost of the Executive Secretary attendance to Geneva was not covered by the organisers, but they covered the cost of attendance of the staff of NIPC who attended the conference with the NIPC boss.

On disallowable expenses on operating surplus computation of N1.7 billion, the commission said the N1.7 billion was part of the N4.01 billion IGR referred to in the audit query.

The commission explained that Section 12 of the NIPC Act empowers the Commission to apply funds generated from services rendered by the Commission towards the discharge of its functions under the Act.

On allegation of repeated expenditure in budget approval for 2019 to the tune of N70 million, the commission clarified that the budget for 2019 was submitted for approval in October 2018, before the final approval for the 2018 supplementary budget.

It said: “Accordingly, some items in the 2018 budget were repeated in 2019 since there was no guarantee that they would be approved in 2018.

“The items represented by the N70m provided for in 2018 were not expended in 2018. Accordingly, the amount was fully released in preparing the re-computed Operating Surplus.

“Only N17,746,906.82 of the N70m provided in 2019 was expended in 2019. Accordingly, the balance of the provision, along with other balances which are no longer required, were fully released in preparing the re-computed Operating Surplus. This accounts for the additional payment of N208,098,083.03 made to the CRF for 2019 as explained in the response to audit query.”

However, neither the audit report nor the NIPC’s response are final as the Auditor General’s report that would be submitted to the Public Accounts Committee of the National Assembly would consider and reflect the responses to the issues raised in the initial report.

*Editor’s Note: This story has been updated to include NIPC’s response to the audit issues raised in the Auditor General’s report.